Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

On Davinder Corp's June bank reconciliation, cheques outstanding totalled $5,400. In July, the corporation issued cheques totalling $38,900. The July bank statement shows that $26,300 in cheques cleared the bank in July. A cheque from one of Davis Corp's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding cheques on Davis' July bank reconciliation should be

Accepted Answer

A) $ 7,200. 
B) $12,600. 
C) $17,700. 
D) $18,000. 
A) $ 7,200. 
B) $12,600. 
C) $17,700. 
D) $18,000.

Question 4

A bank statement

Accepted Answer

A) lets a depositor know the financial position of the bank as of a certain date. 
B) is a credit reference letter written by the depositor's bank. 
C) is a bill from the bank for services provided. 
D) shows the activity that increased or decreased the depositor's account balance. 
A) lets a depositor know the financial position of the bank as of a certain date. 
B) is a credit reference letter written by the depositor's bank. 
C) is a bill from the bank for services provided. 
D) shows the activity that increased or decreased the depositor's account balance.

Question 5

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

Accepted Answer

A) Foreign currency 
B) Money orders 
C) Coins 
D) Post-dated cheques 
A) Foreign currency 
B) Money orders 
C) Coins 
D) Post-dated cheques

Question 6

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

Question 7

External auditors may examine internal controls as part of their evaluation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 8

A bank reconciliation should be prepared

Accepted Answer

A) whenever the bank refuses to lend the depositor money. 
B) when an employee is suspected of fraud. 
C) to explain any difference between the depositor's balance per books and the balance per bank. 
D) by the person who is authorized to sign cheques. 
A) whenever the bank refuses to lend the depositor money. 
B) when an employee is suspected of fraud. 
C) to explain any difference between the depositor's balance per books and the balance per bank. 
D) by the person who is authorized to sign cheques.

Question 9

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 10

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 11

The Canada Business Corporations Act did not require corporations to maintain an adequate system of internal control until the United States passed the Sarbanes-Oxley Act.

Accepted Answer

A) True 
 B)False

Question 12

An authorized signing officer should sign a cheque only after reviewing the appropriate supporting documentation.

Accepted Answer

A) True 
 B)False

Question 13

Ms. Greene has worked for Ambleside Inc. for 20 years without taking a vacation. An internal control activity that would address this situation would be

Accepted Answer

A) human resource controls. 
B) authorization of transactions and activities. 
C) physical controls. 
D) documentation. 
A) human resource controls. 
B) authorization of transactions and activities. 
C) physical controls. 
D) documentation.

Question 14

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 15

Electronic funds transfers never have to be recorded.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 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

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

Accepted Answer

A) True 
 B)False

Question 20

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.

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

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

A bank statement

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

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

External auditors may examine internal controls as part of their evaluation of the financial statements.

A bank reconciliation should be prepared

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

If employees are bonded, it means that

The Canada Business Corporations Act did not require corporations to maintain an adequate system of internal control until the United States passed the Sarbanes-Oxley Act.

An authorized signing officer should sign a cheque only after reviewing the appropriate supporting documentation.

Ms. Greene has worked for Ambleside Inc. for 20 years without taking a vacation. An internal control activity that would address this situation would be

The use of electronic funds transfers

Electronic funds transfers never have to be recorded.

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

Physical controls to safeguard assets do not include

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

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

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

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

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

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

A bank statement

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

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

External auditors may examine internal controls as part of their evaluation of the financial statements.

A bank reconciliation should be prepared

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

If employees are bonded, it means that

The Canada Business Corporations Act did not require corporations to maintain an adequate system of internal control until the United States passed the Sarbanes-Oxley Act.

An authorized signing officer should sign a cheque only after reviewing the appropriate supporting documentation.

Ms. Greene has worked for Ambleside Inc. for 20 years without taking a vacation. An internal control activity that would address this situation would be

The use of electronic funds transfers

Electronic funds transfers never have to be recorded.

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

Physical controls to safeguard assets do not include

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

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

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

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