Question 1

When used to monitor and control operations, internal control systems are a low priority for managers.

Accepted Answer

A) True 
 B)False

Question 2

Maintaining accurate records is an important internal control principle.

Accepted Answer

A) True 
 B)False

Question 3

A bank reconciliation results in creating an adjusted bank balance as well as an adjusted book balance.

Accepted Answer

A) True 
 B)False

Question 4

Identify how each of the following items would be treated on a bankreconciliation by entering one of the following codes in the space provided.   1. Outstanding cheques.2. Deposits in transit.3. Cheque #32, subtracted from the bank balance on last month's bank reconciliation, was returned with this month's statement.4. Included with the bank statement was a debit memo for bank servicecharges.5. Cash receipts placed in the bank's night depository after banking hours were not included on the bank statement prepared on the same date.6. Cheque #47 was written and recorded by the bank as $753. The business recorded the cheque as $735.7. A cheque listed as outstanding on last month's bank reconciliation was not returned with the current month's cancelled cheques.8. A deposit listed as outstanding on last month's bank reconciliationappeared as a deposit on the current month's bank statement.9. A credit memo enclosed with the bank statement shows that the bank collected a note on behalf of the account holder.10. A debit memo enclosed with the bank statement shows that the bankpaid a note on behalf of the account holder.

Accepted Answer

The answer of Identify how each of the following items...

Question 5

Internal control procedures for cash receipts require:

Accepted Answer

A) Separation of custody of cash receipts from their recordkeeping. 
B) All cheques to be numbered in sequence. 
C) In-store cash sales be recorded on a cash register at the time of each sale. 
D) Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale. 
E) All of these answers are correct. 
A) Separation of custody of cash receipts from their recordkeeping. 
B) All cheques to be numbered in sequence. 
C) In-store cash sales be recorded on a cash register at the time of each sale. 
D) Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale. 
E) All of these answers are correct.

Question 6

The Petty Cash account is a separate chequing account used for small amounts.

Accepted Answer

A) True 
 B)False

Question 7

Identify each of the following items as either (a)cash or (b)cash equivalent._____ 1. Coins_____ 2. Petty cash_____ 3. Three-month certificate of deposit_____ 4. Currency_____ 5. Certified cheque_____ 6. Cashier's cheque_____ 7. Loose change in a coffee tin_____ 8. Money orders

Accepted Answer

(1) a (2)

Question 8

Cash equivalents are short-term investments that a company invests in to increase earnings.

Accepted Answer

A) True 
 B)False

Question 9

The impact of technology on internal controls includes:

Accepted Answer

A) Reduced processing errors. 
B) Fewer hard copies of source documents. 
C) Elimination of the need for regular audits. 
D) More efficient separation of duties. 
E) Reduced processing errors and fewer hard copies of source documents. 
A) Reduced processing errors. 
B) Fewer hard copies of source documents. 
C) Elimination of the need for regular audits. 
D) More efficient separation of duties. 
E) Reduced processing errors and fewer hard copies of source documents.

Question 10

Cash consists of:

Accepted Answer

A) Certificates of deposit. 
B) Coins, currency, and chequing accounts. 
C) IOUs. 
D) Postage stamps. 
E) Coins, currency, chequing accounts, and certificates of deposit. 
A) Certificates of deposit. 
B) Coins, currency, and chequing accounts. 
C) IOUs. 
D) Postage stamps. 
E) Coins, currency, chequing accounts, and certificates of deposit.

Question 11

Preventing unauthorized access to company resources is one of the most difficult and time-consuming tasks for internal control experts.

Accepted Answer

A) True 
 B)False

Question 12

Prenumbered printed cheques are an example of which internal control principle?

Accepted Answer

A) Technological controls. 
B) Perform regular and independent reviews. 
C) Maintain adequate records. 
D) Technological controls and maintain adequate records. 
E) All of these answers are correct. 
A) Technological controls. 
B) Perform regular and independent reviews. 
C) Maintain adequate records. 
D) Technological controls and maintain adequate records. 
E) All of these answers are correct.

Question 13

DMS offers lawn and garden maintenance services. DMS customers pay largely by cheque and submit a remittance slip with their payment, to identify thecustomer account number to which the payment is applied. Ditta Mistry is the company owner and she attended a conference on internal controls. She plans to institute stronger internal controls over customer cash receipts. What controls might Ditta introduce?

Accepted Answer

Someone other than the accountant should

Question 14

In reconciling the bank balance, an unrecorded debit memorandum for printing cheques should be:

Accepted Answer

A) Deducted from the bank balance of cash. 
B) Deducted from the book balance of cash. 
C) Added to the bank balance of cash. 
D) Noted as a memo. 
E) Added to the book balance of cash. 
A) Deducted from the bank balance of cash. 
B) Deducted from the book balance of cash. 
C) Added to the bank balance of cash. 
D) Noted as a memo. 
E) Added to the book balance of cash.

Question 15

Credit cards are seen as an advantage by businesses because the cash is normally received quicker than with other forms of extended credit.

Accepted Answer

A) True 
 B)False

Question 16

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.

Accepted Answer

A) True 
 B)False

Question 17

A properly designed internal control system is a key part of systems design, analysis, and performance.

Accepted Answer

A) True 
 B)False

Question 18

A bank statement includes:

Accepted Answer

A) A list of outstanding cheques. 
B) The beginning and ending balance of the depositor's chequing account. 
C) A list of petty cash amounts. 
D) A list of outstanding cheques and a list of petty cash amounts. 
E) All of these answers are correct. 
A) A list of outstanding cheques. 
B) The beginning and ending balance of the depositor's chequing account. 
C) A list of petty cash amounts. 
D) A list of outstanding cheques and a list of petty cash amounts. 
E) All of these answers are correct.

Question 19

The use of internal controls provides guaranteed protection against losses due to operating activities.

Accepted Answer

A) True 
 B)False

Question 20

All monies disbursed from petty cash should be documented by a petty cash receipt.

Accepted Answer

A) True 
 B)False

When used to monitor and control operations, internal control systems are a low priority for managers.

Maintaining accurate records is an important internal control principle.

A bank reconciliation results in creating an adjusted bank balance as well as an adjusted book balance.

Internal control procedures for cash receipts require:

The Petty Cash account is a separate chequing account used for small amounts.

Identify each of the following items as either (a)cash or (b)cash equivalent.___ 1. Coins_ 2. Petty cash_ 3. Three-month certificate of deposit_ 4. Currency_ 5. Certified cheque_ 6. Cashier's cheque_ 7. Loose change in a coffee tin___ 8. Money orders

Cash equivalents are short-term investments that a company invests in to increase earnings.

The impact of technology on internal controls includes:

Cash consists of:

Preventing unauthorized access to company resources is one of the most difficult and time-consuming tasks for internal control experts.

Prenumbered printed cheques are an example of which internal control principle?

In reconciling the bank balance, an unrecorded debit memorandum for printing cheques should be:

Credit cards are seen as an advantage by businesses because the cash is normally received quicker than with other forms of extended credit.

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.

A properly designed internal control system is a key part of systems design, analysis, and performance.

A bank statement includes:

The use of internal controls provides guaranteed protection against losses due to operating activities.

All monies disbursed from petty cash should be documented by a petty cash receipt.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Receivables

Appendix

Filters

Exam 7: Internal Control and Cash

When used to monitor and control operations, internal control systems are a low priority for managers.

Maintaining accurate records is an important internal control principle.

A bank reconciliation results in creating an adjusted bank balance as well as an adjusted book balance.

Internal control procedures for cash receipts require:

The Petty Cash account is a separate chequing account used for small amounts.

Identify each of the following items as either (a)cash or (b)cash equivalent._____ 1. Coins_____ 2. Petty cash_____ 3. Three-month certificate of deposit_____ 4. Currency_____ 5. Certified cheque_____ 6. Cashier's cheque_____ 7. Loose change in a coffee tin_____ 8. Money orders

Cash equivalents are short-term investments that a company invests in to increase earnings.

The impact of technology on internal controls includes:

Cash consists of:

Preventing unauthorized access to company resources is one of the most difficult and time-consuming tasks for internal control experts.

Prenumbered printed cheques are an example of which internal control principle?

In reconciling the bank balance, an unrecorded debit memorandum for printing cheques should be:

Credit cards are seen as an advantage by businesses because the cash is normally received quicker than with other forms of extended credit.

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.

A properly designed internal control system is a key part of systems design, analysis, and performance.

A bank statement includes:

The use of internal controls provides guaranteed protection against losses due to operating activities.

All monies disbursed from petty cash should be documented by a petty cash receipt.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Receivables

Appendix

Filters

Identify each of the following items as either (a)cash or (b)cash equivalent.___ 1. Coins_ 2. Petty cash_ 3. Three-month certificate of deposit_ 4. Currency_ 5. Certified cheque_ 6. Cashier's cheque_ 7. Loose change in a coffee tin___ 8. Money orders