Question 1

Which one of the following is not a primary component of an internal control system?

Accepted Answer

A) control activities 
B) delay payment of liabilities 
C) risk assessment 
D) control environment 
A) control activities 
B) delay payment of liabilities 
C) risk assessment 
D) control environment

Question 2

If a cheque correctly written and paid by the bank for $521 is incorrectly recorded on the company's books for $251, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A) add $270 to the balance per bank. 
B) add $270 to the balance per books. 
C) deduct $270 from the balance per books. 
D) deduct $270 from the balance per bank. 
A) add $270 to the balance per bank. 
B) add $270 to the balance per books. 
C) deduct $270 from the balance per books. 
D) deduct $270 from the balance per bank.

Question 3

Debit card and bank credit card transactions are considered cash.

Accepted Answer

A) True 
 B)False

Question 4

NSF cheques received are accounted for by adding them to the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following bank reconciliation items would not require an adjusting entry on the depositor's books?

Accepted Answer

A) bank service charge 
B) outstanding cheques 
C) a customer's NSF cheque 
D) electronic payment on account 
A) bank service charge 
B) outstanding cheques 
C) a customer's NSF cheque 
D) electronic payment on account

Question 6

An NSF cheque received from a customer should appear in which section of the bank reconciliation?

Accepted Answer

A) addition to the balance per books 
B) deduction from the balance per books 
C) addition to the balance per bank 
D) deduction from the balance per bank 
A) addition to the balance per books 
B) deduction from the balance per books 
C) addition to the balance per bank 
D) deduction from the balance per bank

Question 7

If employees are bonded, it means that

Accepted Answer

A) they are not allowed to handle cash. 
B) they have worked for the company for at least 10 years. 
C) they have been insured against misappropriation of assets. 
D) they are not allowed to take vacations. 
A) they are not allowed to handle cash. 
B) they have worked for the company for at least 10 years. 
C) they have been insured against misappropriation of assets. 
D) they are not allowed to take vacations.

Question 8

The use of electronic funds transfers

Accepted Answer

A) normally results in better internal controls. 
B) does not require segregation of duties. 
C) eliminates opportunities for fraud. 
D) does not require proper authorization. 
A) normally results in better internal controls. 
B) does not require segregation of duties. 
C) eliminates opportunities for fraud. 
D) does not require proper authorization.

Question 9

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

Accepted Answer

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

Question 10

NSF cheques received from customers are debited by the bank to the depositor's account.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not true with respect to the reporting of cash?

Accepted Answer

A) Cash equivalents are normally combined with cash and reported as a current asset. 
B) Compensating balances are minimum cash balances required by the bank. 
C) Restricted cash can be either a current or a non-current asset, depending on when it is expected to be used. 
D) Cash overdrafts are reported as contra-assets. 
A) Cash equivalents are normally combined with cash and reported as a current asset. 
B) Compensating balances are minimum cash balances required by the bank. 
C) Restricted cash can be either a current or a non-current asset, depending on when it is expected to be used. 
D) Cash overdrafts are reported as contra-assets.

Question 12

On a bank reconciliation, which of the following would be deducted from 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

Question 13

On the April 30 bank reconciliation, a deposit made by a company to its bank account on April 18 will likely appear as a(n)

Accepted Answer

A) addition to the balance per books. 
B) deduction from the balance per books. 
C) deduction from the balance per bank. 
D) This will not affect the current period's bank reconciliation. 
A) addition to the balance per books. 
B) deduction from the balance per books. 
C) deduction from the balance per bank. 
D) This will not affect the current period's bank reconciliation.

Question 14

Which of the following is not a basic principle of cash management?

Accepted Answer

A) Increase collection of receivables. 
B) Keep inventory levels high. 
C) Delay payment of liabilities. 
D) Invest idle cash. 
A) Increase collection of receivables. 
B) Keep inventory levels high. 
C) Delay payment of liabilities. 
D) Invest idle cash.

Question 15

The control activity related to not having the same person authorize and pay for goods is known as

Accepted Answer

A) authorization of transactions and activities. 
B) independent checks of performance. 
C) segregation of duties. 
D) human resource controls. 
A) authorization of transactions and activities. 
B) independent checks of performance. 
C) segregation of duties. 
D) human resource controls.

Question 16

Internal controls are concerned with all of the following except

Accepted Answer

A) computerized systems of accounting. 
B) effective and efficient operations. 
C) ensuring reliable financial reporting. 
D) compliance with relevant laws and regulations. 
A) computerized systems of accounting. 
B) effective and efficient operations. 
C) ensuring reliable financial reporting. 
D) compliance with relevant laws and regulations.

Question 17

A key principle of cash management is to increase the speed of collection on receivables.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a control activity over cash?

Accepted Answer

A) Only designated personnel are authorized to handle cash. 
B) The same individual receives the cash and pays the bills. 
C) Surprise audits of cash on hand should be made occasionally. 
D) Access to cash is limited. 
A) Only designated personnel are authorized to handle cash. 
B) The same individual receives the cash and pays the bills. 
C) Surprise audits of cash on hand should be made occasionally. 
D) Access to cash is limited.

Question 19

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

Accepted Answer

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

Question 20

On Druskus Corp.'s April bank reconciliation, cheques outstanding totalled $7,200.In May, the corporation issued cheques totalling $43,300.The May bank statement shows that $32,900 in cheques cleared the bank in May.A cheque from one of Druskus Corp.'s customers in the amount of $290 was also returned marked "NSF." The amount of outstanding cheques on Druskus' May bank reconciliation should be

Accepted Answer

A) $10,400. 
B) $17,310. 
C) $17,890. 
D) $17,600. 
A) $10,400. 
B) $17,310. 
C) $17,890. 
D) $17,600.

Which one of the following is not a primary component of an internal control system?

If a cheque correctly written and paid by the bank for $521 is incorrectly recorded on the company's books for $251, the appropriate treatment on the bank reconciliation would be to

Debit card and bank credit card transactions are considered cash.

NSF cheques received are accounted for by adding them to the cash balance per books.

Which of the following bank reconciliation items would not require an adjusting entry on the depositor's books?

An NSF cheque received from a customer should appear in which section of the bank reconciliation?

If employees are bonded, it means that

The use of electronic funds transfers

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

NSF cheques received from customers are debited by the bank to the depositor's account.

Which of the following is not true with respect to the reporting of cash?

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

On the April 30 bank reconciliation, a deposit made by a company to its bank account on April 18 will likely appear as a(n)

Which of the following is not a basic principle of cash management?

The control activity related to not having the same person authorize and pay for goods is known as

Internal controls are concerned with all of the following except

A key principle of cash management is to increase the speed of collection on receivables.

Which of the following is not a control activity over cash?

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

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 is not a primary component of an internal control system?

If a cheque correctly written and paid by the bank for $521 is incorrectly recorded on the company's books for $251, the appropriate treatment on the bank reconciliation would be to

Debit card and bank credit card transactions are considered cash.

NSF cheques received are accounted for by adding them to the cash balance per books.

Which of the following bank reconciliation items would not require an adjusting entry on the depositor's books?

An NSF cheque received from a customer should appear in which section of the bank reconciliation?

If employees are bonded, it means that

The use of electronic funds transfers

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

NSF cheques received from customers are debited by the bank to the depositor's account.

Which of the following is not true with respect to the reporting of cash?

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

On the April 30 bank reconciliation, a deposit made by a company to its bank account on April 18 will likely appear as a(n)

Which of the following is not a basic principle of cash management?

The control activity related to not having the same person authorize and pay for goods is known as

Internal controls are concerned with all of the following except

A key principle of cash management is to increase the speed of collection on receivables.

Which of the following is not a control activity over cash?

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

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