Question 1

Control over cash disbursements is generally more effective when

Accepted Answer

A) all bills are paid in cash. 
B) disbursements are made by the accounts payable subsidiary clerk. 
C) payments are made by check. 
D) all purchases are made on credit. 
A) all bills are paid in cash. 
B) disbursements are made by the accounts payable subsidiary clerk. 
C) payments are made by check. 
D) all purchases are made on credit.

Question 2

Deposits in transit

Accepted Answer

A) have been recorded on the company's books but not yet by the bank. 
B) have been recorded by the bank but not yet by the company. 
C) have not been recorded by the bank or the company. 
D) are customers' checks that have not yet been received by the company. 
A) have been recorded on the company's books but not yet by the bank. 
B) have been recorded by the bank but not yet by the company. 
C) have not been recorded by the bank or the company. 
D) are customers' checks that have not yet been received by the company.

Question 3

Which of the following is not a limitation of internal control?

Accepted Answer

A) Cost of establishing control procedures should not exceed their benefit. 
B) The human element. 
C) Collusion. 
D) The size of the company. 
A) Cost of establishing control procedures should not exceed their benefit. 
B) The human element. 
C) Collusion. 
D) The size of the company.

Question 4

On a bank statement, paid checks are shown as

Accepted Answer

A) credits. 
B) debits 
C) assets. 
D) liabilities. 
A) credits. 
B) debits 
C) assets. 
D) liabilities.

Question 5

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

Accepted Answer

A) True 
 B)False

Question 6

All of the following activities occur at the time of a cash disbursement from petty cash except

Accepted Answer

A) the petty cash custodian signs the voucher. 
B) available supporting documents are attached to the voucher. 
C) a journal entry is made for each cash distribution. 
D) the individual receiving payment signs the voucher. 
A) the petty cash custodian signs the voucher. 
B) available supporting documents are attached to the voucher. 
C) a journal entry is made for each cash distribution. 
D) the individual receiving payment signs the voucher.

Question 7

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

Accepted Answer

A) True 
 B)False

Question 8

Management of cash is the responsibility of the company

Accepted Answer

A) accountant. 
B) president. 
C) treasurer. 
D) vice-president. 
A) accountant. 
B) president. 
C) treasurer. 
D) vice-president.

Question 9

All of the following are items that would most likely be paid from a petty cash fund except

Accepted Answer

A) postage due. 
B) taxi fares. 
C) administrative wages. 
D) freight-out. 
A) postage due. 
B) taxi fares. 
C) administrative wages. 
D) freight-out.

Question 10

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

Accepted Answer

A) Payments should be made with cash. 
B) There should be limited access to cash. 
C) The amount of cash on hand should be kept to a minimum. 
D) Cash should be deposited daily. 
A) Payments should be made with cash. 
B) There should be limited access to cash. 
C) The amount of cash on hand should be kept to a minimum. 
D) Cash should be deposited daily.

Question 11

The treasurer should prepare and sign a check only after authorization to issue a check has been provided.

Accepted Answer

A) True 
 B)False

Question 12

A very small company would have the most difficulty in implementing which of the following internal control activities?

Accepted Answer

A) Separation of duties. 
B) Limited access to assets. 
C) Periodic independent verification. 
D) Sound personnel procedures. 
A) Separation of duties. 
B) Limited access to assets. 
C) Periodic independent verification. 
D) Sound personnel procedures.

Question 13

Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

Accepted Answer

A) documentation procedures are violated. 
B) independent internal verification is violated. 
C) segregation of duties is violated. 
D) establishment of responsibility is violated. 
A) documentation procedures are violated. 
B) independent internal verification is violated. 
C) segregation of duties is violated. 
D) establishment of responsibility is violated.

Question 14

Russel Company assembled the following information in completing its March bank reconciliation: $$\begin{array} { l r } 
\text { Balance per bank } & \$ 19,100 \
\text { Outstanding checks } & \$ 3,875 \
\text { Deposits in transit } & \$ 6,250 \
\text { NSF check } & \$ 400 \
\text { Bank service charges } & \$ 125 \
\text { Cash balance per books } & \$ 22,000
\end{array}$$ As a result of this reconciliation, Russel will

Accepted Answer

A) reduce its cash account by $2,375. 
B) reduce its cash account by $125. 
C) increase its cash account by $275. 
D) reduce its cash account by $525. 
A) reduce its cash account by $2,375. 
B) reduce its cash account by $125. 
C) increase its cash account by $275. 
D) reduce its cash account by $525.

Question 15

Which of the following would be added to the balance per books on a bank reconciliation?

Accepted Answer

A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) NSF check. 
A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) NSF check.

Question 16

A deposit made by a company will appear on the bank statement as a

Accepted Answer

A) debit. 
B) credit. 
C) debit memorandum. 
D) credit memorandum. 
A) debit. 
B) credit. 
C) debit memorandum. 
D) credit memorandum.

Question 17

Of the following employees, who should prepare the bank reconciliation?

Accepted Answer

A) Anne, the bookkeeper, because she is aware of all transactions that affected cash. 
B) Michael, the treasurer, because he has control of the checkbook and has taken more accounting courses than any other employee. 
C) Mary, the cashier, because she does not pay bills. 
D) Frank, the purchasing agent, because he does not work in the accounting department. 
A) Anne, the bookkeeper, because she is aware of all transactions that affected cash. 
B) Michael, the treasurer, because he has control of the checkbook and has taken more accounting courses than any other employee. 
C) Mary, the cashier, because she does not pay bills. 
D) Frank, the purchasing agent, because he does not work in the accounting department.

Question 18

Cash restricted in use should be separately reported on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Clark Company developed the following reconciling information in preparing its September bank reconciliation: $\begin{array}{lr}
\text { Cash balance per bank, } 9 / 30 & \$ 46,200 \
\text { Note receivable collected by bank } & 25,200 \
\text { Outstanding checks } & 37,800 \
\text { Deposits in transit } & 18,900 \
\text { Bank service charges } & 315 \
\text { NSF check } & 5,040
\end{array}$ Using the above information, determine the cash balance per books (before adjustments) for the Clark Company.

Accepted Answer

A) $41,055. 
B) $65,100. 
C) $7,455. 
D) $63,000. 
A) $41,055. 
B) $65,100. 
C) $7,455. 
D) $63,000.

Question 20

An adjusting entry is not required for

Accepted Answer

A) outstanding checks. 
B) collection of a note by the bank. 
C) NSF checks. 
D) bank service charges. 
A) outstanding checks. 
B) collection of a note by the bank. 
C) NSF checks. 
D) bank service charges.

Exam 6: Fraud, Internal Control, and Cash

Control over cash disbursements is generally more effective when

Deposits in transit

Which of the following is not a limitation of internal control?

On a bank statement, paid checks are shown as

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

All of the following activities occur at the time of a cash disbursement from petty cash except

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

Management of cash is the responsibility of the company

All of the following are items that would most likely be paid from a petty cash fund except

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

The treasurer should prepare and sign a check only after authorization to issue a check has been provided.

A very small company would have the most difficulty in implementing which of the following internal control activities?

Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

Russel Company assembled the following information in completing its March bank reconciliation: Balance per bank \ 19,100 Outstanding checks \ 3,875 Deposits in transit \ 6,250 NSF check \ 400 Bank service charges \ 125 Cash balance per books \ 22,000 As a result of this reconciliation, Russel will

Which of the following would be added to the balance per books on a bank reconciliation?

A deposit made by a company will appear on the bank statement as a

Of the following employees, who should prepare the bank reconciliation?

Cash restricted in use should be separately reported on the balance sheet.

An adjusting entry is not required 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

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