Question 1

A properly designed internal control system:

Accepted Answer

A) Lowers the company's risk of loss. 
B) Insures profitable operations. 
C) Eliminates the need for an audit. 
D) Requires the use of non-computerized systems. 
E) Is not necessary if the company uses a computerized system. 
A) Lowers the company's risk of loss. 
B) Insures profitable operations. 
C) Eliminates the need for an audit. 
D) Requires the use of non-computerized systems. 
E) Is not necessary if the company uses a computerized system.

Question 2

The use of internal controls provides a guarantee against losses due to operating activities.

Accepted Answer

A) True 
 B)False

Question 3

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

Accepted Answer

A) True 
 B)False

Question 4

A bank statement provided by the bank includes:

Accepted Answer

A) A list of outstanding checks. 
B) A list of petty cash amounts. 
C) The beginning and the ending balance of the depositor's account. 
D) A listing of deposits in transit. 
E) A reconciliation to the depositor cash account. 
A) A list of outstanding checks. 
B) A list of petty cash amounts. 
C) The beginning and the ending balance of the depositor's account. 
D) A listing of deposits in transit. 
E) A reconciliation to the depositor cash account.

Question 5

Cash,not including cash equivalents,includes:

Accepted Answer

A) Postage stamps. 
B) Customer checks,cashier checks,and money orders. 
C) IOUs. 
D) Two-year certificates of deposit. 
E) Money market funds. 
A) Postage stamps. 
B) Customer checks,cashier checks,and money orders. 
C) IOUs. 
D) Two-year certificates of deposit. 
E) Money market funds.

Question 6

At the end of the current period,a company reported $725,000 in net credit sales and $100,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

Accepted Answer

Days' Sales Uncollected Ratio

Question 7

Internal control procedures for cash receipts do not require that:

Accepted Answer

A) Custody over cash is kept separate from its recordkeeping. 
B) All collections for sales are received immediately upon making the sales. 
C) Clerks having access to cash in a cash register should not have access to the register tape or file. 
D) An employee with no access to cash receipts should compare the total cash recorded by the register with the record of cash receipts reported by the cashier. 
E) Cash sales should be recorded on a cash register at the time of each sale. 
A) Custody over cash is kept separate from its recordkeeping. 
B) All collections for sales are received immediately upon making the sales. 
C) Clerks having access to cash in a cash register should not have access to the register tape or file. 
D) An employee with no access to cash receipts should compare the total cash recorded by the register with the record of cash receipts reported by the cashier. 
E) Cash sales should be recorded on a cash register at the time of each sale.

Question 8

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Accepted Answer

A) True 
 B)False

Question 9

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

Accepted Answer

A) True 
 B)False

Question 10

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

Accepted Answer

A) Deduct the check amount from the book balance of cash. 
B) Add the check amount to the book balance of cash. 
C) Deduct the check amount from the bank balance. 
D) Add the check amount to the bank balance. 
E) Make a journal entry in the company records for an error. 
A) Deduct the check amount from the book balance of cash. 
B) Add the check amount to the book balance of cash. 
C) Deduct the check amount from the bank balance. 
D) Add the check amount to the bank balance. 
E) Make a journal entry in the company records for an error.

Question 11

Great Falls Co.'s bank reconciliation as of February 28 is shown below.   One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes:

Accepted Answer

A) Debit Note Payable $745; credit Cash $745. 
B) Debit Cash $745; credit Note Receivable $745. 
C) Debit Cash $2,950; credit Sales $2,950. 
D) Debit Cash $2,950; credit Accounts Receivable $2,950. 
E) Debit Miscellaneous Expense $35; credit Accounts Payable $35. 
A) Debit Note Payable $745; credit Cash $745. 
B) Debit Cash $745; credit Note Receivable $745. 
C) Debit Cash $2,950; credit Sales $2,950. 
D) Debit Cash $2,950; credit Accounts Receivable $2,950. 
E) Debit Miscellaneous Expense $35; credit Accounts Payable $35.

Question 12

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of selling,general and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 13

Two clerks sharing the same cash register is a violation of which internal control principle?

Accepted Answer

A) Establish responsibilities. 
B) Maintain adequate records. 
C) Insure assets. 
D) Bond key employees. 
E) Apply technological controls. 
A) Establish responsibilities. 
B) Maintain adequate records. 
C) Insure assets. 
D) Bond key employees. 
E) Apply technological controls.

