Question 1

In large companies, the independent internal verification procedure is often assigned to

Accepted Answer

A) computer operators. 
B) management. 
C) internal auditors. 
D) outside CPAs. 
A) computer operators. 
B) management. 
C) internal auditors. 
D) outside CPAs. C

Question 2

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

Accepted Answer

A) establishment of responsibility. 
B) independent internal verification. 
C) separation of duties. 
D) rotation of duties. 
A) establishment of responsibility. 
B) independent internal verification. 
C) separation of duties. 
D) rotation of duties. C

Question 3

An effective system of internal control centralizes functions in a single capable individual.

Accepted Answer

A) True 
 B)False  False

Question 4

An employee authorized to sign checks should not record

Accepted Answer

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

Question 5

Under an effective system of internal control, errors occur only because of fraud or dishonesty.

Accepted Answer

A) True 
 B)False

Question 6

In a small business, the lack of certain separations of duties can best be overcome by

Accepted Answer

A) bonding the employees. 
B) getting the owner actively involved. 
C) hiring only honest employees. 
D) holding one person responsible for a given set of transactions. 
A) bonding the employees. 
B) getting the owner actively involved. 
C) hiring only honest employees. 
D) holding one person responsible for a given set of transactions.

Question 7

Which one of the following would not cause a bank to debit a depositor's account?

Accepted Answer

A) Bank service charge. 
B) Collection of a note receivable. 
C) Wiring of funds to other locations. 
D) Checks marked NSF. 
A) Bank service charge. 
B) Collection of a note receivable. 
C) Wiring of funds to other locations. 
D) Checks marked NSF.

Question 8

Blank checks

Accepted Answer

A) should be safeguarded. 
B) should be pre-signed. 
C) do not need to be safeguarded since they must be signed to be valid. 
D) should not be pre-numbered. 
A) should be safeguarded. 
B) should be pre-signed. 
C) do not need to be safeguarded since they must be signed to be valid. 
D) should not be pre-numbered.

Question 9

Which of the following would be deducted from the balance per books on a bank reconciliation?

Accepted Answer

A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) Service charges. 
A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) Service charges.

Question 10

A traditional definition of internal control specifically includes all of the following features except

Accepted Answer

A) adherence to prescribed managerial policies. 
B) promotion of operational efficiency. 
C) reliability of accounting data. 
D) insistence that employees not take earned vacations. 
A) adherence to prescribed managerial policies. 
B) promotion of operational efficiency. 
C) reliability of accounting data. 
D) insistence that employees not take earned vacations.

Question 11

James Company had checks outstanding totaling $32,400 on its June bank reconciliation.In July, James Company issued checks totaling $233,400.The July bank statement shows that $157,800 in checks cleared the bank in July.A check from one of James Company's customers in the amount of $1,800 was also returned marked "NSF." The amount of outstanding checks on James Company's July bank reconciliation should be

Accepted Answer

A) $75,600. 
B) $108,000. 
C) $106,200. 
D) $43,200. 
A) $75,600. 
B) $108,000. 
C) $106,200. 
D) $43,200.

Question 12

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the cash account.

Accepted Answer

A) True 
 B)False

Question 13

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A) add $54 to the book's balance. 
B) subtract $54 from the book's balance. 
C) deduct $54 from the bank's balance. 
D) deduct $628 from the book's balance. 
A) add $54 to the book's balance. 
B) subtract $54 from the book's balance. 
C) deduct $54 from the bank's balance. 
D) deduct $628 from the book's balance.

Question 14

A check written by the company for $275 is incorrectly recorded by a company as $257.On the bank reconciliation, the $18 error should be

Accepted Answer

A) added to the balance per books. 
B) deducted from the balance per books. 
C) added to the balance per bank. 
D) deducted from the balance per bank. 
A) added to the balance per books. 
B) deducted from the balance per books. 
C) added to the balance per bank. 
D) deducted from the balance per bank.

Question 15

All of the following are items that would most likely be paid from a petty cash fund except

Accepted Answer

A) postage due. 
B) taxi fares. 
C) administrative wages. 
D) freight-out. 
A) postage due. 
B) taxi fares. 
C) administrative wages. 
D) freight-out.

Question 16

Internal control measures

Accepted Answer

A) only apply to publicly traded companies. 
B) are in place to safeguard assets. 
C) can eliminate all irregularities in the accounting process. 
D) All of these answer choices are correct. 
A) only apply to publicly traded companies. 
B) are in place to safeguard assets. 
C) can eliminate all irregularities in the accounting process. 
D) All of these answer choices are correct.

Question 17

Maximum benefit from independent internal verification is obtained when

Accepted Answer

A) it is made on a pre-announced basis. 
B) it is done by the employee possessing custody of the asset. 
C) discrepancies are reported to management. 
D) it is done at the time of the audit. 
A) it is made on a pre-announced basis. 
B) it is done by the employee possessing custody of the asset. 
C) discrepancies are reported to management. 
D) it is done at the time of the audit.

Question 18

Which one of the following items would never appear on a cash budget?

Accepted Answer

A) Office salaries expense. 
B) Interest expense. 
C) Depreciation expense. 
D) Travel expense. 
A) Office salaries expense. 
B) Interest expense. 
C) Depreciation expense. 
D) Travel expense.

Question 19

Internal control is defined, in part, as a plan that safeguards

Accepted Answer

A) all balance sheet accounts. 
B) assets. 
C) liabilities. 
D) capital stock. 
A) all balance sheet accounts. 
B) assets. 
C) liabilities. 
D) capital stock.

Question 20

A $250 petty cash fund has cash of $25 and receipts of $200.The journal entry to replenish the account would include a credit to

Accepted Answer

A) Cash for $225. 
B) Petty Cash for $225. 
C) Cash Over and Short for $25. 
D) Cash for $200. 
A) Cash for $225. 
B) Petty Cash for $225. 
C) Cash Over and Short for $25. 
D) Cash for $200.

In large companies, the independent internal verification procedure is often assigned to

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

An effective system of internal control centralizes functions in a single capable individual.

An employee authorized to sign checks should not record

Under an effective system of internal control, errors occur only because of fraud or dishonesty.

In a small business, the lack of certain separations of duties can best be overcome by

Which one of the following would not cause a bank to debit a depositor's account?

Blank checks

Which of the following would be deducted from the balance per books on a bank reconciliation?

A traditional definition of internal control specifically includes all of the following features except

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the cash account.

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to

A check written by the company for $275 is incorrectly recorded by a company as $257.On the bank reconciliation, the $18 error should be

All of the following are items that would most likely be paid from a petty cash fund except

Internal control measures

Maximum benefit from independent internal verification is obtained when

Which one of the following items would never appear on a cash budget?

Internal control is defined, in part, as a plan that safeguards

A $250 petty cash fund has cash of $25 and receipts of $200.The journal entry to replenish the account would include a credit to

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 7: Fraud, Internal Control, and Cash

In large companies, the independent internal verification procedure is often assigned to

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

An effective system of internal control centralizes functions in a single capable individual.

An employee authorized to sign checks should not record

Under an effective system of internal control, errors occur only because of fraud or dishonesty.

In a small business, the lack of certain separations of duties can best be overcome by

Which one of the following would not cause a bank to debit a depositor's account?

Blank checks

Which of the following would be deducted from the balance per books on a bank reconciliation?

A traditional definition of internal control specifically includes all of the following features except

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the cash account.

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to

A check written by the company for $275 is incorrectly recorded by a company as $257.On the bank reconciliation, the $18 error should be

All of the following are items that would most likely be paid from a petty cash fund except

Internal control measures

Maximum benefit from independent internal verification is obtained when

Which one of the following items would never appear on a cash budget?

Internal control is defined, in part, as a plan that safeguards

A $250 petty cash fund has cash of $25 and receipts of $200.The journal entry to replenish the account would include a credit to

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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