Question 1

Fraudulent financial reporting:

Accepted Answer

A) involves employee overstatement of expense reimbursement requests. 
B) involves bribes and kickbacks. 
C) involves stealing assets from the company. 
D) deceives financial statement users. 
A) involves employee overstatement of expense reimbursement requests. 
B) involves bribes and kickbacks. 
C) involves stealing assets from the company. 
D) deceives financial statement users.

Question 2

Companies use a bank lock-box system to:

Accepted Answer

A) ensure that all checks are properly received by the company's mailroom employees. 
B) get the cash to the bank in a more timely manner. 
C) allow the bank to post collections to customers' Account Receivable accounts. 
D) increase internal controls over their purchase and payment processes. 
A) ensure that all checks are properly received by the company's mailroom employees. 
B) get the cash to the bank in a more timely manner. 
C) allow the bank to post collections to customers' Account Receivable accounts. 
D) increase internal controls over their purchase and payment processes.

Question 3

Internal control procedures do NOT include:

Accepted Answer

A) smart hiring practices. 
B) adequate records. 
C) limited access. 
D) control environment. 
A) smart hiring practices. 
B) adequate records. 
C) limited access. 
D) control environment.

Question 4

Olde Shoppe has the following information at August 31: ∙ Two deposits made on August 31 were not on the bank statement, totaling $5,300.
∙ The bank collected an EFT payment on a note receivable for $2780. Of this amount, $250 represented interest on the note.
∙ August 31 balance in Cash was $11,697.
∙ The bookkeeper forgot to record check #1578 for $543 which was cashed by the bank on August 15th.
∙ The balance on the bank statement as of August 31 was $10,720.
∙ A check printing fee of $70 was shown on the bank statement. NSF check $200.
∙ Checks #1572, 1606, and 1548, totaling $2,356, were not shown on the bank statement, even though the company had sent the checks.
What is the adjusted book balance at August 31?

Accepted Answer

A) $11,697 
B) $13,664 
C) $13,414 
D) $8104 
A) $11,697 
B) $13,664 
C) $13,414 
D) $8104

Question 5

________ is the element in the fraud triangle that results from weak internal controls.

Accepted Answer

A) Motive 
B) Opportunity 
C) Rationalization 
D) Reasoning 
A) Motive 
B) Opportunity 
C) Rationalization 
D) Reasoning

Question 6

All of the following are examples of a weak control environment EXCEPT:

Accepted Answer

A) a domineering CEO. 
B) a weak or conflicted Board of Directors. 
C) lax ethical practices. 
D) proper segregation of duties. 
A) a domineering CEO. 
B) a weak or conflicted Board of Directors. 
C) lax ethical practices. 
D) proper segregation of duties.

Question 7

The control environment does NOT include:

Accepted Answer

A) a corporation's code of ethics. 
B) prohibition of bribes and kickbacks. 
C) risk assessment. 
D) prohibition of transactions that involve a conflict of interest. 
A) a corporation's code of ethics. 
B) prohibition of bribes and kickbacks. 
C) risk assessment. 
D) prohibition of transactions that involve a conflict of interest.

Question 8

Cash equivalents include:

Accepted Answer

A) certificates of deposit. 
B) restricted amounts of cash. 
C) compensating balances. 
D) high-grade U.S. or foreign government securities that are very close to maturity (three months or less from the balance sheet date). 
A) certificates of deposit. 
B) restricted amounts of cash. 
C) compensating balances. 
D) high-grade U.S. or foreign government securities that are very close to maturity (three months or less from the balance sheet date).

Question 9

All of the following will appear on the bank statement EXCEPT for:

Accepted Answer

A) checks paid and deposits made before the cutoff date on the bank statement. 
B) book errors. 
C) checks paid and deposits made after the cutoff date on the bank statement. 
D) B and C. 
A) checks paid and deposits made before the cutoff date on the bank statement. 
B) book errors. 
C) checks paid and deposits made after the cutoff date on the bank statement. 
D) B and C.

Question 10

All of the following will appear on the book side of the bank reconciliation EXCEPT for:

Accepted Answer

A) service charges. 
B) electronic funds transfers. 
C) deposits in transit. 
D) book errors. 
A) service charges. 
B) electronic funds transfers. 
C) deposits in transit. 
D) book errors.

Question 11

An imprest petty cash fund of $600 was established for minor disbursements. At the end of the month, the fund included petty cash tickets for the purchase of $200 in supplies, $73 for meals, $82 for fuel, and $67 for taxi fare. How much cash should be left in the fund?

Accepted Answer

A) $245 
B) $178 
C) $1022 
D) $600 
A) $245 
B) $178 
C) $1022 
D) $600

Question 12

Marjorie Company's cash balance per the books at the end of the month was $9000. After comparing the company's records with the monthly bank statement, Marjorie's accountant identified the following reconciling items: outstanding checks, $800; deposits in transit, $700; bank service charge, $30; and NSF check, $100. The bank collection of a note receivable was $1100 plus interest of $180. There also was an EFT payment of $150. What is the adjusted book balance at the end of the month?

Accepted Answer

A) $10,150 
B) $9970 
C) $8900 
D) $10,000 
A) $10,150 
B) $9970 
C) $8900 
D) $10,000

Question 13

When preparing a cash budget, a company must determine how much cash it will need in a future period.

