Question 1

Cash restricted in use should be reported separately on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 2

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 cheque or electronic funds transfer. 
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 cheque or electronic funds transfer. 
D) all purchases are made on credit.

Question 3

From an internal control standpoint, what type of controls are thorough background checks and bonding of employees?

Accepted Answer

A) physical controls 
B) human resource controls 
C) independent checks of performance 
D) documentation 
A) physical controls 
B) human resource controls 
C) independent checks of performance 
D) documentation

Question 4

Maximum benefit from independent checks of performance is obtained when

Accepted Answer

A) it is made on a pre-announced basis. 
B) it is done by the employee possessing custody of the asset. 
C) discrepancies are reported to management. 
D) it is done at the time of the external audit. 
A) it is made on a pre-announced basis. 
B) it is done by the employee possessing custody of the asset. 
C) discrepancies are reported to management. 
D) it is done at the time of the external audit.

Question 5

Fraud is an unintentional act to misappropriate (steal) assets or misstate financial statements.

Accepted Answer

A) True 
 B)False

Question 6

Bonding means insuring a company against misappropriation of assets by employees.

Accepted Answer

A) True 
 B)False

Question 7

Physical controls to safeguard assets do not include

Accepted Answer

A) cashier department supervisors. 
B) vaults. 
C) safety deposit boxes. 
D) locked warehouses. 
A) cashier department supervisors. 
B) vaults. 
C) safety deposit boxes. 
D) locked warehouses.

Question 8

An example of segregation of duties is having a cheque signer record cash disbursements.

Accepted Answer

A) True 
 B)False

Question 9

Describe the primary components of an internal control system.

Accepted Answer

Internal control systems have the follow

Question 10

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Accepted Answer

A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of a control activity. 
D) reduces cost and maximizes benefit. 
A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of a control activity. 
D) reduces cost and maximizes benefit.

Question 11

Cash equivalents are

Accepted Answer

A) often combined with cash and reported as a current asset. 
B) usually reported as a non-current asset. 
C) reported as a current liability. 
D) included as a compensating balance. 
A) often combined with cash and reported as a current asset. 
B) usually reported as a non-current asset. 
C) reported as a current liability. 
D) included as a compensating balance.

Question 12

The use of prenumbered cheques is an example of

Accepted Answer

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

Question 13

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is recorded, on the bank's books, as

Accepted Answer

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

Question 14

All documents should be prenumbered.

Accepted Answer

A) True 
 B)False

Question 15

Segregation of duties among employees eliminates the possibility of collusion.

Accepted Answer

A) True 
 B)False

Question 16

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Driftech Limited gathered the following reconciling information in preparing its October bank reconciliation:   The adjusted cash balance per books at October 31 is

Accepted Answer

A) $14,380. 
B) $19,500. 
C) $18,490. 
D) $17,290. 
A) $14,380. 
B) $19,500. 
C) $18,490. 
D) $17,290.

Question 19

The use of electronic funds transfers normally results in better control over cash.

Accepted Answer

A) True 
 B)False

Question 20

Deposits in transit require an adjustment to the cash balance per books.

Accepted Answer

A) True 
 B)False

Cash restricted in use should be reported separately on the statement of financial position.

Control over cash disbursements is generally more effective when

From an internal control standpoint, what type of controls are thorough background checks and bonding of employees?

Maximum benefit from independent checks of performance is obtained when

Fraud is an unintentional act to misappropriate (steal) assets or misstate financial statements.

Bonding means insuring a company against misappropriation of assets by employees.

Physical controls to safeguard assets do not include

An example of segregation of duties is having a cheque signer record cash disbursements.

Describe the primary components of an internal control system.

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Cash equivalents are

The use of prenumbered cheques is an example of

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is recorded, on the bank's books, as

All documents should be prenumbered.

Segregation of duties among employees eliminates the possibility of collusion.

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Bank errors

Driftech Limited gathered the following reconciling information in preparing its October bank reconciliation: The adjusted cash balance per books at October 31 is

The use of electronic funds transfers normally results in better control over cash.

Deposits in transit require an adjustment to the cash balance per books.

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

Cash restricted in use should be reported separately on the statement of financial position.

Control over cash disbursements is generally more effective when

From an internal control standpoint, what type of controls are thorough background checks and bonding of employees?

Maximum benefit from independent checks of performance is obtained when

Fraud is an unintentional act to misappropriate (steal) assets or misstate financial statements.

Bonding means insuring a company against misappropriation of assets by employees.

Physical controls to safeguard assets do not include

An example of segregation of duties is having a cheque signer record cash disbursements.

Describe the primary components of an internal control system.

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Cash equivalents are

The use of prenumbered cheques is an example of

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is recorded, on the bank's books, as

All documents should be prenumbered.

Segregation of duties among employees eliminates the possibility of collusion.

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Bank errors

Driftech Limited gathered the following reconciling information in preparing its October bank reconciliation: The adjusted cash balance per books at October 31 is

The use of electronic funds transfers normally results in better control over cash.

Deposits in transit require an adjustment to the cash balance per books.

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