Question 1

A VP of Sales would be the correct person to establish policies for making credit sales.

Accepted Answer

A) True 
 B)False

Question 2

A debit memo by a bank would mean that a journal entry by the bank would be necessary.

Accepted Answer

A) True 
 B)False

Question 3

An independent check of performance would be more effective if it is done by surprise.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  Different individuals approve and make payments. 
B)  Compare cheques with invoices. 
C)  Use remittance advices, cash register tapes, and deposit slips. 
D)  Use electronic payments when possible. 
A)  Different individuals approve and make payments. 
B)  Compare cheques with invoices. 
C)  Use remittance advices, cash register tapes, and deposit slips. 
D)  Use electronic payments when possible.

Question 5

Julian Company had cheques outstanding totalling $6,400 on its May 31 bank reconciliation. In June, Julian Company issued cheques totalling $38,900. The June bank statement shows that $26,300 in cheques cleared the bank in June. A cheque from one of Julian Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding cheques on Julian Company's June 30 bank reconciliation should be

Accepted Answer

A)  $12,600. 
B)  $19,000. 
C)  $17,700. 
D)  $7,200. 
A)  $12,600. 
B)  $19,000. 
C)  $17,700. 
D)  $7,200.

Question 6

Clearing is the process whereby

Accepted Answer

A)  the bank account balance agrees with the company's accounting records. 
B)  the signature on the cheque is compared to the signature card. 
C)  a cheque or deposit is accepted by the maker's bank. 
D)  a deposit agrees with the daily cash receipts. 
A)  the bank account balance agrees with the company's accounting records. 
B)  the signature on the cheque is compared to the signature card. 
C)  a cheque or deposit is accepted by the maker's bank. 
D)  a deposit agrees with the daily cash receipts.

Question 7

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Accepted Answer

A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  an owner's equity account. 
A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  an owner's equity account.

Question 8

Internal auditors are company employees.

Accepted Answer

A) True 
 B)False

Question 9

The size of a business may limit internal controls.

Accepted Answer

A) True 
 B)False

Question 10

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 11

A company's cash deposit, while appearing as a debit on the company's books, would be shown as a credit on company's bank statement.

Accepted Answer

A) True 
 B)False

Question 12

A strong system of internal controls will prove that an organization complies with all relevant laws and regulations.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT an element of the fraud triangle?

Accepted Answer

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

Question 14

Sam Samson has worked for Tantramar Development for 20 years without taking a vacation. An internal control that would address this situation would be

Accepted Answer

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

Question 15

An example of physical and IT controls would NOT include which of the following?

Accepted Answer

A)  source documents sent promptly to the accounting department 
B)  alarms set at the close of the business day 
C)  computer facilities requiring a password or fingerprint 
D)  time clocks used to record time worked 
A)  source documents sent promptly to the accounting department 
B)  alarms set at the close of the business day 
C)  computer facilities requiring a password or fingerprint 
D)  time clocks used to record time worked

Question 16

In Canada, the responsibility for internal controls is the responsibility of the management.

Accepted Answer

A) True 
 B)False

Question 17

The control activity related to NOT having the same person authorize and pay for goods is known as

Accepted Answer

A)  establishment of responsibility. 
B)  independent check of performance. 
C)  segregation of duties. 
D)  rotation of duties. 
A)  establishment of responsibility. 
B)  independent check of performance. 
C)  segregation of duties. 
D)  rotation of duties.

Question 18

All of the following are considered to be cash EXCEPT

Accepted Answer

A)  cheques. 
B)  debit card receipts. 
C)  nonbank credit card slips. 
D)  money orders. 
A)  cheques. 
B)  debit card receipts. 
C)  nonbank credit card slips. 
D)  money orders.

Question 19

Electronic funds transfers are used to

Accepted Answer

A)  reduce the risk of lost or stolen cheques. 
B)  reduce the cost of making payments by cheque. 
C)  used to make payroll payments to employees. 
D)  all of the above 
A)  reduce the risk of lost or stolen cheques. 
B)  reduce the cost of making payments by cheque. 
C)  used to make payroll payments to employees. 
D)  all of the above

A VP of Sales would be the correct person to establish policies for making credit sales.

A debit memo by a bank would mean that a journal entry by the bank would be necessary.

An independent check of performance would be more effective if it is done by surprise.

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

Clearing is the process whereby

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Internal auditors are company employees.

The size of a business may limit internal controls.

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

A company's cash deposit, while appearing as a debit on the company's books, would be shown as a credit on company's bank statement.

A strong system of internal controls will prove that an organization complies with all relevant laws and regulations.

Which of the following is NOT an element of the fraud triangle?

Sam Samson has worked for Tantramar Development for 20 years without taking a vacation. An internal control that would address this situation would be

An example of physical and IT controls would NOT include which of the following?

In Canada, the responsibility for internal controls is the responsibility of the management.

The control activity related to NOT having the same person authorize and pay for goods is known as

All of the following are considered to be cash EXCEPT

Electronic funds transfers are used to

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

A VP of Sales would be the correct person to establish policies for making credit sales.

A debit memo by a bank would mean that a journal entry by the bank would be necessary.

An independent check of performance would be more effective if it is done by surprise.

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

Clearing is the process whereby

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Internal auditors are company employees.

The size of a business may limit internal controls.

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

A company's cash deposit, while appearing as a debit on the company's books, would be shown as a credit on company's bank statement.

A strong system of internal controls will prove that an organization complies with all relevant laws and regulations.

Which of the following is NOT an element of the fraud triangle?

Sam Samson has worked for Tantramar Development for 20 years without taking a vacation. An internal control that would address this situation would be

An example of physical and IT controls would NOT include which of the following?

In Canada, the responsibility for internal controls is the responsibility of the management.

The control activity related to NOT having the same person authorize and pay for goods is known as

All of the following are considered to be cash EXCEPT

Electronic funds transfers are used to

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