Question 1

A petty cash fund of $250 is replenished when the fund contains $15 in cash and receipts for $230. The entry to replenish the fund would

Accepted Answer

A) credit Cash Over and Short for $5. 
B) credit Miscellaneous Revenue for $5. 
C) debit Cash Over and Short for $5. 
D) debit Miscellaneous Expense for $5. 
A) credit Cash Over and Short for $5. 
B) credit Miscellaneous Revenue for $5. 
C) debit Cash Over and Short for $5. 
D) debit Miscellaneous Expense for $5. C

Question 2

A basic principle of cash management is to increase the speed of paying liabilities.

Accepted Answer

A) True 
 B)False  False

Question 3

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Accepted Answer

A) a fraud committee. 
B) collusion. 
C) a division of duties. 
D) bonding of employees. 
A) a fraud committee. 
B) collusion. 
C) a division of duties. 
D) bonding of employees. B

Question 4

Adler Company developed the following reconciling information in preparing its December bank reconciliation: $$\begin{array} { l r } 
\text { Cash balance per bank, } 12 / 31 & \$ 24,000 \
\text { Note receivable collected by bank } & 12,000 \
\text { Outstanding checks } & 18,000 \
\text { Deposits in transit } & 9,000 \
\text { Bank service charges } & 150 \
\text { NSF check } & 2,400
\end{array}$$ Using the above information, determine the cash balance per books (before adjustments) for the Adler Company.

Accepted Answer

A) $5,550. 
B) $33,000. 
C) $17,550. 
D) $24,000. 
A) $5,550. 
B) $33,000. 
C) $17,550. 
D) $24,000.

Question 5

Under an effective system of internal control, errors occur only as a result of fraud or dishonesty.

Accepted Answer

A) True 
 B)False

Question 6

The most important element of the fraud triangle is rationalization.

Accepted Answer

A) True 
 B)False

Question 7

In the month of May, Lopat Company Inc. wrote checks in the amount of $64,750. In June, checks in the amount of $88,606 were written. In May, $59,276 of these checks were presented to the bank for payment, and $76,181 in June. What is the amount of outstanding checks at the end of June?

Accepted Answer

A) $12,425. 
B) $5,474. 
C) $17,899. 
D) $24,850. 
A) $12,425. 
B) $5,474. 
C) $17,899. 
D) $24,850.

Question 8

The following credit sales are budgeted by Garcia Company: $$\begin{array} { l r } 
\text { January } & \$ 306,000 \
\text { February } & 450,000 \
\text { March } & 630,000 \
\text { April } & 540,000
\end{array}$$ The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of March is

Accepted Answer

A) $555,480. 
B) $504,000. 
C) $540,000. 
D) $529,200. 
A) $555,480. 
B) $504,000. 
C) $540,000. 
D) $529,200.

Question 9

The safeguarding of assets is an objective of a company's system of internal control.

Accepted Answer

A) True 
 B)False

Question 10

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

Accepted Answer

A) Increasing the speed of receivables collection. 
B) Planning the timing of major expenditures. 
C) Keeping inventory levels low. 
D) Delaying the payment of liabilities. 
A) Increasing the speed of receivables collection. 
B) Planning the timing of major expenditures. 
C) Keeping inventory levels low. 
D) Delaying the payment of liabilities.

Question 11

Which of the following is an appropriate internal control activity for cash?

Accepted Answer

A) Record keeping and custodianship over cash should be performed by the same person. 
B) Banking facilities should be used as little as possible. 
C) All payments should be made with currency, not checks. 
D) The amount of cash on hand should be kept to a minimum. 
A) Record keeping and custodianship over cash should be performed by the same person. 
B) Banking facilities should be used as little as possible. 
C) All payments should be made with currency, not checks. 
D) The amount of cash on hand should be kept to a minimum.

Question 12

Which of the following is not an internal control activity for cash?

Accepted Answer

A) All payments should be made with currency, not checks. 
B) Banking facilities should be used as much as possible. 
C) The amount of cash on hand should be kept to a minimum. 
D) Employees who have access to cash should be bonded. 
A) All payments should be made with currency, not checks. 
B) Banking facilities should be used as much as possible. 
C) The amount of cash on hand should be kept to a minimum. 
D) Employees who have access to cash should be bonded.

Question 13

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

Question 14

Sarbanes Oxley applies to

Accepted Answer

A) U.S companies but not international companies. 
B) international companies but not U.S.companies. 
C) U.S.and Canadian companies but not other international companies. 
D) U.S and international companies. 
A) U.S companies but not international companies. 
B) international companies but not U.S.companies. 
C) U.S.and Canadian companies but not other international companies. 
D) U.S and international companies.

Question 15

Which statement regarding negative cash balances is true?