Accepted Answer

A) True 
 B)False

Question 14

The following information is available for Golden Image, Inc.:
∙ The bank statement indicated a monthly service charge of $200.
∙ Golden Image made a deposit of $2,660 on June 30, but this deposit did not appear on the bank statement until July 6.
∙ The bank collected an account receivable of $900 from one of Golden Image's customers.
∙ The bank also collected interest revenue for Golden Image of $99.
∙ The bank also returned a nonsufficient funds check for $378 from John Able, one of Golden Image's customers.
∙ Checks #1874 for $1,140, #1898 for $609, and #1899 for $875 were written by Golden Image and sent to the respective companies, but these checks do not appear on the bank statement.
∙ The balance on the bank statement as of June 30 was $16,711.
∙ On June 30, the Cash account from Golden Image's books showed an amount of $16,326.
Required:
1. Prepare the bank reconciliation at June 30 for Golden Image, Inc.
2. Prepare the necessary journal entries by Golden Image, Inc., at June 30.

Accepted Answer

1.
Golden Image, Inc

Question 15

Dooley Company sent a deposit of $4000 to the bank. The bank credited Dooley Company's checking account for a deposit of $400. In reconciling the bank statement, the bookkeeper saw the deposit of $400. Which journal entry should Dooley Company prepare?

Accepted Answer

A) Debit Cash for $3600 and credit Deposits fo $3600. 
B) Debit Cash for $3600 and credit Revenue for $3600. 
C) Debit Cash for $3600 and credit Accounts Receivable for $3600. 
D) No journal entry is required. 
A) Debit Cash for $3600 and credit Deposits fo $3600. 
B) Debit Cash for $3600 and credit Revenue for $3600. 
C) Debit Cash for $3600 and credit Accounts Receivable for $3600. 
D) No journal entry is required.

Question 16

Jerry's Company is looking at various financing agreements. New Credit Union has agreed to loan the company $500,000 at 8% interest. Happy Bank has agreed to loan the company $500,000 at an interest rate of 6%. This is the lowest interest rate the company has been offered. However, as a condition to the loan, the company must maintain a compensating balance amount equal to 20% of the loan.
Required:
1. Determine the company's actual (effective)interest rate on the bank loan.
2. Which loan has the lowest interest cost?

Accepted Answer

1. Bank loan:
Compensating balance = $50

Question 17

The type of fraud committed by company managers, who make false and misleading entries in the books in order to improve a company's financial statements, is called:

Accepted Answer

A) misappropriation of assets. 
B) fraudulent financial reporting. 
C) embezzlement. 
D) collusion. 
A) misappropriation of assets. 
B) fraudulent financial reporting. 
C) embezzlement. 
D) collusion.

Question 18

The book side of a bank reconciliation includes:

Accepted Answer

A) deposits in transit, bank collections and NSF checks. 
B) NSF checks, bank collections of notes receivable and interest earned on the checking account. 
C) outstanding checks and deposits in transit. 
D) outstanding checks, NSF checks and cost of printed checks. 
A) deposits in transit, bank collections and NSF checks. 
B) NSF checks, bank collections of notes receivable and interest earned on the checking account. 
C) outstanding checks and deposits in transit. 
D) outstanding checks, NSF checks and cost of printed checks.

Question 19

In a bank reconciliation, an EFT cash payment is:

Accepted Answer

A) added to the bank balance. 
B) added to the book balance. 
C) subtracted from the book balance. 
D) subtracted from the bank balance. 
A) added to the bank balance. 
B) added to the book balance. 
C) subtracted from the book balance. 
D) subtracted from the bank balance.

Question 20

A budget is a financial plan that helps coordinate business activities.

Accepted Answer

A) True 
 B)False

Fraudulent financial reporting:

Companies use a bank lock-box system to:

Internal control procedures do NOT include:

________ is the element in the fraud triangle that results from weak internal controls.

All of the following are examples of a weak control environment EXCEPT:

The control environment does NOT include:

Cash equivalents include:

All of the following will appear on the bank statement EXCEPT for:

All of the following will appear on the book side of the bank reconciliation EXCEPT for:

An imprest petty cash fund of $600 was established for minor disbursements. At the end of the month, the fund included petty cash tickets for the purchase of $200 in supplies, $73 for meals, $82 for fuel, and $67 for taxi fare. How much cash should be left in the fund?

When preparing a cash budget, a company must determine how much cash it will need in a future period.

Dooley Company sent a deposit of $4000 to the bank. The bank credited Dooley Company's checking account for a deposit of $400. In reconciling the bank statement, the bookkeeper saw the deposit of $400. Which journal entry should Dooley Company prepare?

The type of fraud committed by company managers, who make false and misleading entries in the books in order to improve a company's financial statements, is called:

The book side of a bank reconciliation includes:

In a bank reconciliation, an EFT cash payment is:

A budget is a financial plan that helps coordinate business activities.

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

Fraudulent financial reporting:

Companies use a bank lock-box system to:

Internal control procedures do NOT include:

________ is the element in the fraud triangle that results from weak internal controls.

All of the following are examples of a weak control environment EXCEPT:

The control environment does NOT include:

Cash equivalents include:

All of the following will appear on the bank statement EXCEPT for:

All of the following will appear on the book side of the bank reconciliation EXCEPT for:

An imprest petty cash fund of $600 was established for minor disbursements. At the end of the month, the fund included petty cash tickets for the purchase of $200 in supplies, $73 for meals, $82 for fuel, and $67 for taxi fare. How much cash should be left in the fund?

When preparing a cash budget, a company must determine how much cash it will need in a future period.

Dooley Company sent a deposit of $4000 to the bank. The bank credited Dooley Company's checking account for a deposit of $400. In reconciling the bank statement, the bookkeeper saw the deposit of $400. Which journal entry should Dooley Company prepare?

The type of fraud committed by company managers, who make false and misleading entries in the books in order to improve a company's financial statements, is called:

The book side of a bank reconciliation includes:

In a bank reconciliation, an EFT cash payment is:

A budget is a financial plan that helps coordinate business activities.

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