Question 1

Which one of the following is not an objective of a system of internal controls?

Accepted Answer

A) Safeguard company assets. 
B) Overstate liabilities in order to be conservative. 
C) Enhance the accuracy and reliability of accounting records. 
D) Reduce the risks of errors. 
A) Safeguard company assets. 
B) Overstate liabilities in order to be conservative. 
C) Enhance the accuracy and reliability of accounting records. 
D) Reduce the risks of errors.

Question 2

Lackey Company wrote checks totaling $38,430 during October and $41,964 during November.$36,540 of these checks cleared the bank in October, and $40,995 cleared the bank in November.What was the amount of outstanding checks on November 30?

Accepted Answer

A) $2,859. 
B) $519. 
C) $1,374. 
D) $4,455. 
A) $2,859. 
B) $519. 
C) $1,374. 
D) $4,455.

Question 3

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 4

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

Accepted Answer

A) Segregation of duties. 
B) Documentation procedures. 
C) Independent internal verification. 
D) Employee background check. 
A) Segregation of duties. 
B) Documentation procedures. 
C) Independent internal verification. 
D) Employee background check.

Question 5

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

Accepted Answer

A) collections of accounts receivable. 
B) expected borrowings. 
C) receipts of dividends on stock investments. 
D) proceeds from the sale of stock. 
A) collections of accounts receivable. 
B) expected borrowings. 
C) receipts of dividends on stock investments. 
D) proceeds from the sale of stock.

Question 6

All of the following are examples of internal control procedures except

Accepted Answer

A) using prenumbered documents. 
B) reconciling the bank statement. 
C) customer satisfaction surveys. 
D) insisting that employees take vacations. 
A) using prenumbered documents. 
B) reconciling the bank statement. 
C) customer satisfaction surveys. 
D) insisting that employees take vacations.

Question 7

Each of the following is a feature of internal control except

Accepted Answer

A) limited access to assets. 
B) independent internal verifications. 
C) authorization of transactions. 
D) generic design of documents. 
A) limited access to assets. 
B) independent internal verifications. 
C) authorization of transactions. 
D) generic design of documents.

Question 8

Which of the following bank reconciliation items would not result in an adjusting entry?

Accepted Answer

A) Service charge. 
B) Deposits in transit. 
C) NSF check of a customer. 
D) Collection of a note by the bank. 
A) Service charge. 
B) Deposits in transit. 
C) NSF check of a customer. 
D) Collection of a note by the bank.

Question 9

Cash restricted in use should be separately reported on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

The following information was taken from Hurlbert Company cash budget for the month of June   If the company has a policy of maintaining an end of the month cash balance of $60,000, the amount the company would have to borrow is

Accepted Answer

A) $36,000. 
B) $15,000. 
C) $24,000. 
D) $0. 
A) $36,000. 
B) $15,000. 
C) $24,000. 
D) $0.

Question 11

Which of the following is an appropriate internal control activity for cash?

Accepted Answer

A) Record keeping and custodianship over cash should be performed by the same person. 
B) Banking facilities should be used as little as possible. 
C) All payments should be made with currency, not checks. 
D) The amount of cash on hand should be kept to a minimum. 
A) Record keeping and custodianship over cash should be performed by the same person. 
B) Banking facilities should be used as little as possible. 
C) All payments should be made with currency, not checks. 
D) The amount of cash on hand should be kept to a minimum.

Question 12

A $150 petty cash fund has cash of $21 and receipts of $126.The journal entry to replenish the account would include a

Accepted Answer

A) debit to Cash for $126. 
B) credit to Petty Cash for $126. 
C) credit to Cash Over and Short for $3. 
D) credit to Cash for $129. 
A) debit to Cash for $126. 
B) credit to Petty Cash for $126. 
C) credit to Cash Over and Short for $3. 
D) credit to Cash for $129.

Question 13

Expected direct materials purchases in Rees Company are $210,000 in the first quarter and $270,000 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) $288,000. 
B) $270,000. 
C) $234,000. 
D) $216,000. 
A) $288,000. 
B) $270,000. 
C) $234,000. 
D) $216,000.

Question 14

A $300 petty cash fund has cash of $39 and receipts of $255.The journal entry to replenish the account would include

Accepted Answer

A) debit to Cash for $255. 
B) credit to Petty Cash for $255. 
C) debit to Petty Cash for $261. 
D) credit to Cash for $261. 
A) debit to Cash for $255. 
B) credit to Petty Cash for $255. 
C) debit to Petty Cash for $261. 
D) credit to Cash for $261.

Question 15

The following information was taken from Mitchell Company cash budget for the month of July:   If the company has a policy of maintaining an end of the month cash balance of $125,000, the amount the company would have to borrow is

Accepted Answer

A) $50,000. 
B) $25,000. 
C) $75,000. 
D) $36,000. 
A) $50,000. 
B) $25,000. 
C) $75,000. 
D) $36,000.

Question 16

A system of internal control

Accepted Answer

A) is infallible. 
B) can be rendered ineffective by employee collusion. 
C) invariably will have costs exceeding benefits. 
D) is premised on the concept of absolute assurance. 
A) is infallible. 
B) can be rendered ineffective by employee collusion. 
C) invariably will have costs exceeding benefits. 
D) is premised on the concept of absolute assurance.

Question 17

All of the following are true regarding the management and monitoring of cash except

Accepted Answer

A) companies may have plenty of sales, but insufficient cash to support operations. 
B) the cash to cash operating cycle for a manufacturer is generally shorter than that of a merchandising company. 
C) manufacturers may experience a significant lag between the purchase of raw materials and the receipt of cash from customers. 
D) companies should have sufficient cash to meet payments but minimize the amount of non-revenue-generating cash on hand. 
A) companies may have plenty of sales, but insufficient cash to support operations. 
B) the cash to cash operating cycle for a manufacturer is generally shorter than that of a merchandising company. 
C) manufacturers may experience a significant lag between the purchase of raw materials and the receipt of cash from customers. 
D) companies should have sufficient cash to meet payments but minimize the amount of non-revenue-generating cash on hand.

Question 18

Which of the following statements is correct?

Accepted Answer

A) Due to its liquid nature, cash is the easiest asset to steal. 
B) A good system of internal control will ensure that employees will not be able to steal cash. 
C) It takes two or more employees working together to be able to steal cash. 
D) All of these answer choices are correct. 
A) Due to its liquid nature, cash is the easiest asset to steal. 
B) A good system of internal control will ensure that employees will not be able to steal cash. 
C) It takes two or more employees working together to be able to steal cash. 
D) All of these answer choices are correct.

Question 19

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as a check on the other.

Accepted Answer

A) True 
 B)False

Question 20

Electronic funds transfer (EFT) is a disbursement system that uses a telephone or a computer to transfer cash from one location to another.

Accepted Answer

A) True 
 B)False

Which one of the following is not an objective of a system of internal controls?

Lackey Company wrote checks totaling $38,430 during October and $41,964 during November.$36,540 of these checks cleared the bank in October, and $40,995 cleared the bank in November.What was the amount of outstanding checks on November 30?

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

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

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

All of the following are examples of internal control procedures except

Each of the following is a feature of internal control except

Which of the following bank reconciliation items would not result in an adjusting entry?

Cash restricted in use should be separately reported on the balance sheet.

The following information was taken from Hurlbert Company cash budget for the month of June If the company has a policy of maintaining an end of the month cash balance of $60,000, the amount the company would have to borrow is

Which of the following is an appropriate internal control activity for cash?

A $150 petty cash fund has cash of $21 and receipts of $126.The journal entry to replenish the account would include a

Expected direct materials purchases in Rees Company are $210,000 in the first quarter and $270,000 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:

A $300 petty cash fund has cash of $39 and receipts of $255.The journal entry to replenish the account would include

The following information was taken from Mitchell Company cash budget for the month of July: If the company has a policy of maintaining an end of the month cash balance of $125,000, the amount the company would have to borrow is

A system of internal control

All of the following are true regarding the management and monitoring of cash except

Which of the following statements is correct?

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as a check on the other.

Electronic funds transfer (EFT) is a disbursement system that uses a telephone or a computer to transfer cash from one location to another.

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

Which one of the following is not an objective of a system of internal controls?

Lackey Company wrote checks totaling $38,430 during October and $41,964 during November.$36,540 of these checks cleared the bank in October, and $40,995 cleared the bank in November.What was the amount of outstanding checks on November 30?

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

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

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

All of the following are examples of internal control procedures except

Each of the following is a feature of internal control except

Which of the following bank reconciliation items would not result in an adjusting entry?

Cash restricted in use should be separately reported on the balance sheet.

The following information was taken from Hurlbert Company cash budget for the month of June If the company has a policy of maintaining an end of the month cash balance of $60,000, the amount the company would have to borrow is

Which of the following is an appropriate internal control activity for cash?

A $150 petty cash fund has cash of $21 and receipts of $126.The journal entry to replenish the account would include a

Expected direct materials purchases in Rees Company are $210,000 in the first quarter and $270,000 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:

A $300 petty cash fund has cash of $39 and receipts of $255.The journal entry to replenish the account would include

The following information was taken from Mitchell Company cash budget for the month of July: If the company has a policy of maintaining an end of the month cash balance of $125,000, the amount the company would have to borrow is

A system of internal control

All of the following are true regarding the management and monitoring of cash except

Which of the following statements is correct?

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as a check on the other.

Electronic funds transfer (EFT) is a disbursement system that uses a telephone or a computer to transfer cash from one location to another.

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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