Accepted Answer

A) The amount is offset against other current assets because users need to know net current assets. 
B) The amount is shown as a current liability because a company cannot have a cash balance below zero. 
C) The company must obtain a loan to bring the cash balance to zero before financial statements are prepared. 
D) The negative cash balance is included as a current asset and discussed in a footnote to the financial statements. 
A) The amount is offset against other current assets because users need to know net current assets. 
B) The amount is shown as a current liability because a company cannot have a cash balance below zero. 
C) The company must obtain a loan to bring the cash balance to zero before financial statements are prepared. 
D) The negative cash balance is included as a current asset and discussed in a footnote to the financial statements.

Question 16

Electronic funds transfer (EFT) is a disbursement system that uses a telephone or a computer to transfer cash from one location to another.

Accepted Answer

A) True 
 B)False

Question 17

Schwinn Company assembled the following information in completing its March bank reconciliation: $$\begin{array} { l r } 
\text { Balance per bank } & \$ 12,224 \
\text { Outstanding checks } & \$ 2,480 \
\text { Deposits in transit } & \$ 4,000 \
\text { NSF check } & \$ 256 \
\text { Bank service charges } & \$ 80 \
\text { Cash balance per books } & \$ 14,080
\end{array}$$ As a result of this reconciliation, Schwinn will

Accepted Answer

A) reduce its cash account by $1,520. 
B) reduce its cash account by $80. 
C) increase its cash account by $176. 
D) reduce its cash account by $336. 
A) reduce its cash account by $1,520. 
B) reduce its cash account by $80. 
C) increase its cash account by $176. 
D) reduce its cash account by $336.

Question 18

The following credit sales are budgeted by Gonzalez Company: $\begin{array}{ll}
\text { February } & 200,000 \
\text { March } & 280,000 \
\text { April } & 240,000
\end{array}$ The company's past experience indicates that 80% of the accounts receivable are collected in the month of sale, 20% in the month following the sale. The anticipated cash inflow for the month of April is

Accepted Answer

A) $172,800. 
B) $201,600. 
C) $216,000. 
D) $248,000. 
A) $172,800. 
B) $201,600. 
C) $216,000. 
D) $248,000.

Question 19

Each of the following is a feature of internal control except

Accepted Answer

A) limited access to assets. 
B) independent internal verifications. 
C) authorization of transactions. 
D) generic design of documents. 
A) limited access to assets. 
B) independent internal verifications. 
C) authorization of transactions. 
D) generic design of documents.

Question 20

A debit memorandum would not be issued by the bank for

Accepted Answer

A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable. 
A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable.

A petty cash fund of $250 is replenished when the fund contains $15 in cash and receipts for $230. The entry to replenish the fund would

A basic principle of cash management is to increase the speed of paying liabilities.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Under an effective system of internal control, errors occur only as a result of fraud or dishonesty.

The most important element of the fraud triangle is rationalization.

In the month of May, Lopat Company Inc. wrote checks in the amount of $64,750. In June, checks in the amount of $88,606 were written. In May, $59,276 of these checks were presented to the bank for payment, and $76,181 in June. What is the amount of outstanding checks at the end of June?

The safeguarding of assets is an objective of a company's system of internal control.

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

Which of the following is an appropriate internal control activity for cash?

Which of the following is not an internal control activity for cash?

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

Sarbanes Oxley applies to

Which statement regarding negative cash balances is true?

Electronic funds transfer (EFT) is a disbursement system that uses a telephone or a computer to transfer cash from one location to another.

Schwinn Company assembled the following information in completing its March bank reconciliation: Balance per bank \ 12,224 Outstanding checks \ 2,480 Deposits in transit \ 4,000 NSF check \ 256 Bank service charges \ 80 Cash balance per books \ 14,080 As a result of this reconciliation, Schwinn will

Each of the following is a feature of internal control except

A debit memorandum would not be issued by the bank for

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 6: Fraud, Internal Control, and Cash

A petty cash fund of $250 is replenished when the fund contains $15 in cash and receipts for $230. The entry to replenish the fund would

A basic principle of cash management is to increase the speed of paying liabilities.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Under an effective system of internal control, errors occur only as a result of fraud or dishonesty.

The most important element of the fraud triangle is rationalization.

In the month of May, Lopat Company Inc. wrote checks in the amount of $64,750. In June, checks in the amount of $88,606 were written. In May, $59,276 of these checks were presented to the bank for payment, and $76,181 in June. What is the amount of outstanding checks at the end of June?

The safeguarding of assets is an objective of a company's system of internal control.

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

Which of the following is an appropriate internal control activity for cash?

Which of the following is not an internal control activity for cash?

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

Sarbanes Oxley applies to

Which statement regarding negative cash balances is true?

Electronic funds transfer (EFT) is a disbursement system that uses a telephone or a computer to transfer cash from one location to another.

Each of the following is a feature of internal control except

A debit memorandum would not be issued by the bank for

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters