Question 1

Chavez Company maintains a petty cash fund with a balance of $100. A disbursement of $10 from the fund for postage is recorded as an expense in the accounting records

Accepted Answer

A)  at the time the cash is taken from the fund. 
B)  when the postage is used. 
C)  when the petty cash fund is replenished. 
D)  when the adjusting entries are prepared at year end. 
A)  at the time the cash is taken from the fund. 
B)  when the postage is used. 
C)  when the petty cash fund is replenished. 
D)  when the adjusting entries are prepared at year end. C

Question 2

Having different people approve and make payments is an example of an independent check of performance control activity over cash payments.

Accepted Answer

A) True 
 B)False  True

Question 3

EFT Payments increase the risk of lost, stolen, or forged cheques.

Accepted Answer

A) True 
 B)False  False

Question 4

A debit balance in Cash Over and Short is reported as a

Accepted Answer

A)  contra asset. 
B)  miscellaneous asset. 
C)  miscellaneous expense. 
D)  miscellaneous revenue. 
A)  contra asset. 
B)  miscellaneous asset. 
C)  miscellaneous expense. 
D)  miscellaneous revenue.

Question 5

Effective and efficient operations can be a result of a strong system of internal controls.

Accepted Answer

A) True 
 B)False

Question 6

A debit card gives customers access to money made available by a bank or other financial institution and is essentially the same as a short-term loan.

Accepted Answer

A) True 
 B)False

Question 7

A petty cash fund should NOT be used for

Accepted Answer

A)  postage due. 
B)  loans to the petty cash custodian. 
C)  taxi fares. 
D)  customer lunches. 
A)  postage due. 
B)  loans to the petty cash custodian. 
C)  taxi fares. 
D)  customer lunches.

Question 8

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 9

Internal auditors

Accepted Answer

A)  are hired by CPA firms to audit business firms. 
B)  are employees of the Canada Revenue Agency who evaluate the internal controls of companies filing tax returns. 
C)  evaluate the system of internal controls for the companies that employ them. 
D)  cannot evaluate the system of internal controls of the company that employs them because they are not independent. 
A)  are hired by CPA firms to audit business firms. 
B)  are employees of the Canada Revenue Agency who evaluate the internal controls of companies filing tax returns. 
C)  evaluate the system of internal controls for the companies that employ them. 
D)  cannot evaluate the system of internal controls of the company that employs them because they are not independent.

Question 10

Cash lacks owner identification.

Accepted Answer

A) True 
 B)False

Question 11

An employee authorized to sign cheques should NOT record

Accepted Answer

A)  owner cash contributions. 
B)  mail receipts. 
C)  cash payment transactions. 
D)  sales transactions. 
A)  owner cash contributions. 
B)  mail receipts. 
C)  cash payment transactions. 
D)  sales transactions.

Question 12

A deposit in transit is a deposit which has been recorded in the company's books but NOT yet recorded by the bank.

Accepted Answer

A) True 
 B)False

Question 13

Too much personal debt creates an opportunity to commit fraud.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is NOT an example of financial pressure to commit fraud?

Accepted Answer

A)  gambling 
B)  too much debt 
C)  drug addiction 
D)  inexpensive lifestyle 
A)  gambling 
B)  too much debt 
C)  drug addiction 
D)  inexpensive lifestyle

Question 15

If a cheque correctly written and paid by the bank for $528 is incorrectly recorded on the company's books for $582, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  add $54 to the bank's balance. 
B)  add $54 to the book's balance. 
C)  deduct $54 from the bank's balance. 
D)  deduct $528 from the book's balance. 
A)  add $54 to the bank's balance. 
B)  add $54 to the book's balance. 
C)  deduct $54 from the bank's balance. 
D)  deduct $528 from the book's balance.

Question 16

Independent checks of performance should be carried out only by external auditors.

Accepted Answer

A) True 
 B)False

Question 17

A bank overdraft would be reported as

Accepted Answer

A)  a current liability. 
B)  part of the current asset cash account. 
C)  restricted funds. 
D)  accounts receivable. 
A)  a current liability. 
B)  part of the current asset cash account. 
C)  restricted funds. 
D)  accounts receivable.

Question 18

Deposits in transit

Accepted Answer

A)  have been recorded on the company's books but not yet by the bank. 
B)  have been recorded by the bank but not yet by the company. 
C)  have not been recorded by the bank or the company. 
D)  are cheques from customers which have not yet been received by the company. 
A)  have been recorded on the company's books but not yet by the bank. 
B)  have been recorded by the bank but not yet by the company. 
C)  have not been recorded by the bank or the company. 
D)  are cheques from customers which have not yet been received by the company.

Question 19

Internal control is a process that helps an organization achieve reliable financial reporting.

Accepted Answer

A) True 
 B)False

Question 20

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.

Chavez Company maintains a petty cash fund with a balance of $100. A disbursement of $10 from the fund for postage is recorded as an expense in the accounting records

Having different people approve and make payments is an example of an independent check of performance control activity over cash payments.

EFT Payments increase the risk of lost, stolen, or forged cheques.

A debit balance in Cash Over and Short is reported as a

Effective and efficient operations can be a result of a strong system of internal controls.

A debit card gives customers access to money made available by a bank or other financial institution and is essentially the same as a short-term loan.

A petty cash fund should NOT be used for

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

Internal auditors

Cash lacks owner identification.

An employee authorized to sign cheques should NOT record

A deposit in transit is a deposit which has been recorded in the company's books but NOT yet recorded by the bank.

Too much personal debt creates an opportunity to commit fraud.

Which of the following is NOT an example of financial pressure to commit fraud?

If a cheque correctly written and paid by the bank for $528 is incorrectly recorded on the company's books for $582, the appropriate treatment on the bank reconciliation would be to

Independent checks of performance should be carried out only by external auditors.

A bank overdraft would be reported as

Deposits in transit

Internal control is a process that helps an organization achieve reliable financial reporting.

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

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Inventory Costing

Accounting for Receivables

Long-Lived Assets

Current Liabilities and Payroll

Filters

Exam 7: Internal Control and Cash

Chavez Company maintains a petty cash fund with a balance of $100. A disbursement of $10 from the fund for postage is recorded as an expense in the accounting records

Having different people approve and make payments is an example of an independent check of performance control activity over cash payments.

EFT Payments increase the risk of lost, stolen, or forged cheques.

A debit balance in Cash Over and Short is reported as a

Effective and efficient operations can be a result of a strong system of internal controls.

A debit card gives customers access to money made available by a bank or other financial institution and is essentially the same as a short-term loan.

A petty cash fund should NOT be used for

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

Internal auditors

Cash lacks owner identification.

An employee authorized to sign cheques should NOT record

A deposit in transit is a deposit which has been recorded in the company's books but NOT yet recorded by the bank.

Too much personal debt creates an opportunity to commit fraud.

Which of the following is NOT an example of financial pressure to commit fraud?

If a cheque correctly written and paid by the bank for $528 is incorrectly recorded on the company's books for $582, the appropriate treatment on the bank reconciliation would be to

Independent checks of performance should be carried out only by external auditors.

A bank overdraft would be reported as

Deposits in transit

Internal control is a process that helps an organization achieve reliable financial reporting.

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

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Inventory Costing

Accounting for Receivables

Long-Lived Assets

Current Liabilities and Payroll

Filters