Question 1

If employees are bonded

Accepted Answer

A) it means that 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) it is impossible for them to steal from the company. 
A) it means that 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) it is impossible for them to steal from the company.

Question 2

A highly automated computerized system of accounting eliminates the need for internal control.

Accepted Answer

A) True 
 B)False

Question 3

Replenishing the petty cash fund requires

Accepted Answer

A) a debit to Cash. 
B) a credit to Petty Cash. 
C) a debit to various expense accounts. 
D) no accounting entry. 
A) a debit to Cash. 
B) a credit to Petty Cash. 
C) a debit to various expense accounts. 
D) no accounting entry.

Question 4

Blank checks

Accepted Answer

A) should be safeguarded. 
B) should be pre-signed. 
C) do not need to be safeguarded since they must be signed to be valid. 
D) should not be prenumbered. 
A) should be safeguarded. 
B) should be pre-signed. 
C) do not need to be safeguarded since they must be signed to be valid. 
D) should not be prenumbered.

Question 5

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Accepted Answer

A) True 
 B)False

Question 6

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A) Petty Cash, $94. 
B) Petty Cash, $97. 
C) Cash, $94; Cash Over and Short, $3. 
D) Cash, $97. 
A) Petty Cash, $94. 
B) Petty Cash, $97. 
C) Cash, $94; Cash Over and Short, $3. 
D) Cash, $97.

Question 7

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

Accepted Answer

A) True 
 B)False

Question 8

Entries are made to the Petty Cash account when

Accepted Answer

A) establishing the fund. 
B) making payments out of the fund. 
C) recording shortages in the fund. 
D) replenishing the fund. 
A) establishing the fund. 
B) making payments out of the fund. 
C) recording shortages in the fund. 
D) replenishing the fund.

Question 9

In general, documents should be prenumbered and all documents should be accounted for.

Accepted Answer

A) True 
 B)False

Question 10

The size of the petty cash fund is dependent on

Accepted Answer

A) the wishes of the custodian of the fund. 
B) anticipated disbursements for the year. 
C) anticipated disbursements for a three- to four-week period. 
D) the size of the regular cash account. 
A) the wishes of the custodian of the fund. 
B) anticipated disbursements for the year. 
C) anticipated disbursements for a three- to four-week period. 
D) the size of the regular cash account.

Question 11

To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by an employee who has no other responsibilities pertaining to cash.

Accepted Answer

A) True 
 B)False

Question 12

A debit memorandum would not be issued by the bank for

Accepted Answer

A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable. 
A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable.

Question 13

Only large companies need to be concerned with a system of internal control.

Accepted Answer

A) True 
 B)False

Question 14

Rebekah Grace has worked for Specoly Inc., for 20 years without taking a vacation. An internal control feature that would address this situation would be

Accepted Answer

A) other controls. 
B) establishment of responsibility. 
C) physical controls. 
D) documentation procedures. 
A) other controls. 
B) establishment of responsibility. 
C) physical controls. 
D) documentation procedures.

Question 15

A voucher system is used by many large companies as a means of controlling cash receipts.

Accepted Answer

A) True 
 B)False

Question 16

Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate.

Accepted Answer

A) True 
 B)False

Question 17

Compensating balances are a restriction on the use of a company's cash and should be

Accepted Answer

A) reported as a current asset. 
B) reported as a noncurrent asset. 
C) disclosed in the financial statements. 
D) reported as a reduction of cash. 
A) reported as a current asset. 
B) reported as a noncurrent asset. 
C) disclosed in the financial statements. 
D) reported as a reduction of cash.

Question 18

Cash equivalents are defined by IFRS as

Accepted Answer

A) cash on hand. 
B) demand deposits. 
C) cash on hand and demand deposits. 
D) short-term, highly liquid investments that are readily convertible into known amounts of cash. 
A) cash on hand. 
B) demand deposits. 
C) cash on hand and demand deposits. 
D) short-term, highly liquid investments that are readily convertible into known amounts of cash.

Question 19

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 check. 
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 check. 
D) all purchases are made on credit.

Question 20

What percentage of companies worldwide have experienced fraud in a recent two-year period?

Accepted Answer

A) 1% 
B) 10% 
C) 50% 
D) 100% 
A) 1% 
B) 10% 
C) 50% 
D) 100%

If employees are bonded

A highly automated computerized system of accounting eliminates the need for internal control.

Replenishing the petty cash fund requires

Blank checks

For efficiency of operations and better control over cash, a company should maintain only one bank account.

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

Entries are made to the Petty Cash account when

In general, documents should be prenumbered and all documents should be accounted for.

The size of the petty cash fund is dependent on

To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by an employee who has no other responsibilities pertaining to cash.

A debit memorandum would not be issued by the bank for

Only large companies need to be concerned with a system of internal control.

Rebekah Grace has worked for Specoly Inc., for 20 years without taking a vacation. An internal control feature that would address this situation would be

A voucher system is used by many large companies as a means of controlling cash receipts.

Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate.

Compensating balances are a restriction on the use of a company's cash and should be

Cash equivalents are defined by IFRS as

Control over cash disbursements is generally more effective when

What percentage of companies worldwide have experienced fraud in a recent two-year period?

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

If employees are bonded

A highly automated computerized system of accounting eliminates the need for internal control.

Replenishing the petty cash fund requires

Blank checks

For efficiency of operations and better control over cash, a company should maintain only one bank account.

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

Entries are made to the Petty Cash account when

In general, documents should be prenumbered and all documents should be accounted for.

The size of the petty cash fund is dependent on

To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by an employee who has no other responsibilities pertaining to cash.

A debit memorandum would not be issued by the bank for

Only large companies need to be concerned with a system of internal control.

Rebekah Grace has worked for Specoly Inc., for 20 years without taking a vacation. An internal control feature that would address this situation would be

A voucher system is used by many large companies as a means of controlling cash receipts.

Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate.

Compensating balances are a restriction on the use of a company's cash and should be

Cash equivalents are defined by IFRS as

Control over cash disbursements is generally more effective when

What percentage of companies worldwide have experienced fraud in a recent two-year period?

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