Question 1

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Accepted Answer

A)  prepaid insurance. 
B)  cash. 
C)  buildings. 
D)  land. 
A)  prepaid insurance. 
B)  cash. 
C)  buildings. 
D)  land.

Question 2

Which one of the following items would not be considered cash?

Accepted Answer

A)  Coins 
B)  Money orders 
C)  Currency 
D)  Postdated checks 
A)  Coins 
B)  Money orders 
C)  Currency 
D)  Postdated checks

Question 3

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A)  Petty Cash, $84. 
B)  Petty Cash, $81. 
C)  Cash, $81; Cash Over and Short, $3. 
D)  Cash, $84. 
A)  Petty Cash, $84. 
B)  Petty Cash, $81. 
C)  Cash, $81; Cash Over and Short, $3. 
D)  Cash, $84.

Question 4

If the month-end bank statement shows a balance of $72,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $3,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Accepted Answer

A)  $33,000. 
B)  $36,000. 
C)  $72,000. 
D)  $114,000. 
A)  $33,000. 
B)  $36,000. 
C)  $72,000. 
D)  $114,000.

Question 5

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Accepted Answer

A)  debit to Cash for $86. 
B)  credit to Petty Cash for $86. 
C)  credit to Cash Over and Short for $3. 
D)  credit to Cash for $86. 
A)  debit to Cash for $86. 
B)  credit to Petty Cash for $86. 
C)  credit to Cash Over and Short for $3. 
D)  credit to Cash for $86.

Question 6

Checks received through the mail should

Accepted Answer

A)  immediately be endorsed "For Deposit Only." 
B)  be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C)  be cashed at the bank as soon as possible. 
D)  be "rung up" on a cash register immediately. 
A)  immediately be endorsed "For Deposit Only." 
B)  be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C)  be cashed at the bank as soon as possible. 
D)  be "rung up" on a cash register immediately.

Question 7

Tangible frauds include

Accepted Answer

A)  asset misappropriation. 
B)  false pretenses. 
C)  counterfeiting. 
D)  all of the above.
IFRS 
A)  asset misappropriation. 
B)  false pretenses. 
C)  counterfeiting. 
D)  all of the above.
IFRS

Question 8

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Accepted Answer

A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  a stockholders' equity account. 
A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  a stockholders' equity account.

Question 9

Which of the following would not be reported on the balance sheet as a cash equivalent?

Accepted Answer

A)  Money market fund 
B)  Sixty-day certificate of deposit 
C)  Six-month Treasury bill 
D)  Money market savings certificate 
A)  Money market fund 
B)  Sixty-day certificate of deposit 
C)  Six-month Treasury bill 
D)  Money market savings certificate

Question 10

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A)  Petty Cash, $94. 
B)  Petty Cash, $97. 
C)  Cash, $94; Cash Over and Short, $3. 
D)  Cash, $97. 
A)  Petty Cash, $94. 
B)  Petty Cash, $97. 
C)  Cash, $94; Cash Over and Short, $3. 
D)  Cash, $97.

Question 11

Controls that enhance the accuracy and reliability of the accounting records are

Accepted Answer

A)  automated controls. 
B)  external controls. 
C)  mechanical and electronic controls. 
D)  physical controls. 
A)  automated controls. 
B)  external controls. 
C)  mechanical and electronic controls. 
D)  physical controls.

Question 12

A check returned by the bank marked "NSF" means

Accepted Answer

A)  no service fee. 
B)  no signature found. 
C)  not satisfactorily filled-out. 
D)  not sufficient funds. 
A)  no service fee. 
B)  no signature found. 
C)  not satisfactorily filled-out. 
D)  not sufficient funds.

Question 13

A voucher system is used by many large companies as a means of controlling cash receipts.

Accepted Answer

A) True 
 B)False

Question 14

Macrinez Company assembled the following information in completing its July bank reconciliation: balance per bank $22,920; outstanding checks $4,650; deposits in transit $7,500; NSF check $480; bank service charge $150; cash balance per books $26,400. As a result of this reconciliation, Macrinez will

Accepted Answer

A)  reduce its cash account by $150. 
B)  reduce its cash account by $630. 
C)  reduce its cash account by $2,850. 
D)  increase its cash account by $330. 
A)  reduce its cash account by $150. 
B)  reduce its cash account by $630. 
C)  reduce its cash account by $2,850. 
D)  increase its cash account by $330.

Question 15

Allowing only designated personnel to handle cash receipts is an example of

Accepted Answer

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

Question 16

A debit memorandum could show the collection of a note receivable by the bank.

Accepted Answer

A) True 
 B)False

Question 17

A petty cash fund should not be used for

Accepted Answer

A)  postage due. 
B)  loans to the petty cash custodian. 
C)  taxi fares. 
D)  customer lunches. 
A)  postage due. 
B)  loans to the petty cash custodian. 
C)  taxi fares. 
D)  customer lunches.

Question 18

Bank errors

Accepted Answer

A)  occur because of time lags. 
B)  must be corrected by debits. 
C)  are infrequent in occurrence. 
D)  are corrected by making an adjusting entry on the depositor's books. 
A)  occur because of time lags. 
B)  must be corrected by debits. 
C)  are infrequent in occurrence. 
D)  are corrected by making an adjusting entry on the depositor's books.

Question 19

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

Accepted Answer

A) True 
 B)False

Question 20

The principle of establishing responsibility does not include

Accepted Answer

A)  one person being responsible for one task. 
B)  authorization of transactions. 
C)  independent internal verification. 
D)  approval of transactions. 
A)  one person being responsible for one task. 
B)  authorization of transactions. 
C)  independent internal verification. 
D)  approval of transactions.

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Which one of the following items would not be considered cash?

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

If the month-end bank statement shows a balance of $72,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $3,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Checks received through the mail should

Tangible frauds include

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Which of the following would not be reported on the balance sheet as a cash equivalent?

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Controls that enhance the accuracy and reliability of the accounting records are

A check returned by the bank marked "NSF" means

A voucher system is used by many large companies as a means of controlling cash receipts.

Allowing only designated personnel to handle cash receipts is an example of

A debit memorandum could show the collection of a note receivable by the bank.

A petty cash fund should not be used for

Bank errors

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

The principle of establishing responsibility does not include

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters

Exam 7: Fraud, Internal Control, and Cash

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Which one of the following items would not be considered cash?

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

If the month-end bank statement shows a balance of $72,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $3,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Checks received through the mail should

Tangible frauds include

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Which of the following would not be reported on the balance sheet as a cash equivalent?

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Controls that enhance the accuracy and reliability of the accounting records are

A check returned by the bank marked "NSF" means

A voucher system is used by many large companies as a means of controlling cash receipts.

Allowing only designated personnel to handle cash receipts is an example of

A debit memorandum could show the collection of a note receivable by the bank.

A petty cash fund should not be used for

Bank errors

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

The principle of establishing responsibility does not include

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters