Question 1

All of the following are examples of a control activity except

Accepted Answer

A) using prenumbered documents. 
B) reconciling the bank statement. 
C) insistence that employees work overtime. 
D) insistence that employees take vacations. 
A) using prenumbered documents. 
B) reconciling the bank statement. 
C) insistence that employees work overtime. 
D) insistence that employees take vacations.

Question 2

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 3

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 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

External auditors are usually employees of the company.

Accepted Answer

A) True 
 B)False

Question 7

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 8

All of the following are examples of a control activity except

Accepted Answer

A) limit access to assets. 
B) independent internal reviews. 
C) authorization of transactions. 
D) increasing the speed of collection on receivables. 
A) limit access to assets. 
B) independent internal reviews. 
C) authorization of transactions. 
D) increasing the speed of collection on receivables.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

Which of the following is not a limitation of internal control?

Accepted Answer

A) Cost of establishing control procedures 
B) The human element 
C) Use of a bank account 
D) The size of the company 
A) Cost of establishing control procedures 
B) The human element 
C) Use of a bank account 
D) The size of the company

Question 12

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

Accepted Answer

A) Payments to creditors should be made in cash. 
B) There should be limited access to cash. 
C) The amount of cash on hand should be kept at a minimum. 
D) Cash should be deposited daily. 
A) Payments to creditors should be made in cash. 
B) There should be limited access to cash. 
C) The amount of cash on hand should be kept at a minimum. 
D) Cash should be deposited daily.

Question 13

The use of a bank account makes internal control over cash more difficult.

Accepted Answer

A) True 
 B)False

Question 14

An NSF cheque that was received is recorded as an account receivable.

Accepted Answer

A) True 
 B)False

Question 15

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 16

A cheque written by the company for $157 is incorrectly recorded as $175. On the bank reconciliation, the $18 error should be

Accepted Answer

A) added to the balance per books. 
B) deducted from the balance per books. 
C) added to the balance per bank. 
D) deducted from the balance per bank. 
A) added to the balance per books. 
B) deducted from the balance per books. 
C) added to the balance per bank. 
D) deducted from the balance per bank.

Question 17

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 18

A basic principle of cash management is to increase the speed of paying liabilities.

Accepted Answer

A) True 
 B)False

Question 19

The person responsible for making credit sales should be the vice-president of finance.

Accepted Answer

A) True 
 B)False

Question 20

Control activities are most effective when several people are responsible for a given task.

Accepted Answer

A) True 
 B)False

All of the following are examples of a control activity except

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

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

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)

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

External auditors are usually employees of the company.

Bank errors

All of the following are examples of a control activity except

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

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

Which of the following is not a limitation of internal control?

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

The use of a bank account makes internal control over cash more difficult.

An NSF cheque that was received is recorded as an account receivable.

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

A cheque written by the company for $157 is incorrectly recorded as $175. On the bank reconciliation, the $18 error should be

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

A basic principle of cash management is to increase the speed of paying liabilities.

The person responsible for making credit sales should be the vice-president of finance.

Control activities are most effective when several people are responsible for a given task.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 7: Internal Control and Cash

All of the following are examples of a control activity except

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

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

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)

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

External auditors are usually employees of the company.

Bank errors

All of the following are examples of a control activity except

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

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

Which of the following is not a limitation of internal control?

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

The use of a bank account makes internal control over cash more difficult.

An NSF cheque that was received is recorded as an account receivable.

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

A cheque written by the company for $157 is incorrectly recorded as $175. On the bank reconciliation, the $18 error should be

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

A basic principle of cash management is to increase the speed of paying liabilities.

The person responsible for making credit sales should be the vice-president of finance.

Control activities are most effective when several people are responsible for a given task.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters