Question 1

Risks involved in e-commerce include: credit card theft, computer viruses and impersonation.

Accepted Answer

A) True 
 B)False

Question 2

The impact of technology on internal controls includes

Accepted Answer

A)  Reduced processing error 
B)  Elimination of the need for regular audits. 
C)  Fewer hard copies of source documents 
D)  More efficient separation of duties 
E)  Reduced processing errors and fewer hard copies of source documents

Question 3

The principles of internal control include: ensure transactions and activities are authorized, maintain records, insure assets, separate recordkeeping and custody of assets, and perform internal and external audits.

Accepted Answer

A) True 
 B)False

Question 4

Maintaining a petty cash fund makes it possible to determine human fraud.

Accepted Answer

A) True 
 B)False

Question 5

Risks involved in e-commerce include

Accepted Answer

A)  Firewalls 
B)  Encryption 
C)  Missing documents 
D)  Computer viruses 
E)  All of the above

Question 6

The following information refers to Annie's Attic and competitors in the antiques business.
 $$\begin{array} { | l | r | r | } 
\hline & \text { Current Ratio } & \text { Quick Ratio } \
\hline \text { Arrie's Attic } & 1.7 \text { to } 1 & .85 \text { to } 1 \
\hline \text { Bart's Basernent } & 1.3 \text { to } 1 & .90 \text { to } 1 \
\hline \text { Chisolm's Collectibles } & 1.5 \text { to } 1 & 1.1 \text { to 1 } \
\hline \text { Martin's Meubles } & 1.6 \text { to 1 } & .7 \text { to } \
\hline
\end{array}$$ Information:
Comment on the relative liquidity positions of the companies.

Accepted Answer

The answer of The following information refers to Annie's Attic...

Question 7

An error made by the bank should result in a reconciling item on the book side of a bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 8

Discuss how banking activities promote the control of cash.

Accepted Answer

The answer of Discuss how banking activities promote the control...

Question 9

A good system of internal control

Accepted Answer

A)  Encourages adherence to prescribed managerial policies 
B)  Promotes operational efficiencies 
C)  Eliminates the need for an audit 
D)  Both encourages adherence to prescribed managerial policies and promotes operational efficiencies 
E)  All of the above

Question 10

In reconciling the bank balance, an unrecorded debit memorandum for printing cheques should be

Accepted Answer

A)  Noted as a memo 
B)  Added to the book balance of cash 
C)  Deducted from the book balance of cash 
D)  Added to the bank balance of cash 
E)  Deducted from the bank balance of cash

Question 11

A cheque that was outstanding on last month's bank reconciliation was not among the cancelled cheques returned by the bank this month. As a result, in preparing this month's reconciliation, the amount of this cheque should be

Accepted Answer

A)  Added to the book balance of cash 
B)  Deducted from the book balance of cash 
C)  Added to the bank balance of cash 
D)  Deducted from the bank balance of cash 
E)  Noted as a memo

Question 12

Internal control policies and procedures are standard across companies.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT a principle of internal control?

Accepted Answer

A)  Responsibilities should be clearly established 
B)  Adequate records should be maintained 
C)  Responsibility for related transactions should be divided 
D)  Assets should be insured and employees bonded 
E)  Audits should always be conducted by employees internal to the organization

Question 14

The payee is the person who signs a cheque.

Accepted Answer

A) True 
 B)False

Question 15

Banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions.

Accepted Answer

A) True 
 B)False

Question 16

Bank debit cards get their name from

Accepted Answer

A)  The fact that a debit is made to Cash by the business receiving the money 
B)  Banks debit your account when they take the money out of it. 
C)  It is the opposite of a credit card 
D)  The fact that a debit is made to Cash by the business receiving the money and banks debit your account when they take the money out of it 
E)  None of these

Question 17

A bank reconciliation results in creating an adjusted bank balance as well as an adjusted book balance.

Accepted Answer

A) True 
 B)False

Question 18

Outstanding cheques are cheques that

Accepted Answer

A)  Have been written, recorded, sent to the payees, received, and paid by the bank 
B)  Have been written and not yet recorded in the company books 
C)  Are blank cheques 
D)  Have been written, recorded on the company books, and sent to the payees, but have not yet been paid by the bank 
E)  Have been issued by the bank

Question 19

The following information was available for Rachel Supply Company for the month ended May 31, 2020.
 (a) On May 31, 2020 the Cash account of Rachel Supply Compary had a balance of $\$ 25,850$
(b) On May 31,2020 the bank statement indicated a balarce of $\$ 44,580$.
(c) The bank reported the collection of a note receivable for Rachel of $\$ 4,300$ plus $\$ 500$ irterest.
(d) It was observed that the bank statement did not include a deposit of $\$ 2,700 \mathrm { made }$ by Rachel on May 31 and that cheques totalling $\$ 15,830$ issued by Rachel had not cleared the bank
(e) Rachel recorded ant insurance expense payment of $\$ 150$ as $\$ 1,500$.
(f) Service charges of $\$ 50$ were charged for cheque printing Prepare the bank reconciliation Prepare the bank reconciliation at May 31, 2020.

Accepted Answer

The answer of The following information was available for Rachel...

Question 20

Identify the principles of internal control.

Accepted Answer

The answer of Identify the principles of internal control....

Exam 7: Internal Control and Cash

Risks involved in e-commerce include: credit card theft, computer viruses and impersonation.

The impact of technology on internal controls includes

The principles of internal control include: ensure transactions and activities are authorized, maintain records, insure assets, separate recordkeeping and custody of assets, and perform internal and external audits.

Maintaining a petty cash fund makes it possible to determine human fraud.

Risks involved in e-commerce include

An error made by the bank should result in a reconciling item on the book side of a bank reconciliation.

Discuss how banking activities promote the control of cash.

A good system of internal control

In reconciling the bank balance, an unrecorded debit memorandum for printing cheques should be

A cheque that was outstanding on last month's bank reconciliation was not among the cancelled cheques returned by the bank this month. As a result, in preparing this month's reconciliation, the amount of this cheque should be

Internal control policies and procedures are standard across companies.

Which of the following is NOT a principle of internal control?

The payee is the person who signs a cheque.

Banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions.

Bank debit cards get their name from

A bank reconciliation results in creating an adjusted bank balance as well as an adjusted book balance.

Outstanding cheques are cheques that

Identify the principles of internal control.