Question 1

A __________________ fund is used to pay relatively small expenditures.

Accepted Answer

The answer of A __________________ fund is used to pay...

Question 2

At April 30 Dorale Company has the following bank information: cash balance per bank $2500; outstanding checks $385; deposits in transit $260; credit memo for interest $50; bank service charge $15. What is Dorale's adjusted cash balance on April 30?

Accepted Answer

A)  $2375 
B)  $2440 
C)  $2500 
D)  $2660 
A)  $2375 
B)  $2440 
C)  $2500 
D)  $2660

Question 3

The independent internal verification principle involves each of the following except the ______________ of data prepared by other employees.

Accepted Answer

A)  comparison 
B)  reconciliation 
C)  review 
D)  segregation 
A)  comparison 
B)  reconciliation 
C)  review 
D)  segregation

Question 4

Internal controls are not designed to safeguard assets from

Accepted Answer

A)  natural disasters. 
B)  employee theft. 
C)  robbery. 
D)  unauthorized use. 
A)  natural disasters. 
B)  employee theft. 
C)  robbery. 
D)  unauthorized use.

Question 5

If a check correctly written and paid by the bank for $854 is incorrectly recorded on the company's books for $845 the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  deduct $9 from the book's balance. 
B)  add $9 to the book's balance. 
C)  deduct $9 from the bank's balance. 
D)  deduct $854 from the book's balance. 
A)  deduct $9 from the book's balance. 
B)  add $9 to the book's balance. 
C)  deduct $9 from the bank's balance. 
D)  deduct $854 from the book's balance.

Question 6

If the month-end bank statement shows a balance of $75000 outstanding checks are $54000 a deposit of $15000 was in transit at month end and a check for $4000 was erroneously charged by the bank against the account the correct balance in the bank account at month end is

Accepted Answer

A)  $37000. 
B)  $40000. 
C)  $75000. 
D)  $118000. 
A)  $37000. 
B)  $40000. 
C)  $75000. 
D)  $118000.

Question 7

When two or more people get together for the purpose of circumventing prescribed controls it is called

Accepted Answer

A)  a fraud committee. 
B)  collusion. 
C)  a division of duties. 
D)  bonding of employees. 
A)  a fraud committee. 
B)  collusion. 
C)  a division of duties. 
D)  bonding of employees.

Question 8

Match the principle of internal control to each of the following cases.

Accepted Answer

The answer of Match the principle of internal control to...

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

If a check correctly written and paid by the bank for $724 is incorrectly recorded on the company's books for $742 the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  add $18 to the bank's balance. 
B)  add $18 to the book's balance. 
C)  deduct $724 from the bank's balance. 
D)  deduct $724 from the book's balance. 
A)  add $18 to the bank's balance. 
B)  add $18 to the book's balance. 
C)  deduct $724 from the bank's balance. 
D)  deduct $724 from the book's balance.

Question 11

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

Accepted Answer

A) True 
 B)False

Question 12

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 13

The cash account shows a balance of $85000 before reconciliation. The bank statement does not include a deposit of $5000 made on the last day of the month. The bank statement shows a collection by the bank of $2400 and a customer's check for $680 was returned because it was NSF. A customer's check for $900 was recorded on the books as $1080 and a check written for $138 was recorded as $183. The correct balance in the cash account was

Accepted Answer

A)  $86540. 
B)  $86585. 
C)  $87400. 
D)  $95350. 
A)  $86540. 
B)  $86585. 
C)  $87400. 
D)  $95350.

Question 14

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 rendered. 
D)  shows the activity which 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 rendered. 
D)  shows the activity which increased or decreased the depositor's account balance.

Question 15

Gretchen Gobbell Grace has worked for Hitone Inc. for 20 years without taking a vacation. An internal control feature that would address this situation would be

Accepted Answer

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

Question 16

A petty cash fund is generally established in order to

Accepted Answer

A)  pay for all merchandise purchased on account. 
B)  pay employees' wages. 
C)  make loans internally to employees. 
D)  pay relatively small expenditures. 
A)  pay for all merchandise purchased on account. 
B)  pay employees' wages. 
C)  make loans internally to employees. 
D)  pay relatively small expenditures.

Question 17

All of the following would involve a debit memorandum except

Accepted Answer

A)  a bank service charge. 
B)  an NSF check. 
C)  the cost of printing checks. 
D)  interest earned. 
A)  a bank service charge. 
B)  an NSF check. 
C)  the cost of printing checks. 
D)  interest earned.

Question 18

Identify which of the following reconciling items would require an adjusting entry to be made by Danielle Doyle Company.
1. Deposits in transit totaled $2000.
2. A check written to the company for $415 by Cartography Company was returned NSF.
3. The bank charged the company $25 for printing checks.
4. Outstanding checks totaled $3300
5. A debit memorandum reported an EFT of $178 to Salome Utilities

Accepted Answer

Adjusting entries would be req

Question 19

Match the internal control principle below with the appropriate cash receipts procedure described.

Accepted Answer

The answer of Match the internal control principle below with...

Question 20

Reconciling the bank statement monthly is an example of

Accepted Answer

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

Exam 8: Fraud, Internal Control, and Cash

A __________________ fund is used to pay relatively small expenditures.

At April 30 Dorale Company has the following bank information: cash balance per bank $2500; outstanding checks $385; deposits in transit $260; credit memo for interest $50; bank service charge $15. What is Dorale's adjusted cash balance on April 30?

The independent internal verification principle involves each of the following except the ______________ of data prepared by other employees.

Internal controls are not designed to safeguard assets from

If a check correctly written and paid by the bank for $854 is incorrectly recorded on the company's books for $845 the appropriate treatment on the bank reconciliation would be to

If the month-end bank statement shows a balance of $75000 outstanding checks are $54000 a deposit of $15000 was in transit at month end and a check for $4000 was erroneously charged by the bank against the account the correct balance in the bank account at month end is

When two or more people get together for the purpose of circumventing prescribed controls it is called

Match the principle of internal control to each of the following cases.

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

If a check correctly written and paid by the bank for $724 is incorrectly recorded on the company's books for $742 the appropriate treatment on the bank reconciliation would be to

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

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

A bank statement

Gretchen Gobbell Grace has worked for Hitone Inc. for 20 years without taking a vacation. An internal control feature that would address this situation would be

A petty cash fund is generally established in order to

All of the following would involve a debit memorandum except

Match the internal control principle below with the appropriate cash receipts procedure described.

Reconciling the bank statement monthly is an example of

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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