Question 1

Which of the following factors does NOT contribute to fraudulent activities?

Accepted Answer

A)  opportunity 
B)  promotion 
C)  financial pressure 
D)  rationalization 
A)  opportunity 
B)  promotion 
C)  financial pressure 
D)  rationalization

Question 2

Electronic funds transfer

Accepted Answer

A)  occurs when a company has a computerized cash register. 
B)  occurs when a company downloads bank details to a company computer. 
C)  occurs when a certified cheque is requested. 
D)  is a system that electronically transfers funds between parties without the use of paper. 
A)  occurs when a company has a computerized cash register. 
B)  occurs when a company downloads bank details to a company computer. 
C)  occurs when a certified cheque is requested. 
D)  is a system that electronically transfers funds between parties without the use of paper.

Question 3

Having one person receive all cash and a different person post to the Accounts Receivable account in the general ledger is an example of

Accepted Answer

A)  inadequate internal control. 
B)  duplication of effort. 
C)  independent check of performance. 
D)  segregation of duties. 
A)  inadequate internal control. 
B)  duplication of effort. 
C)  independent check of performance. 
D)  segregation of duties.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

One of the controls for documents is to have all of the documents pre-numbered.

Accepted Answer

A) True 
 B)False

Question 6

All errors in a bank reconciliation will result in a journal entry being made by the company.

Accepted Answer

A) True 
 B)False

Question 7

Sales using a retailer's own credit card are considered to be

Accepted Answer

A)  cash. 
B)  prepaid expenses. 
C)  accounts receivable. 
D)  bank loans. 
A)  cash. 
B)  prepaid expenses. 
C)  accounts receivable. 
D)  bank loans.

Question 8

To replenish a petty cash fund, the entry would debit the Expense account and credit Petty Cash.

Accepted Answer

A) True 
 B)False

Question 9

Control over cash payments is generally more effective when

Accepted Answer

A)  all bills are paid when due. 
B)  payments are made by the accounts payable subsidiary clerk. 
C)  payments are made by cheque. 
D)  all purchases are made by one individual. 
A)  all bills are paid when due. 
B)  payments are made by the accounts payable subsidiary clerk. 
C)  payments are made by cheque. 
D)  all purchases are made by one individual.

Question 10

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 with the balance per bank. 
D)  by the person who is authorized to sign cheques. 
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 with the balance per bank. 
D)  by the person who is authorized to sign cheques.

Question 11

Because cash is a company's most liquid asset it is typically listed first in the current asset section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

A bank overdraft occurs

Accepted Answer

A)  after a bank reconciliation. 
B)  when a cheque is written for more than the amount in the bank account. 
C)  when a previously deposited customer cheque bounces. 
D)  when an error is discovered. 
A)  after a bank reconciliation. 
B)  when a cheque is written for more than the amount in the bank account. 
C)  when a previously deposited customer cheque bounces. 
D)  when an error is discovered.

Question 13

If a deposit is listed as "in transit" on the bank reconciliation, the balance in the bank account is more than the amount showing in the company's books.

Accepted Answer

A) True 
 B)False

Question 14

Proper control for over-the-counter cash receipts includes

Accepted Answer

A)  a cash register with totals visible to the customer. 
B)  using electronic cash registers with no tapes. 
C)  placing each customer deposit in a separate envelope. 
D)  placing each customer deposit in a safety deposit box. 
A)  a cash register with totals visible to the customer. 
B)  using electronic cash registers with no tapes. 
C)  placing each customer deposit in a separate envelope. 
D)  placing each customer deposit in a safety deposit box.

Question 15

An electronic funds transfer will result in less internal control because no cash or cheques are handled by company employees.

Accepted Answer

A) True 
 B)False

Question 16

One advantage of a debit card is that the retailer knows immediately whether the customer has enough money in their account to pay for the transaction.

Accepted Answer

A) True 
 B)False

Question 17

The purpose of a petty cash fund is to eliminate the nuisance of making payments by EFT and cheques for common small business purchases, while still maintaining reasonable controls.

Accepted Answer

A) True 
 B)False

Question 18

When customers make purchases with a bank credit card, the retailer

Accepted Answer

A)  is responsible for maintaining customer accounts. 
B)  is not involved in the collection process. 
C)  absorbs any losses from uncollectible accounts. 
D)  receives cash equal to the full price of the merchandise sold from the credit card company. 
A)  is responsible for maintaining customer accounts. 
B)  is not involved in the collection process. 
C)  absorbs any losses from uncollectible accounts. 
D)  receives cash equal to the full price of the merchandise sold from the credit card company.

Question 19

The outstanding cheques should always decrease in subsequent months if no new cheques have been issued by the company.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT considered a control activity over cash receipts?

Accepted Answer

A)  Different individuals approve and make payments. 
B)  Only designated personnel are authorized to handle cash receipts. 
C)  Use remittance advices, cash register tapes, and deposit slips. 
D)  Supervisors count cash receipts daily. 
A)  Different individuals approve and make payments. 
B)  Only designated personnel are authorized to handle cash receipts. 
C)  Use remittance advices, cash register tapes, and deposit slips. 
D)  Supervisors count cash receipts daily.

Which of the following factors does NOT contribute to fraudulent activities?

Electronic funds transfer

Having one person receive all cash and a different person post to the Accounts Receivable account in the general ledger is an example of

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

One of the controls for documents is to have all of the documents pre-numbered.

All errors in a bank reconciliation will result in a journal entry being made by the company.

Sales using a retailer's own credit card are considered to be

To replenish a petty cash fund, the entry would debit the Expense account and credit Petty Cash.

Control over cash payments is generally more effective when

A bank reconciliation should be prepared

Because cash is a company's most liquid asset it is typically listed first in the current asset section of the balance sheet.

A bank overdraft occurs

If a deposit is listed as "in transit" on the bank reconciliation, the balance in the bank account is more than the amount showing in the company's books.

Proper control for over-the-counter cash receipts includes

An electronic funds transfer will result in less internal control because no cash or cheques are handled by company employees.

One advantage of a debit card is that the retailer knows immediately whether the customer has enough money in their account to pay for the transaction.

The purpose of a petty cash fund is to eliminate the nuisance of making payments by EFT and cheques for common small business purchases, while still maintaining reasonable controls.

When customers make purchases with a bank credit card, the retailer

The outstanding cheques should always decrease in subsequent months if no new cheques have been issued by the company.

Which of the following is NOT considered a control activity over cash receipts?

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

Which of the following factors does NOT contribute to fraudulent activities?

Electronic funds transfer

Having one person receive all cash and a different person post to the Accounts Receivable account in the general ledger is an example of

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

One of the controls for documents is to have all of the documents pre-numbered.

All errors in a bank reconciliation will result in a journal entry being made by the company.

Sales using a retailer's own credit card are considered to be

To replenish a petty cash fund, the entry would debit the Expense account and credit Petty Cash.

Control over cash payments is generally more effective when

A bank reconciliation should be prepared

Because cash is a company's most liquid asset it is typically listed first in the current asset section of the balance sheet.

A bank overdraft occurs

If a deposit is listed as "in transit" on the bank reconciliation, the balance in the bank account is more than the amount showing in the company's books.

Proper control for over-the-counter cash receipts includes

An electronic funds transfer will result in less internal control because no cash or cheques are handled by company employees.

One advantage of a debit card is that the retailer knows immediately whether the customer has enough money in their account to pay for the transaction.

The purpose of a petty cash fund is to eliminate the nuisance of making payments by EFT and cheques for common small business purchases, while still maintaining reasonable controls.

When customers make purchases with a bank credit card, the retailer

The outstanding cheques should always decrease in subsequent months if no new cheques have been issued by the company.

Which of the following is NOT considered a control activity over cash receipts?

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