Question 14

Which of the following events would cause a bank to debit a depositor's account?

Accepted Answer

A) The depositor orders new checks through the bank at a cost of $50. 
B) The bank collects a note receivable and related interest on the depositor's behalf. 
C) There are outstanding checks drawn on the account at month-end. 
D) There are deposits in transit on the account at month-end. 
E) The bank corrects an error from previous month by adding $75 to the depositor account. 
A) The depositor orders new checks through the bank at a cost of $50. 
B) The bank collects a note receivable and related interest on the depositor's behalf. 
C) There are outstanding checks drawn on the account at month-end. 
D) There are deposits in transit on the account at month-end. 
E) The bank corrects an error from previous month by adding $75 to the depositor account.

Question 15

Outstanding checks,deposits in transit,and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.

Accepted Answer

A) True 
 B)False

Question 16

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

Accepted Answer

A) True 
 B)False

Question 17

If the Cash Over and Short account has a credit balance at the end of the period,the amount is commonly reported as miscellaneous revenue.

Accepted Answer

A) True 
 B)False

Question 18

The entry to record reimbursement of the petty cash fund for postage expense should include:

Accepted Answer

A) A debit to Postage Expense. 
B) A debit to Petty Cash. 
C) A debit to Cash. 
D) A debit to Cash Short and Over. 
E) A debit to Supplies. 
A) A debit to Postage Expense. 
B) A debit to Petty Cash. 
C) A debit to Cash. 
D) A debit to Cash Short and Over. 
E) A debit to Supplies.

Question 19

Cash equivalents meet all of the following criteria except:

Accepted Answer

A) Readily convertible to a known cash amount. 
B) Short-term investments purchased within 3 months of their maturity dates. 
C) Have a market value that is not sensitive to interest rate changes. 
D) Short-term U.S.treasury bills. 
E) More liquid than cash. 
A) Readily convertible to a known cash amount. 
B) Short-term investments purchased within 3 months of their maturity dates. 
C) Have a market value that is not sensitive to interest rate changes. 
D) Short-term U.S.treasury bills. 
E) More liquid than cash.

Question 20

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

Accepted Answer

A) Promoting efficient operations. 
B) Protecting assets. 
C) Upholding company policies. 
D) Ensuring reliable accounting. 
E) Assuring that no loss will occur. 
A) Promoting efficient operations. 
B) Protecting assets. 
C) Upholding company policies. 
D) Ensuring reliable accounting. 
E) Assuring that no loss will occur.

A properly designed internal control system:

The use of internal controls provides a guarantee against losses due to operating activities.

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

A bank statement provided by the bank includes:

Cash,not including cash equivalents,includes:

At the end of the current period,a company reported $725,000 in net credit sales and $100,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

Internal control procedures for cash receipts do not require that:

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

Great Falls Co.'s bank reconciliation as of February 28 is shown below. One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes:

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of selling,general and administrative expenses.

Two clerks sharing the same cash register is a violation of which internal control principle?

Which of the following events would cause a bank to debit a depositor's account?

Outstanding checks,deposits in transit,and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

If the Cash Over and Short account has a credit balance at the end of the period,the amount is commonly reported as miscellaneous revenue.

The entry to record reimbursement of the petty cash fund for postage expense should include:

Cash equivalents meet all of the following criteria except:

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 6: Reporting and Analyzing Cash,fraud,and Internal Control

A properly designed internal control system:

The use of internal controls provides a guarantee against losses due to operating activities.

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

A bank statement provided by the bank includes:

Cash,not including cash equivalents,includes:

At the end of the current period,a company reported $725,000 in net credit sales and $100,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

Internal control procedures for cash receipts do not require that:

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

Great Falls Co.'s bank reconciliation as of February 28 is shown below. One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes:

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of selling,general and administrative expenses.

Two clerks sharing the same cash register is a violation of which internal control principle?

Which of the following events would cause a bank to debit a depositor's account?

Outstanding checks,deposits in transit,and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

If the Cash Over and Short account has a credit balance at the end of the period,the amount is commonly reported as miscellaneous revenue.

The entry to record reimbursement of the petty cash fund for postage expense should include:

Cash equivalents meet all of the following criteria except:

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters