Question 1

Using prenumbered checks and having an approved invoice for each check is an example of

Accepted Answer

A)  establishment of responsibility. 
B)  segregation of duties. 
C)  documentation procedures. 
D)  independent internal verification.

Question 2

On October 1 Jack and Jill Company's petty cash fund of $150 is replenished. The fund contains cash of $25 and receipts for supplies of $80 and postage of $45. Prepare the journal entry to record the replenishment of the petty cash fund.

Accepted Answer

The answer of On October 1 Jack and Jill Company's...

Question 3

Internal auditors

Accepted Answer

A)  are hired by CPA firms to audit business firms. 
B)  are employees of the IRS who evaluate the internal controls of companies filing tax returns. 
C)  evaluate the system of internal controls for the companies that employ them. 
D)  cannot evaluate the system of internal controls of the company that employs them because they are not independent.

Question 4

Cash equivalents include each of the following except

Accepted Answer

A)  bank certificates of deposit. 
B)  money market funds. 
C)  petty cash. 
D)  U.S. Treasury bills.

Question 5

In large companies the independent internal verification procedure is often assigned to

Accepted Answer

A)  computer operators. 
B)  management. 
C)  internal auditors. 
D)  outside CPAs.

Question 6

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Accepted Answer

A) True 
 B)False

Question 7

An adjusting entry is not required for

Accepted Answer

A)  outstanding checks. 
B)  collection of a note by the bank. 
C)  NSF checks. 
D)  bank service charges.

Question 8

Employees of a company who evaluate the effectiveness of the company's system of internal controls on a year-round basis are called ______________.

Accepted Answer

The answer of Employees of a company who evaluate the...

Question 9

IFRS compared to GAAP tends to be more

Accepted Answer

A)  detailed. 
B)  rules-based. 
C)  principles-based. 
D)  full of disclosures requirements.

Question 10

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets and (b) enhance the accuracy and reliability of its accounting records.

Accepted Answer

A) True 
 B)False

Question 11

Deposits in transit

Accepted Answer

A)  have been recorded on the company's books but not yet by the bank. 
B)  have been recorded by the bank but not yet by the company. 
C)  have not been recorded by the bank or the company. 
D)  are checks from customers which have not yet been received by the company.

Question 12

Internal control is most effective when several people are responsible for a given task.

Accepted Answer

A) True 
 B)False

Question 13

The control principle related to not having the same person authorize and pay for goods is known as

Accepted Answer

A)  establishment of responsibility. 
B)  independent internal verification. 
C)  segregation of duties. 
D)  rotation of duties.

Question 14

Compute Whiz Company's adjusted cash balance per books based on the following information: $\begin{array} { l r } 
\text { Beginning cash balance per books } & \$ 4,200 \
\text { Deposit in transit } & 900 \
\text { Check printing charge } & 20 \
\text { Note collected by bank for Whiz } & 1,600
\end{array}$

Accepted Answer

The answer of Compute Whiz Company's adjusted cash balance per...

Question 15

Two limitations of systems of internal control are the concept of ______________ and the ______________.

Accepted Answer

The answer of Two limitations of systems of internal control...

Question 16

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

Accepted Answer

A) True 
 B)False

Question 17

Delton Company developed the following reconciling information in preparing its September bank reconciliation: $\begin{array}{lr}
\text { Cash balance per bank, 9/30 } & \$ 6,610 \
\text { Note receivable collected by bank } & 3,630 \
\text { Outstanding checks } & 2,300 \
\text { Deposits in transit } & 2,520 \
\text { Bank service charge } & 24 \
\text { NSF check } & 627
\end{array}$ Using the above information determine the cash balance per books (before adjustments) for the Delton Company.

Accepted Answer

A)  $3851 
B)  $6830 
C)  $9809 
D)  $9369

Question 18

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

Accepted Answer

A)  inadequate internal control. 
B)  duplication of effort. 
C)  external verification. 
D)  segregation of duties.

Question 19

All of the following are parties to a check except the

Accepted Answer

A)  bank. 
B)  Federal Reserve. 
C)  maker. 
D)  payee.

Question 20

Cash which is restricted for a specific use should be separately reported.

Accepted Answer

A) True 
 B)False

Exam 8: Fraud, Internal Control, and Cash

Using prenumbered checks and having an approved invoice for each check is an example of

On October 1 Jack and Jill Company's petty cash fund of $150 is replenished. The fund contains cash of $25 and receipts for supplies of $80 and postage of $45. Prepare the journal entry to record the replenishment of the petty cash fund.

Internal auditors

Cash equivalents include each of the following except

In large companies the independent internal verification procedure is often assigned to

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

An adjusting entry is not required for

Employees of a company who evaluate the effectiveness of the company's system of internal controls on a year-round basis are called ______________.

IFRS compared to GAAP tends to be more

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets and (b) enhance the accuracy and reliability of its accounting records.

Deposits in transit

Internal control is most effective when several people are responsible for a given task.

The control principle related to not having the same person authorize and pay for goods is known as

Two limitations of systems of internal control are the concept of and the .

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

All of the following are parties to a check except the

Cash which is restricted for a specific use should be separately reported.