Question 1

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

Accepted Answer

A) establishment of responsibility is violated. 
B) independent internal verification is violated. 
C) documentation procedures is violated. 
D) segregation of duties is violated. 
A) establishment of responsibility is violated. 
B) independent internal verification is violated. 
C) documentation procedures is violated. 
D) segregation of duties is violated. D

Question 2

A bank reconciliation should be prepared

Accepted Answer

A) whenever the bank refuses to lend the company 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 checks. 
A) whenever the bank refuses to lend the company 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 checks. C

Question 3

Control over cash disbursements is improved if major expenditures are paid by check.

Accepted Answer

A) True 
 B)False  True

Question 4

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Accepted Answer

A) True 
 B)False

Question 5

The daily cash count of cash register receipts made by department supervisors is an example of

Accepted Answer

A) other controls. 
B) independent internal verification. 
C) establishment of responsibility. 
D) segregation of duties. 
A) other controls. 
B) independent internal verification. 
C) establishment of responsibility. 
D) segregation of duties.

Question 6

Internal controls are concerned with

Accepted Answer

A) only manual systems of accounting. 
B) the extent of government regulations. 
C) safeguarding assets. 
D) preparing income tax returns. 
A) only manual systems of accounting. 
B) the extent of government regulations. 
C) safeguarding assets. 
D) preparing income tax returns.

Question 7

Cash registers are an important internal control device used in controlling over-the-counter receipts.

Accepted Answer

A) True 
 B)False

Question 8

If a check correctly written and paid by the bank for $427 is incorrectly recorded on the company's books for $472, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A) add $45 to the bank's balance. 
B) add $45 to the book's balance. 
C) deduct $45 from the bank's balance. 
D) deduct $427 from the book's balance. 
A) add $45 to the bank's balance. 
B) add $45 to the book's balance. 
C) deduct $45 from the bank's balance. 
D) deduct $427 from the book's balance.

Question 9

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Accepted Answer

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

Question 10

A bank may issue a credit memorandum for

Accepted Answer

A) a bank service charge. 
B) an NSF (not sufficient funds) check from a customer. 
C) the collection of a note receivable for the depositor by the bank. 
D) the cost of printing checks. 
A) a bank service charge. 
B) an NSF (not sufficient funds) check from a customer. 
C) the collection of a note receivable for the depositor by the bank. 
D) the cost of printing checks.

Question 11

A check returned by the bank marked "NSF" means

Accepted Answer

A) no service fee. 
B) no signature found. 
C) not satisfactorily filled-out. 
D) not sufficient funds. 
A) no service fee. 
B) no signature found. 
C) not satisfactorily filled-out. 
D) not sufficient funds.

Question 12

An example of poor internal control is

Accepted Answer

A) The accountant should not have physical custody of the asset nor access to it. 
B) The custodian of an asset should not maintain or have access to the accounting records. 
C) One person should be responsible for handling related transactions. 
D) A salesperson makes the sale, and a different person ships the goods. 
A) The accountant should not have physical custody of the asset nor access to it. 
B) The custodian of an asset should not maintain or have access to the accounting records. 
C) One person should be responsible for handling related transactions. 
D) A salesperson makes the sale, and a different person ships the goods.

Question 13

Sarbanes Oxley applies to

Accepted Answer

A) U.S companies but not international companies. 
B) international companies but not U.S.companies. 
C) U.S.and Canadian companies but not other international companies. 
D) U.S and international companies. 
A) U.S companies but not international companies. 
B) international companies but not U.S.companies. 
C) U.S.and Canadian companies but not other international companies. 
D) U.S and international companies.

Question 14

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

Accepted Answer

A) True 
 B)False

Question 15

Internal control is most effective when several people are responsible for a given task.

Accepted Answer

A) True 
 B)False

Question 16

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 good internal control. 
D) is a good example of safeguarding the company's assets. 
A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of good internal control. 
D) is a good example of safeguarding the company's assets.

Question 19

An exception to disbursements being made by check is acceptable when cash is paid

Accepted Answer

A) to an owner. 
B) to employees as wages. 
C) from petty cash. 
D) to employees as loans. 
A) to an owner. 
B) to employees as wages. 
C) from petty cash. 
D) to employees as loans.

Question 20

Checks received through the mail should

Accepted Answer

A) immediately be endorsed "For Deposit Only." 
B) be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C) be cashed at the bank as soon as possible. 
D) be "rung up" on a cash register immediately. 
A) immediately be endorsed "For Deposit Only." 
B) be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C) be cashed at the bank as soon as possible. 
D) be "rung up" on a cash register immediately.

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

A bank reconciliation should be prepared

Control over cash disbursements is improved if major expenditures are paid by check.

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

The daily cash count of cash register receipts made by department supervisors is an example of

Internal controls are concerned with

Cash registers are an important internal control device used in controlling over-the-counter receipts.

If a check correctly written and paid by the bank for $427 is incorrectly recorded on the company's books for $472, the appropriate treatment on the bank reconciliation would be to

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

A bank may issue a credit memorandum for

A check returned by the bank marked "NSF" means

An example of poor internal control is

Sarbanes Oxley applies to

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

Internal control is most effective when several people are responsible for a given task.

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

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

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

An exception to disbursements being made by check is acceptable when cash is paid

Checks received through the mail should

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Fraud, Internal Control, and Cash

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

A bank reconciliation should be prepared

Control over cash disbursements is improved if major expenditures are paid by check.

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

The daily cash count of cash register receipts made by department supervisors is an example of

Internal controls are concerned with

Cash registers are an important internal control device used in controlling over-the-counter receipts.

If a check correctly written and paid by the bank for $427 is incorrectly recorded on the company's books for $472, the appropriate treatment on the bank reconciliation would be to

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

A bank may issue a credit memorandum for

A check returned by the bank marked "NSF" means

An example of poor internal control is

Sarbanes Oxley applies to

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

Internal control is most effective when several people are responsible for a given task.

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

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

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

An exception to disbursements being made by check is acceptable when cash is paid

Checks received through the mail should

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters