Question 1

The objectives of internal control do NOT include:

Accepted Answer

A) compliance with standards of social responsibility. 
B) safeguarding assets. 
C) promoting operational efficiency. 
D) compliance with legal requirements. 
A) compliance with standards of social responsibility. 
B) safeguarding assets. 
C) promoting operational efficiency. 
D) compliance with legal requirements.

Question 2

Smart hiring practices and separation of duties are part of the control environment.

Accepted Answer

A) True 
 B)False

Question 3

If a bank statement includes an EFT receipt of $200 for interest, the journal entry to record this reconciling item should include a:

Accepted Answer

A) debit to Cash for $200 and a credit to Interest Revenue for $200. 
B) debit to Accounts Receivable for $200 and a credit to Interest Revenue for $200. 
C) debit to Interest Revenue for $200 and credit to Cash for $200. 
D) debit to Interest Expense for $200 and credit to Prepaid Interest for $200. 
A) debit to Cash for $200 and a credit to Interest Revenue for $200. 
B) debit to Accounts Receivable for $200 and a credit to Interest Revenue for $200. 
C) debit to Interest Revenue for $200 and credit to Cash for $200. 
D) debit to Interest Expense for $200 and credit to Prepaid Interest for $200.

Question 4

Internal controls are designed to accomplish five objectives that include compliance with legal requirements, promote operational efficiency, safeguard assets, encourage employees to follow company policy and:

Accepted Answer

A) prevent misappropriation of assets. 
B) prevent collusion. 
C) prevent fraud. 
D) ensure accurate, reliable accounting records. 
A) prevent misappropriation of assets. 
B) prevent collusion. 
C) prevent fraud. 
D) ensure accurate, reliable accounting records.

Question 5

On a bank reconciliation, electronic fund transfers are:

Accepted Answer

A) additions or subtractions to the bank balance. 
B) additions or subtractions to the book balance. 
C) not put on the bank reconciliation. 
D) only used for journal entries. 
A) additions or subtractions to the bank balance. 
B) additions or subtractions to the book balance. 
C) not put on the bank reconciliation. 
D) only used for journal entries.

Question 6

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation?

Accepted Answer

A) book errors 
B) bank errors 
C) EFT payments by bank 
D) EFT receipts by bank 
A) book errors 
B) bank errors 
C) EFT payments by bank 
D) EFT receipts by bank

Question 7

One of the most common types of fraud that impacts the financial statements is the misappropriation of assets.

Accepted Answer

A) True 
 B)False

Question 8

When preparing a cash budget, the budgeted balance is:

Accepted Answer

A) the beginning cash balance. 
B) the budgeted cash payments. 
C) the minimum amount of cash the company needs. 
D) the budgeted cash receipts. 
A) the beginning cash balance. 
B) the budgeted cash payments. 
C) the minimum amount of cash the company needs. 
D) the budgeted cash receipts.

Question 9

A fidelity bond is a(n):

Accepted Answer

A) employment contract for a specified period of time. 
B) insurance policy that reimburses a company for any losses due to employee theft. 
C) contract prohibiting former employees from working for a competitor. 
D) promise by a company to safeguard customers' personal information. 
A) employment contract for a specified period of time. 
B) insurance policy that reimburses a company for any losses due to employee theft. 
C) contract prohibiting former employees from working for a competitor. 
D) promise by a company to safeguard customers' personal information.

Question 10

Collusion is the method used to defeat an internal controls system.

Accepted Answer

A) True 
 B)False

Question 11

The "tone at the top" refers to:

Accepted Answer

A) a component of the control environment. 
B) a concept that applies only to large corporations. 
C) owners and top managers behaving honorably to set a good example for employees. 
D) A and C. 
A) a component of the control environment. 
B) a concept that applies only to large corporations. 
C) owners and top managers behaving honorably to set a good example for employees. 
D) A and C.

Question 12

Which is NOT an objective of an internal control system?

Accepted Answer

A) safeguarding of assets 
B) compliance with company policies 
C) compliance with legal requirements 
D) risk assessment 
A) safeguarding of assets 
B) compliance with company policies 
C) compliance with legal requirements 
D) risk assessment

Question 13

An employee claims that he overstated expense reimbursement requests to have extra money for his wife and children because "Everyone is doing it." This is an example of:

Accepted Answer

A) opportunity. 
B) motive. 
C) rationalization. 
D) understanding. 
A) opportunity. 
B) motive. 
C) rationalization. 
D) understanding.

Question 14

If the bank records a deposit of $140 as $1400 , the error should be shown on a bank reconciliation as a:

Accepted Answer

A) subtraction from the book balance of $1540. 
B) subtraction from the bank balance of $1540. 
C) subtraction from the bank balance of $1260. 
D) subtraction from the book balance of $1260. 
A) subtraction from the book balance of $1540. 
B) subtraction from the bank balance of $1540. 
C) subtraction from the bank balance of $1260. 
D) subtraction from the book balance of $1260.

Question 15

A receiving report:

Accepted Answer

A) identifies the need for merchandise and begins the purchasing process. 
B) identifies that the merchandise has been received and ends the purchasing process. 
C) is sent by the purchasing department to the customer who purchases the item. 
D) includes the invoice, receiving report, purchase order and purchase request. 
A) identifies the need for merchandise and begins the purchasing process. 
B) identifies that the merchandise has been received and ends the purchasing process. 
C) is sent by the purchasing department to the customer who purchases the item. 
D) includes the invoice, receiving report, purchase order and purchase request.

Question 16

Managers can use records produced by point-of-sale terminals to check inventory levels.

Accepted Answer

A) True 
 B)False

Question 17

Because cash equivalents are less liquid than cash, they cannot be reported along with cash.

Accepted Answer

A) True 
 B)False

Question 18

Mary's Dairy has the following information available for the preparation of the cash budget for the second quarter:
Cash balance, March 31 $ 15,000
Sales for April; all cash 220,000
Sales for May; all cash 330,000
Sales for June; all cash 440,000
Cost of Goods Sold is 80% of Sales; all cash
Operating expenses is 8% of Sales; all cash
Interest expense is paid in June 40,000
Income tax rate is 30%
The minimum cash balance for any month is $10,000.
Prepare a cash budget for each month in the second quarter for this company. No additional equipment will be purchased this quarter.

Accepted Answer

Mary's Dairy
Cash Bu

Question 19

A bank reconciliation included an outstanding check of $850 for the payment of salaries. The journal entry to record this reconciling item:

Accepted Answer

A) should debit Salaries Expense and credit Cash for $850. 
B) should debit Cash and credit Salaries Expense for $850. 
C) should debit Accounts Payable and credit Cash for $850. 
D) is not required. 
A) should debit Salaries Expense and credit Cash for $850. 
B) should debit Cash and credit Salaries Expense for $850. 
C) should debit Accounts Payable and credit Cash for $850. 
D) is not required.

Question 20

The Sarbanes-Oxley Act created the American Institute of Certified Public Accountants to oversee the audits of public companies.

Accepted Answer

A) True 
 B)False

The objectives of internal control do NOT include:

Smart hiring practices and separation of duties are part of the control environment.

If a bank statement includes an EFT receipt of $200 for interest, the journal entry to record this reconciling item should include a:

Internal controls are designed to accomplish five objectives that include compliance with legal requirements, promote operational efficiency, safeguard assets, encourage employees to follow company policy and:

On a bank reconciliation, electronic fund transfers are:

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation?

One of the most common types of fraud that impacts the financial statements is the misappropriation of assets.

When preparing a cash budget, the budgeted balance is:

A fidelity bond is a(n):

Collusion is the method used to defeat an internal controls system.

The "tone at the top" refers to:

Which is NOT an objective of an internal control system?

An employee claims that he overstated expense reimbursement requests to have extra money for his wife and children because "Everyone is doing it." This is an example of:

If the bank records a deposit of $140 as $1400 , the error should be shown on a bank reconciliation as a:

A receiving report:

Managers can use records produced by point-of-sale terminals to check inventory levels.

Because cash equivalents are less liquid than cash, they cannot be reported along with cash.

A bank reconciliation included an outstanding check of $850 for the payment of salaries. The journal entry to record this reconciling item:

The Sarbanes-Oxley Act created the American Institute of Certified Public Accountants to oversee the audits of public companies.

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

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Exam 4: Internal Control Cash

The objectives of internal control do NOT include:

Smart hiring practices and separation of duties are part of the control environment.

If a bank statement includes an EFT receipt of $200 for interest, the journal entry to record this reconciling item should include a:

Internal controls are designed to accomplish five objectives that include compliance with legal requirements, promote operational efficiency, safeguard assets, encourage employees to follow company policy and:

On a bank reconciliation, electronic fund transfers are:

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation?

One of the most common types of fraud that impacts the financial statements is the misappropriation of assets.

When preparing a cash budget, the budgeted balance is:

A fidelity bond is a(n):

Collusion is the method used to defeat an internal controls system.

The "tone at the top" refers to:

Which is NOT an objective of an internal control system?

An employee claims that he overstated expense reimbursement requests to have extra money for his wife and children because "Everyone is doing it." This is an example of:

If the bank records a deposit of $140 as $1400 , the error should be shown on a bank reconciliation as a:

A receiving report:

Managers can use records produced by point-of-sale terminals to check inventory levels.

Because cash equivalents are less liquid than cash, they cannot be reported along with cash.

A bank reconciliation included an outstanding check of $850 for the payment of salaries. The journal entry to record this reconciling item:

The Sarbanes-Oxley Act created the American Institute of Certified Public Accountants to oversee the audits of public companies.

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