Question 1

Which of the following does not appear as a separate section on the cash budget?

Accepted Answer

A) Cash receipts. 
B) Cash disbursements. 
C) Cash sales. 
D) Financing. 
A) Cash receipts. 
B) Cash disbursements. 
C) Cash sales. 
D) Financing.

Question 2

Internal controls are not designed to safeguard assets from

Accepted Answer

A) natural disasters. 
B) employee theft. 
C) robbery. 
D) unauthorized use. 
A) natural disasters. 
B) employee theft. 
C) robbery. 
D) unauthorized use.

Question 3

Which one of the following items would not be considered cash?

Accepted Answer

A) Coins. 
B) Money orders. 
C) Currency. 
D) Postdated checks. 
A) Coins. 
B) Money orders. 
C) Currency. 
D) Postdated checks.

Question 4

A $200 petty cash fund has cash of $32 and receipts of $172.The journal entry to replenish the account would include a

Accepted Answer

A) debit to Cash for $168. 
B) credit to Petty Cash for $168. 
C) credit to Cash Over and Short for $4. 
D) credit to Cash for $172. 
A) debit to Cash for $168. 
B) credit to Petty Cash for $168. 
C) credit to Cash Over and Short for $4. 
D) credit to Cash for $172.

Question 5

Expected direct materials purchases in Wade Company are $630,000 in the first quarter and $810,000 in the second quarter.Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter.The budgeted cash payments for purchases in the second quarter are:

Accepted Answer

A) $864,000. 
B) $810,000. 
C) $702,000. 
D) $648,000. 
A) $864,000. 
B) $810,000. 
C) $702,000. 
D) $648,000.

Question 6

Sara Smith has worked for Bosco Inc.for 20 years without taking a vacation.An internal control feature that would address this situation would be

Accepted Answer

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

Question 7

The custodian of a company asset should

Accepted Answer

A) have access to the accounting records for that asset. 
B) be someone outside the company. 
C) not have access to the accounting records for that asset. 
D) be an accountant. 
A) have access to the accounting records for that asset. 
B) be someone outside the company. 
C) not have access to the accounting records for that asset. 
D) be an accountant.

Question 8

The principle of establishing responsibility does not include

Accepted Answer

A) one person being responsible for one task. 
B) authorization of transactions. 
C) independent internal verification. 
D) approval of transactions. 
A) one person being responsible for one task. 
B) authorization of transactions. 
C) independent internal verification. 
D) approval of transactions.

Question 9

A very small company would have the most difficulty in implementing which of the following internal control activities?

Accepted Answer

A) Separation of duties. 
B) Limited access to assets. 
C) Periodic independent verification. 
D) Sound personnel procedures. 
A) Separation of duties. 
B) Limited access to assets. 
C) Periodic independent verification. 
D) Sound personnel procedures.

Question 10

Segregation of duties among employees eliminates the possibility of collusion.

Accepted Answer

A) True 
 B)False

Question 11

What causes the balance on the bank statement to differ from the cash balance in the general ledger?

Accepted Answer

A) Time lags only. 
B) Errors by the bank only. 
C) Errors by the company only. 
D) Time lags, and errors by the bank or company. 
A) Time lags only. 
B) Errors by the bank only. 
C) Errors by the company only. 
D) Time lags, and errors by the bank or company.

Question 12

The cash receipts section of a cash budget includes all of the following except

Accepted Answer

A) collections of notes receivable. 
B) receipt of income tax refund. 
C) receipts of interest on notes receivable. 
D) All of these answer choices would be included. 
A) collections of notes receivable. 
B) receipt of income tax refund. 
C) receipts of interest on notes receivable. 
D) All of these answer choices would be included.

Question 13

If employees are bonded

Accepted Answer

A) it means that they are not allowed to handle cash. 
B) they have worked for the company for at least 10 years. 
C) they have been insured against misappropriation of assets. 
D) it is impossible for them to steal from the company. 
A) it means that they are not allowed to handle cash. 
B) they have worked for the company for at least 10 years. 
C) they have been insured against misappropriation of assets. 
D) it is impossible for them to steal from the company.

Question 14

Internal control is most effective when several people are responsible for a given task.

Accepted Answer

A) True 
 B)False

Question 15

Ron Jones has been a trusted employee for over 10 years.He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items.Which internal control principle, if any, is being violated?

Accepted Answer

A) None, Ron has proven to be trustworthy and has enough experience to do a good job. 
B) Documentation procedures. 
C) Establishment of responsibilities. 
D) Segregation of duties. 
A) None, Ron has proven to be trustworthy and has enough experience to do a good job. 
B) Documentation procedures. 
C) Establishment of responsibilities. 
D) Segregation of duties.

Question 16

An example of segregation of duties is having a check signer recording cash disbursements.

Accepted Answer

A) True 
 B)False

Question 17

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Accepted Answer

A) independent outside auditors must attest to the level of internal control. 
B) companies must develop sound internal controls over financial reporting. 
C) companies must continually assess the functionality of internal controls. 
D) independent outside auditors must eliminate redundant internal controls. 
A) independent outside auditors must attest to the level of internal control. 
B) companies must develop sound internal controls over financial reporting. 
C) companies must continually assess the functionality of internal controls. 
D) independent outside auditors must eliminate redundant internal controls.

Question 18

One example of a periodic independent internal verification is the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 19

In preparing a bank reconciliation, outstanding checks are

Accepted Answer

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

Question 20

Which of the following is 
not included in the cash disbursements section of a cash budget?

Accepted Answer

A) Payments for materials. 
B) Payments for income taxes. 
C) Repayments of borrowed funds. 
D) All of these answer choices are included. 
A) Payments for materials. 
B) Payments for income taxes. 
C) Repayments of borrowed funds. 
D) All of these answer choices are included.

Which of the following does not appear as a separate section on the cash budget?

Internal controls are not designed to safeguard assets from

Which one of the following items would not be considered cash?

A $200 petty cash fund has cash of $32 and receipts of $172.The journal entry to replenish the account would include a

Expected direct materials purchases in Wade Company are $630,000 in the first quarter and $810,000 in the second quarter.Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter.The budgeted cash payments for purchases in the second quarter are:

Sara Smith has worked for Bosco Inc.for 20 years without taking a vacation.An internal control feature that would address this situation would be

The custodian of a company asset should

The principle of establishing responsibility does not include

A very small company would have the most difficulty in implementing which of the following internal control activities?

Segregation of duties among employees eliminates the possibility of collusion.

What causes the balance on the bank statement to differ from the cash balance in the general ledger?

The cash receipts section of a cash budget includes all of the following except

If employees are bonded

Internal control is most effective when several people are responsible for a given task.

Ron Jones has been a trusted employee for over 10 years.He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items.Which internal control principle, if any, is being violated?

An example of segregation of duties is having a check signer recording cash disbursements.

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

One example of a periodic independent internal verification is the bank reconciliation.

In preparing a bank reconciliation, outstanding checks are

Which of the following is not included in the cash disbursements section of a cash budget?

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

Filters

Exam 7: Fraud, Internal Control, and Cash

Which of the following does not appear as a separate section on the cash budget?

Internal controls are not designed to safeguard assets from

Which one of the following items would not be considered cash?

A $200 petty cash fund has cash of $32 and receipts of $172.The journal entry to replenish the account would include a

Expected direct materials purchases in Wade Company are $630,000 in the first quarter and $810,000 in the second quarter.Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter.The budgeted cash payments for purchases in the second quarter are:

Sara Smith has worked for Bosco Inc.for 20 years without taking a vacation.An internal control feature that would address this situation would be

The custodian of a company asset should

The principle of establishing responsibility does not include

A very small company would have the most difficulty in implementing which of the following internal control activities?

Segregation of duties among employees eliminates the possibility of collusion.

What causes the balance on the bank statement to differ from the cash balance in the general ledger?

The cash receipts section of a cash budget includes all of the following except

If employees are bonded

Internal control is most effective when several people are responsible for a given task.

Ron Jones has been a trusted employee for over 10 years.He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items.Which internal control principle, if any, is being violated?

An example of segregation of duties is having a check signer recording cash disbursements.

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

One example of a periodic independent internal verification is the bank reconciliation.

In preparing a bank reconciliation, outstanding checks are

Which of the following is not included in the cash disbursements section of a cash budget?

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

Filters