Question 1

A deposit made by a company will appear on the bank statement as a

Accepted Answer

A)  debit. 
B)  credit. 
C)  debit memorandum. 
D)  credit memorandum. 
A)  debit. 
B)  credit. 
C)  debit memorandum. 
D)  credit memorandum.

Question 2

Trudy, Inc. had the following bank reconciliation at March 31, 2018:   All reconciling items at March 31, 2018 cleared the bank in April. Outstanding checks at April 30, 2018 totaled $6,000. There were no deposits in transit at April 30, 2018. What is the cash balance per books at April 30, 2018?

Accepted Answer

A)  $25,900 
B)  $31,900 
C)  $34,200 
D)  $38,500 
A)  $25,900 
B)  $31,900 
C)  $34,200 
D)  $38,500

Question 3

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 4

Joe Foss has worked for Dr. Sam Milton for several years. Joe demonstrates a loyalty that is rare among employees. He hasn't taken a vacation in the last three years. One of Joe's primary duties at the medical office is to open the mail and list the checks received. He also takes cash from patients at the cashier window as patients leave. At times it is so hectic that Joe doesn't bother with giving each patient a receipt for the cash paid on their accounts. He assures them he will see to it that they receive the proper credit. When the traffic is slow in the office, Joe offers to help Ann post the payments to the patients' accounts receivable. She is always happy to receive his help, because he is a very conscientious worker.
Instructions
Identify any principles of internal control that may be violated in this medical office situation.

Accepted Answer

Violations:
1. It is Ann's responsibilit

Question 5

The independent internal verification principle involves each of the following except the ______________ of data prepared by other employees.

Accepted Answer

A)  comparison 
B)  reconciliation 
C)  review 
D)  segregation 
A)  comparison 
B)  reconciliation 
C)  review 
D)  segregation

Question 6

When opening a bank checking account, a signature card

Accepted Answer

A)  indicates to whom money is to be paid. 
B)  indicates each person authorized to sign checks on the account. 
C)  is attached to all pre-printed checks. 
D)  is required only when dealing with an out-of-state bank. 
A)  indicates to whom money is to be paid. 
B)  indicates each person authorized to sign checks on the account. 
C)  is attached to all pre-printed checks. 
D)  is required only when dealing with an out-of-state bank.

Question 7

Identify whether each of the following items would be (a) added to the book balance, (b) deducted from the book balance in a bank reconciliation, (c) added to the bank balance, or (d) deducted from the bank balance.
1. Deposits in transit
2. Bank service charge
3. Collection of note and interest by bank on company's behalf
4. NSF check
5. Outstanding checks

Accepted Answer

1. c
2. b

Question 8

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 9

Physical controls to safeguard assets do not include

Accepted Answer

A)  cashier department supervisors. 
B)  vaults. 
C)  employee identification badges. 
D)  security guards. 
A)  cashier department supervisors. 
B)  vaults. 
C)  employee identification badges. 
D)  security guards.

Question 10

In preparing its August 31, 2018 bank reconciliation, Annie Corp. has available the following information:   At August 31, 2018, Annie's adjusted cash balance is

Accepted Answer

A)  $56,700. 
B)  $56,400. 
C)  $68,400. 
D)  $61,500. 
A)  $56,700. 
B)  $56,400. 
C)  $68,400. 
D)  $61,500.

Question 11

The daily cash count of cash register receipts made by department supervisors is an example of

Accepted Answer

A)  other controls. 
B)  independent internal verification. 
C)  establishment of responsibility. 
D)  segregation of duties. 
A)  other controls. 
B)  independent internal verification. 
C)  establishment of responsibility. 
D)  segregation of duties.

Question 12

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A)  Petty Cash, $94. 
B)  Petty Cash, $97. 
C)  Cash, $94; Cash Over and Short, $3. 
D)  Cash, $97. 
A)  Petty Cash, $94. 
B)  Petty Cash, $97. 
C)  Cash, $94; Cash Over and Short, $3. 
D)  Cash, $97.

Question 13

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.

Question 14

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

Accepted Answer

A) True 
 B)False

Question 15

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)  cash count sheets requiring only the supervisor's signature. 
D)  cash count sheets requiring only the cashier's signature. 
A)  a cash register with totals visible to the customer. 
B)  using electronic cash registers with no tapes. 
C)  cash count sheets requiring only the supervisor's signature. 
D)  cash count sheets requiring only the cashier's signature.

Question 16

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Accepted Answer

A)  debit to Cash for $86. 
B)  credit to Petty Cash for $86. 
C)  credit to Cash Over and Short for $3. 
D)  credit to Cash for $86. 
A)  debit to Cash for $86. 
B)  credit to Petty Cash for $86. 
C)  credit to Cash Over and Short for $3. 
D)  credit to Cash for $86.

Question 17

Indicate how each of the following items would be shown on a bank reconciliation.
1. Bank error (The bank charged our account with another company's check)
2. Check printing charge
3. Deposits in transit
4. Note collected by the bank
5. NSF checks
6. Outstanding checks

Accepted Answer

1. Added to balance per bank
2

Question 18

An example of poor internal control is

Accepted Answer

A)  The accountant should not have physical custody of the asset nor access to it. 
B)  The custodian of an asset should not maintain or have access to the accounting records. 
C)  One person should be responsible for handling related transactions. 
D)  A salesperson makes the sale, and a different person ships the goods. 
A)  The accountant should not have physical custody of the asset nor access to it. 
B)  The custodian of an asset should not maintain or have access to the accounting records. 
C)  One person should be responsible for handling related transactions. 
D)  A salesperson makes the sale, and a different person ships the goods.

Question 19

Related selling activities do not include

Accepted Answer

A)  ordering the merchandise. 
B)  making a sale. 
C)  shipping the goods. 
D)  billing the customer. 
A)  ordering the merchandise. 
B)  making a sale. 
C)  shipping the goods. 
D)  billing the customer.

Question 20

The use of remittance advices for mail receipts is an example of

Accepted Answer

A)  documentation procedures. 
B)  other controls. 
C)  physical controls. 
D)  independent internal verification. 
A)  documentation procedures. 
B)  other controls. 
C)  physical controls. 
D)  independent internal verification.

Exam 7: Fraud, Internal Control, and Cash

A deposit made by a company will appear on the bank statement as a

Trudy, Inc. had the following bank reconciliation at March 31, 2018: All reconciling items at March 31, 2018 cleared the bank in April. Outstanding checks at April 30, 2018 totaled $6,000. There were no deposits in transit at April 30, 2018. What is the cash balance per books at April 30, 2018?

The principle of establishing responsibility does not include

The independent internal verification principle involves each of the following except the ______________ of data prepared by other employees.

When opening a bank checking account, a signature card

A system of internal control

Physical controls to safeguard assets do not include

In preparing its August 31, 2018 bank reconciliation, Annie Corp. has available the following information: At August 31, 2018, Annie's adjusted cash balance is

The daily cash count of cash register receipts made by department supervisors is an example of

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

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

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

Proper control for over-the-counter cash receipts includes

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Indicate how each of the following items would be shown on a bank reconciliation. 1. Bank error (The bank charged our account with another company's check) 2. Check printing charge 3. Deposits in transit 4. Note collected by the bank 5. NSF checks 6. Outstanding checks

An example of poor internal control is

Related selling activities do not include

The use of remittance advices for mail receipts is an example of

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

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