Question 1

Managers control cash receipts and payments, as well as ending cash balances, through a(n):

Accepted Answer

A) sales budget. 
B) operating budget. 
C) statement of cash flows. 
D) cash budget. 
A) sales budget. 
B) operating budget. 
C) statement of cash flows. 
D) cash budget. D

Question 2

Debit cards cannot be used to make purchases of relatively small amounts because of the high risk of fraud.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following is NOT a way to circumvent a strong system of internal control?

Accepted Answer

A) management override 
B) collusion 
C) mandatory vacations 
D) employee negligence 
A) management override 
B) collusion 
C) mandatory vacations 
D) employee negligence C

Question 4

What is the purpose of fraudulent financial reporting?

Accepted Answer

A) Net income and total assets are understated so managers can receive their bonuses. 
B) Net income and total assets are overstated so managers can receive their bonuses. 
C) A company can borrow money that would not otherwise be available. 
D) B and C 
A) Net income and total assets are understated so managers can receive their bonuses. 
B) Net income and total assets are overstated so managers can receive their bonuses. 
C) A company can borrow money that would not otherwise be available. 
D) B and C

Question 5

Seidner Store sells expensive watches. An inventory at the beginning of the day showed 46 watches in the store. 7 new watches were added to the inventory during the day. The point-of-sale terminal recorded 3 watches sold. An inventory taken at the end of the day should show how many watches still in the store?

Accepted Answer

A) 53 
B) 50 
C) 46 
D) Cannot be determined from the data 
A) 53 
B) 50 
C) 46 
D) Cannot be determined from the data

Question 6

Creating bogus websites for the purpose of stealing unauthorized data is a(n):

Accepted Answer

A) encryption device. 
B) phishing expedition. 
C) computer virus. 
D) Trojan horse. 
A) encryption device. 
B) phishing expedition. 
C) computer virus. 
D) Trojan horse.

Question 7

Background checks should be conducted only for employees who will handle cash.

Accepted Answer

A) True 
 B)False

Question 8

Johnny Company deposited $25,000 in its bank on the same day as, but after the bank prepared Johnny Company's bank statement. The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):

Accepted Answer

A) addition to the bank balance; outstanding deposit 
B) addition to the bank balance; deposit in transit 
C) subtraction from the bank balance; deposit in transit 
D) subtraction from the bank balance; outstanding deposit 
A) addition to the bank balance; outstanding deposit 
B) addition to the bank balance; deposit in transit 
C) subtraction from the bank balance; deposit in transit 
D) subtraction from the bank balance; outstanding deposit

Question 9

A cash budget does all of the following EXCEPT:

Accepted Answer

A) helps a company manage cash by planning cash receipts and cash payments. 
B) determines if the company will have excess cash available for investing purposes. 
C) determines if the company will need to borrow money. 
D) assess the riskiness of a new product. 
A) helps a company manage cash by planning cash receipts and cash payments. 
B) determines if the company will have excess cash available for investing purposes. 
C) determines if the company will need to borrow money. 
D) assess the riskiness of a new product.

Question 10

In order to maximize profits, a proper system of internal controls provide clear policies that result in fair treatment that applies to customers only.

Accepted Answer

A) True 
 B)False

Question 11

An internal control system can be circumvented by:

Accepted Answer

A) collusion, encryption and management override. 
B) collusion, management override and segregation of duties. 
C) collusion, management override and human limitations. 
D) nothing, if it is a good internal control system. 
A) collusion, encryption and management override. 
B) collusion, management override and segregation of duties. 
C) collusion, management override and human limitations. 
D) nothing, if it is a good internal control system.

Question 12

The sum of the cash in the petty cash fund and the total of the paid vouchers should equal the opening balance in the petty cash account at all times.

Accepted Answer

A) True 
 B)False

Question 13

An environment with strong internal controls can be circumvented with collusion.

Accepted Answer

A) True 
 B)False

Question 14

Access to sensitive data files in a business should be protected by using either passwords or data encryption.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding cash equivalents is INCORRECT?

Accepted Answer

A) Cash equivalents are sufficiently similar to cash and thus can be reported along with cash on the balance sheet. 
B) Cash equivalents include high-grade U.S. or foreign government securities that are very close to maturity (three months or less at the time of purchase). 
C) Most companies include additional information about cash and cash equivalents in the footnotes to their financial statements. 
D) Because cash equivalents are less liquid than cash, they must be reported separately from the Cash account. 
A) Cash equivalents are sufficiently similar to cash and thus can be reported along with cash on the balance sheet. 
B) Cash equivalents include high-grade U.S. or foreign government securities that are very close to maturity (three months or less at the time of purchase). 
C) Most companies include additional information about cash and cash equivalents in the footnotes to their financial statements. 
D) Because cash equivalents are less liquid than cash, they must be reported separately from the Cash account.

Question 16

Which is NOT a component of comparisons and compliance monitoring?

Accepted Answer

A) control environment 
B) budgets 
C) audits 
D) all of the above 
A) control environment 
B) budgets 
C) audits 
D) all of the above

Question 17

The person to whom a check is paid is referred to as the maker.

Accepted Answer

A) True 
 B)False

Question 18

Any restricted amount of cash should be separately disclosed as such on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

When companies use debit cards for purchases of relatively small amounts:

Accepted Answer

A) employees who need to make the purchases may obtain permission from a supervisor to use the company's debit card. 
B) supervisors do not require receipts for the small purchases because prior approval was given. 
C) a petty cash fund is still needed. 
D) the employee who used the debit card compares the receipts to the EFT amounts on the bank statement. 
A) employees who need to make the purchases may obtain permission from a supervisor to use the company's debit card. 
B) supervisors do not require receipts for the small purchases because prior approval was given. 
C) a petty cash fund is still needed. 
D) the employee who used the debit card compares the receipts to the EFT amounts on the bank statement.

Question 20

Lori's Company has the following items: cash in a checking account, $4000; cash in a savings account, $7000; high-grade government securities due in one month (purchased last month), $3556; accounts receivable, $3,000; cash in a compensating balance agreement, $3,200. How much should appear as Cash and Cash Equivalents on the balance sheet?

Accepted Answer

A) $7000 
B) $14,556 
C) $17,556 
D) $17,856 
A) $7000 
B) $14,556 
C) $17,556 
D) $17,856

Managers control cash receipts and payments, as well as ending cash balances, through a(n):

Debit cards cannot be used to make purchases of relatively small amounts because of the high risk of fraud.

Which of the following is NOT a way to circumvent a strong system of internal control?

What is the purpose of fraudulent financial reporting?

Creating bogus websites for the purpose of stealing unauthorized data is a(n):

Background checks should be conducted only for employees who will handle cash.

Johnny Company deposited $25,000 in its bank on the same day as, but after the bank prepared Johnny Company's bank statement. The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):

A cash budget does all of the following EXCEPT:

In order to maximize profits, a proper system of internal controls provide clear policies that result in fair treatment that applies to customers only.

An internal control system can be circumvented by:

The sum of the cash in the petty cash fund and the total of the paid vouchers should equal the opening balance in the petty cash account at all times.

An environment with strong internal controls can be circumvented with collusion.

Access to sensitive data files in a business should be protected by using either passwords or data encryption.

Which of the following statements regarding cash equivalents is INCORRECT?

Which is NOT a component of comparisons and compliance monitoring?

The person to whom a check is paid is referred to as the maker.

Any restricted amount of cash should be separately disclosed as such on the balance sheet.

When companies use debit cards for purchases of relatively small amounts:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 4: Internal Control Cash

Managers control cash receipts and payments, as well as ending cash balances, through a(n):

Debit cards cannot be used to make purchases of relatively small amounts because of the high risk of fraud.

Which of the following is NOT a way to circumvent a strong system of internal control?

What is the purpose of fraudulent financial reporting?

Creating bogus websites for the purpose of stealing unauthorized data is a(n):

Background checks should be conducted only for employees who will handle cash.

Johnny Company deposited $25,000 in its bank on the same day as, but after the bank prepared Johnny Company's bank statement. The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):

A cash budget does all of the following EXCEPT:

In order to maximize profits, a proper system of internal controls provide clear policies that result in fair treatment that applies to customers only.

An internal control system can be circumvented by:

The sum of the cash in the petty cash fund and the total of the paid vouchers should equal the opening balance in the petty cash account at all times.

An environment with strong internal controls can be circumvented with collusion.

Access to sensitive data files in a business should be protected by using either passwords or data encryption.

Which of the following statements regarding cash equivalents is INCORRECT?

Which is NOT a component of comparisons and compliance monitoring?

The person to whom a check is paid is referred to as the maker.

Any restricted amount of cash should be separately disclosed as such on the balance sheet.

When companies use debit cards for purchases of relatively small amounts:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters