Question 1

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

Accepted Answer

A) debit cards 
B) money orders 
C) coins 
D) post-dated cheques 
A) debit cards 
B) money orders 
C) coins 
D) post-dated cheques

Question 2

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

Accepted Answer

A) True 
 B)False

Question 3

Blank cheques

Accepted Answer

A) should be safeguarded. 
B) should be pre-signed. 
C) do not need to be safeguarded since they must be signed to be valid. 
D) should not be prenumbered. 
A) should be safeguarded. 
B) should be pre-signed. 
C) do not need to be safeguarded since they must be signed to be valid. 
D) should not be prenumbered.

Question 4

An effective control activity results when at least two individuals are assigned to one cash drawer so that each can serve as check on the other.

Accepted Answer

A) True 
 B)False

Question 5

Two employees at a retail store work the same cash register.You evaluate this situation as

Accepted Answer

A) a violation of authorization of transactions and activities. 
B) a violation of segregation of duties. 
C) supporting the authorization of transactions and activities. 
D) supporting independent checks of performance. 
A) a violation of authorization of transactions and activities. 
B) a violation of segregation of duties. 
C) supporting the authorization of transactions and activities. 
D) supporting independent checks of performance.

Question 6

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Accepted Answer

A) True 
 B)False

Question 7

Physical controls are not designed to safeguard assets from

Accepted Answer

A) natural disasters. 
B) employee theft. 
C) robbery. 
D) unauthorized use. 
A) natural disasters. 
B) employee theft. 
C) robbery. 
D) unauthorized use.

Question 8

Joe is warehouse custodian and also maintains the accounting records of the inventory held at the warehouse.Which control activity is violated?

Accepted Answer

A) documentation 
B) independent checks of performance 
C) segregation of duties 
D) authorization of transactions and activities 
A) documentation 
B) independent checks of performance 
C) segregation of duties 
D) authorization of transactions and activities

Question 9

Debt investments due within three months are normally classified as cash equivalents.

Accepted Answer

A) True 
 B)False

Question 10

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

Accepted Answer

A) True 
 B)False

Question 11

Notification by the bank that a customer's deposited cheque was returned NSF requires that the depositor make the following adjusting entry:

Accepted Answer

A) Accounts Receivable   
B) Cash   
C) Bank Charges Expense   
D) No adjusting entry is necessary. 
A) Accounts Receivable   
B) Cash   
C) Bank Charges Expense   
D) No adjusting entry is necessary.

Question 12

Independent internal reviews should be done

Accepted Answer

A) at the end of each accounting period. 
B) at the end of each month. 
C) periodically on a surprise basis. 
D) by the external auditor. 
A) at the end of each accounting period. 
B) at the end of each month. 
C) periodically on a surprise basis. 
D) by the external auditor.

Question 13

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

Accepted Answer

A) True 
 B)False

Question 14

A cash budget will help determine if additional financing will be necessary.

Accepted Answer

A) True 
 B)False

Question 15

On a bank reconciliation, which of the following would be deducted from the balance per books?

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

Question 16

External auditors are usually employees of the company.

Accepted Answer

A) True 
 B)False

Question 17

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

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

Question 18

Outstanding cheques from the prior period which clear the bank in the current period

Accepted Answer

A) should be added to the balance per books. 
B) should be deducted from the balance per books. 
C) should be deducted from the balance per bank. 
D) do not affect the current period's bank reconciliation. 
A) should be added to the balance per books. 
B) should be deducted from the balance per books. 
C) should be deducted from the balance per bank. 
D) do not affect the current period's bank reconciliation.

Question 19

Electronic funds transfers never have to be recorded.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a suggested procedure to establish a good control activity over cash disbursements?

Accepted Answer

A) pre-signed blank cheques 
B) Different individuals approve and make payments. 
C) Blank cheques are stored with limited access. 
D) The bank statement is reconciled monthly. 
A) pre-signed blank cheques 
B) Different individuals approve and make payments. 
C) Blank cheques are stored with limited access. 
D) The bank statement is reconciled monthly.

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

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

Blank cheques

An effective control activity results when at least two individuals are assigned to one cash drawer so that each can serve as check on the other.

Two employees at a retail store work the same cash register.You evaluate this situation as

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Physical controls are not designed to safeguard assets from

Joe is warehouse custodian and also maintains the accounting records of the inventory held at the warehouse.Which control activity is violated?

Debt investments due within three months are normally classified as cash equivalents.

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

Notification by the bank that a customer's deposited cheque was returned NSF requires that the depositor make the following adjusting entry:

Independent internal reviews should be done

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

A cash budget will help determine if additional financing will be necessary.

On a bank reconciliation, which of the following would be deducted from the balance per books?

External auditors are usually employees of the company.

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

Outstanding cheques from the prior period which clear the bank in the current period

Electronic funds transfers never have to be recorded.

Which of the following is not a suggested procedure to establish a good control activity over cash disbursements?

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

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

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

Blank cheques

An effective control activity results when at least two individuals are assigned to one cash drawer so that each can serve as check on the other.

Two employees at a retail store work the same cash register.You evaluate this situation as

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Physical controls are not designed to safeguard assets from

Joe is warehouse custodian and also maintains the accounting records of the inventory held at the warehouse.Which control activity is violated?

Debt investments due within three months are normally classified as cash equivalents.

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

Notification by the bank that a customer's deposited cheque was returned NSF requires that the depositor make the following adjusting entry:

Independent internal reviews should be done

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

A cash budget will help determine if additional financing will be necessary.

On a bank reconciliation, which of the following would be deducted from the balance per books?

External auditors are usually employees of the company.

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

Outstanding cheques from the prior period which clear the bank in the current period

Electronic funds transfers never have to be recorded.

Which of the following is not a suggested procedure to establish a good control activity over cash disbursements?

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