Question 1

Which of the following would not be found in a good system of internal control?

Accepted Answer

A) Requiring all employees to take earned vacations 
B) Establishing a system of checks and balances 
C) Having one person handle all the responsibilities of a department 
D) Establishing an internal audit staff 
A) Requiring all employees to take earned vacations 
B) Establishing a system of checks and balances 
C) Having one person handle all the responsibilities of a department 
D) Establishing an internal audit staff

Question 2

When a company makes payment for goods or services,the check is prepared by the company's

Accepted Answer

A) requesting department. 
B) treasurer. 
C) accounting department. 
D) receiving department. 
A) requesting department. 
B) treasurer. 
C) accounting department. 
D) receiving department.

Question 3

Which of the following bank reconciliation items would not result in a journal entry?

Accepted Answer

A) Service charge 
B) NSF check of a customer 
C) Collection of a note by the bank 
D) Deposits in transit 
A) Service charge 
B) NSF check of a customer 
C) Collection of a note by the bank 
D) Deposits in transit

Question 4

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage.)

Accepted Answer

$22 overag

Question 5

One example of a periodic independent verification is the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 6

The purchasing department prepares a purchase requisition addressed to the vendor (seller)containing instructions related to the items ordered.

Accepted Answer

A) True 
 B)False

Question 7

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A) Deposit of $250 recorded by the bank as $25 
B) Deposit of $25 recorded by the bank as $250 
C) Check for $25 recorded as $52 
D) Check for $52 recorded as $25 
A) Deposit of $250 recorded by the bank as $25 
B) Deposit of $25 recorded by the bank as $250 
C) Check for $25 recorded as $52 
D) Check for $52 recorded as $25

Question 8

Which of the following sets of documents are in the correct sequence?

Accepted Answer

A) Purchase order,check,receiving report 
B) Purchase requisition,purchase order,invoice 
C) Purchase requisition,receiving report,purchase order 
D) Purchase order,purchase requisition,invoice 
A) Purchase order,check,receiving report 
B) Purchase requisition,purchase order,invoice 
C) Purchase requisition,receiving report,purchase order 
D) Purchase order,purchase requisition,invoice

Question 9

Proper control procedures can guarantee the prevention of theft.

Accepted Answer

A) True 
 B)False

Question 10

The management of public companies must establish systems that

Accepted Answer

A) safeguard the firm's assets. 
B) ensure reliability of its accounting records. 
C) see that employees comply with legal requirements 
D) do all of these. 
A) safeguard the firm's assets. 
B) ensure reliability of its accounting records. 
C) see that employees comply with legal requirements 
D) do all of these.

Question 11

Which of the following documents would be prepared (by a buyer of goods)after the others?

Accepted Answer

A) Purchase order 
B) Check 
C) Purchase requisition 
D) Receiving report 
A) Purchase order 
B) Check 
C) Purchase requisition 
D) Receiving report

Question 12

Public companies are required to

Accepted Answer

A) have an independent audit of financial statements. 
B) have an audit of the internal control systems. 
C) fully document and certify the company's system of internal controls. 
D) do all of these. 
A) have an independent audit of financial statements. 
B) have an audit of the internal control systems. 
C) fully document and certify the company's system of internal controls. 
D) do all of these.

Question 13

Which of the following would be deducted from the balance per books on a bank reconciliation?

Accepted Answer

A) Notes collected by the bank 
B) Deposits in transit 
C) Service charges 
D) Outstanding checks 
A) Notes collected by the bank 
B) Deposits in transit 
C) Service charges 
D) Outstanding checks

Question 14

Cash received through the mail need be handled by only one employee to achieve effective internal control.

Accepted Answer

A) True 
 B)False

Question 15

An accountant is responsible for the following activities: (1)receiving all cash; (2)maintaining the general ledger; (3)maintaining the accounts receivable subsidiary ledger that includes the individual records of each customer; (4)maintaining the journals for recording sales,purchases,and cash receipts; and (5)preparing monthly statements to be sent to customers.As a service to customers and employees,the company allows the accountant to cash checks of up to $75 with money from the cash receipts.When deposits are made,the checks are included in place of the cash receipts.What weaknesses in internal control exist in this system?

Accepted Answer

In this case,the principle of separation

Question 16

Which of the following would not be a valid reason for keeping currency on hand at a place of business?

Accepted Answer

A) To pay small,unforeseen expenses 
B) To make up for any imbalance in the books 
C) To advance money to sales reps for travel expenses 
D) To provide money for cash registers 
A) To pay small,unforeseen expenses 
B) To make up for any imbalance in the books 
C) To advance money to sales reps for travel expenses 
D) To provide money for cash registers

Question 17

Privately owned companies

Accepted Answer

A) are required to have an independent CPA audit their financial statements. 
B) are required to have their internal control systems audited. 
C) are required to have both the financial statements and internal control systems audited. 
D) are not required to do any of these. 
A) are required to have an independent CPA audit their financial statements. 
B) are required to have their internal control systems audited. 
C) are required to have both the financial statements and internal control systems audited. 
D) are not required to do any of these.

Question 18

Internal control is weakened by all of the following except

Accepted Answer

A) collusion. 
B) separation of duties. 
C) human error. 
D) effects of changing conditions. 
A) collusion. 
B) separation of duties. 
C) human error. 
D) effects of changing conditions.

Question 19

Internal control involves,in part,the protection of a company's assets.

Accepted Answer

A) True 
 B)False

Question 20

Mandisa Sounds,Inc.,a specialty retailer of customized audio systems for automobiles,installed a perpetual inventory system in the second quarter of 2011.The new system allowed the firm to adjust its merchandise inventories to sales patterns more effectively and to prepare monthly financial statements.Although the system led to an improvement in sales and income,the gross margin on the monthly income statements was falling below both management's expectations and the industry average.At the end of 2014,a physical inventory revealed that actual merchandise inventory was considerably lower than the perpetual inventory records indicated.The merchandise inventories of some stores were off more than others,but all had deficiencies.What probably caused these losses and what steps could be taken to prevent them in the future?

Accepted Answer

The merchandise inventory losses probabl

Which of the following would not be found in a good system of internal control?

When a company makes payment for goods or services,the check is prepared by the company's

Which of the following bank reconciliation items would not result in a journal entry?

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage.)

One example of a periodic independent verification is the bank reconciliation.

The purchasing department prepares a purchase requisition addressed to the vendor (seller)containing instructions related to the items ordered.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Which of the following sets of documents are in the correct sequence?

Proper control procedures can guarantee the prevention of theft.

The management of public companies must establish systems that

Which of the following documents would be prepared (by a buyer of goods)after the others?

Public companies are required to

Which of the following would be deducted from the balance per books on a bank reconciliation?

Cash received through the mail need be handled by only one employee to achieve effective internal control.

Which of the following would not be a valid reason for keeping currency on hand at a place of business?

Privately owned companies

Internal control is weakened by all of the following except

Internal control involves,in part,the protection of a company's assets.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 8: Cash and Internal Control

Which of the following would not be found in a good system of internal control?

When a company makes payment for goods or services,the check is prepared by the company's

Which of the following bank reconciliation items would not result in a journal entry?

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage.)

One example of a periodic independent verification is the bank reconciliation.

The purchasing department prepares a purchase requisition addressed to the vendor (seller)containing instructions related to the items ordered.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Which of the following sets of documents are in the correct sequence?

Proper control procedures can guarantee the prevention of theft.

The management of public companies must establish systems that

Which of the following documents would be prepared (by a buyer of goods)after the others?

Public companies are required to

Which of the following would be deducted from the balance per books on a bank reconciliation?

Cash received through the mail need be handled by only one employee to achieve effective internal control.

Which of the following would not be a valid reason for keeping currency on hand at a place of business?

Privately owned companies

Internal control is weakened by all of the following except

Internal control involves,in part,the protection of a company's assets.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters