Question 1

Only large companies need to be concerned with a system of internal control.

Accepted Answer

A) True 
 B)False  False

Question 2

Errors give rise to unintentional misstatements in the financial statements.

Accepted Answer

A) True 
 B)False  True

Question 3

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

Accepted Answer

A) True 
 B)False  True

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

A system of internal control can only provide reasonable assurance, which is based on the belief that

Accepted Answer

A) the system is infallible. 
B) the system can always detect errors and irregularities. 
C) the costs of establishing control activities should not be greater than their expected benefit. 
D) the human element is not important. 
A) the system is infallible. 
B) the system can always detect errors and irregularities. 
C) the costs of establishing control activities should not be greater than their expected benefit. 
D) the human element is not important.

Question 6

Great Scott Corporation gathered the following reconciling information in preparing its August bank reconciliation:   The adjusted cash balance per books at August 31 is

Accepted Answer

A) $4,160. 
B) $4,010. 
C) $2,460. 
D) $2,310. 
A) $4,160. 
B) $4,010. 
C) $2,460. 
D) $2,310.

Question 7

Management only needs to know how much cash is available at the end of the month (when the bank reconciliation is prepared).

Accepted Answer

A) True 
 B)False

Question 8

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A) cheque for $43 recorded as $34 by the depositor 
B) deposit of $500 recorded by the bank as $50 
C) a paid cheque for $200 recorded by the bank as $20 
D) cheque for $35 recorded as $53 by the depositor 
A) cheque for $43 recorded as $34 by the depositor 
B) deposit of $500 recorded by the bank as $50 
C) a paid cheque for $200 recorded by the bank as $20 
D) cheque for $35 recorded as $53 by the depositor

Question 9

Allowing only the treasurer to sign cheques is an example of which control activity?

Accepted Answer

A) documentation 
B) segregation of duties 
C) human resource controls 
D) authorization of transactions and activities 
A) documentation 
B) segregation of duties 
C) human resource controls 
D) authorization of transactions and activities

Question 10

Idle cash should be reported as restricted cash.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is(are) considered cash?

Accepted Answer

A) debit cards only 
B) debit cards and bank credit cards 
C) bank credit cards only 
D) debit cards and all types of credit cards 
A) debit cards only 
B) debit cards and bank credit cards 
C) bank credit cards only 
D) debit cards and all types of credit cards

Question 12

Deposits in transit

Accepted Answer

A) have been recorded on the depositor's books but not yet by the bank. 
B) have been recorded by the bank but not yet by the depositor. 
C) have not been recorded by either the bank or the depositor. 
D) are customers' cheques that are in the mail but have not yet been received by the depositor. 
A) have been recorded on the depositor's books but not yet by the bank. 
B) have been recorded by the bank but not yet by the depositor. 
C) have not been recorded by either the bank or the depositor. 
D) are customers' cheques that are in the mail but have not yet been received by the depositor.

Question 13

Requiring employees to take vacations is a weakness in a control activity because it does not promote operational efficiency.

Accepted Answer

A) True 
 B)False

Question 14

All of the following bank reconciliation items would require an adjusting entry on the depositor's books except

Accepted Answer

A) interest earned. 
B) deposits in transit. 
C) a bank service charge. 
D) a customer's NSF cheque. 
A) interest earned. 
B) deposits in transit. 
C) a bank service charge. 
D) a customer's NSF cheque.

Question 15

A good internal control system will help a company achieve reliable financial reporting, effective and efficient operations, and compliance with laws and regulations.

Accepted Answer

A) True 
 B)False

Question 16

Island Corporation gathered the following reconciling information in preparing its September bank reconciliation:   The adjusted cash balance per bank at September 30 is

Accepted Answer

A) $ 1,775. 
B) $ 6,500. 
C) $ 9,725. 
D) $15,725. 
A) $ 1,775. 
B) $ 6,500. 
C) $ 9,725. 
D) $15,725.

Question 17

Which one of the following would not cause a bank to debit a depositor's account?

Accepted Answer

A) bank service charge 
B) collection of a note receivable 
C) payment of a note payable 
D) cheques marked NSF 
A) bank service charge 
B) collection of a note receivable 
C) payment of a note payable 
D) cheques marked NSF

Question 18

A company should plan the timing of major expenditures in light of its operating cycle.

Accepted Answer

A) True 
 B)False

Question 19

A compensating balance is always reported as a non-current asset.

Accepted Answer

A) True 
 B)False

Question 20

On a bank reconciliation, which of the following would be added to the balance per bank?

Accepted Answer

A) outstanding cheques 
B) deposits in transit 
C) electronic payment by a customer on account 
D) bank service charges 
A) outstanding cheques 
B) deposits in transit 
C) electronic payment by a customer on account 
D) bank service charges

Only large companies need to be concerned with a system of internal control.

Errors give rise to unintentional misstatements in the financial statements.

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

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

A system of internal control can only provide reasonable assurance, which is based on the belief that

Great Scott Corporation gathered the following reconciling information in preparing its August bank reconciliation: The adjusted cash balance per books at August 31 is

Management only needs to know how much cash is available at the end of the month (when the bank reconciliation is prepared).

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Allowing only the treasurer to sign cheques is an example of which control activity?

Idle cash should be reported as restricted cash.

Which of the following is(are) considered cash?

Deposits in transit

Requiring employees to take vacations is a weakness in a control activity because it does not promote operational efficiency.

All of the following bank reconciliation items would require an adjusting entry on the depositor's books except

A good internal control system will help a company achieve reliable financial reporting, effective and efficient operations, and compliance with laws and regulations.

Island Corporation gathered the following reconciling information in preparing its September bank reconciliation: The adjusted cash balance per bank at September 30 is

Which one of the following would not cause a bank to debit a depositor's account?

A company should plan the timing of major expenditures in light of its operating cycle.

A compensating balance is always reported as a non-current asset.

On a bank reconciliation, which of the following would be added to the balance per bank?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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 Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters

Exam 7: Fraud, Internal Control, and Cash

Only large companies need to be concerned with a system of internal control.

Errors give rise to unintentional misstatements in the financial statements.

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

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

A system of internal control can only provide reasonable assurance, which is based on the belief that

Great Scott Corporation gathered the following reconciling information in preparing its August bank reconciliation: The adjusted cash balance per books at August 31 is

Management only needs to know how much cash is available at the end of the month (when the bank reconciliation is prepared).

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Allowing only the treasurer to sign cheques is an example of which control activity?

Idle cash should be reported as restricted cash.

Which of the following is(are) considered cash?

Deposits in transit

Requiring employees to take vacations is a weakness in a control activity because it does not promote operational efficiency.

All of the following bank reconciliation items would require an adjusting entry on the depositor's books except

A good internal control system will help a company achieve reliable financial reporting, effective and efficient operations, and compliance with laws and regulations.

Island Corporation gathered the following reconciling information in preparing its September bank reconciliation: The adjusted cash balance per bank at September 30 is

Which one of the following would not cause a bank to debit a depositor's account?

A company should plan the timing of major expenditures in light of its operating cycle.

A compensating balance is always reported as a non-current asset.

On a bank reconciliation, which of the following would be added to the balance per bank?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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 Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters