Question 1

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

Accepted Answer

A)  review and reconciliation 
B)  documentation 
C)  segregation of duties 
D)  assignment of responsibility 
A)  review and reconciliation 
B)  documentation 
C)  segregation of duties 
D)  assignment of responsibility

Question 2

A compensating balance is always reported as a non-current asset.

Accepted Answer

A) True 
 B)False

Question 3

Debt investments due within three months are normally classified as cash equivalents.

Accepted Answer

A) True 
 B)False

Question 4

Internal controls are concerned with all of the following except

Accepted Answer

A)  computerized systems of accounting. 
B)  effective and efficient operations. 
C)  ensuring reliable financial reporting. 
D)  compliance with relevant laws and regulations. 
A)  computerized systems of accounting. 
B)  effective and efficient operations. 
C)  ensuring reliable financial reporting. 
D)  compliance with relevant laws and regulations.

Question 5

On a bank reconciliation, which of the following would be deducted from the balance per bank?

Accepted Answer

A)  outstanding cheques 
B)  deposits in transit 
C)  electronic payment by a customer on account 
D)  bank service charges 
A)  outstanding cheques 
B)  deposits in transit 
C)  electronic payment by a customer on account 
D)  bank service charges

Question 6

All of the following are examples of a control activity except

Accepted Answer

A)  limited access to assets. 
B)  review and reconciliation. 
C)  assignment of responsibility. 
D)  increasing the speed of collection on receivables. 
A)  limited access to assets. 
B)  review and reconciliation. 
C)  assignment of responsibility. 
D)  increasing the speed of collection on receivables.

Question 7

Idle cash should be reported as restricted cash.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a control activity over cash?

Accepted Answer

A)  Only designated personnel are authorized to handle cash. 
B)  The same individual receives the cash and pays the bills. 
C)  Surprise audits of cash on hand should be made occasionally. 
D)  Access to cash is limited. 
A)  Only designated personnel are authorized to handle cash. 
B)  The same individual receives the cash and pays the bills. 
C)  Surprise audits of cash on hand should be made occasionally. 
D)  Access to cash is limited.

Question 9

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

Accepted Answer

A)  physical controls. 
B)  review and reconciliation. 
C)  segregation of duties. 
D)  assignment of responsibility. 
A)  physical controls. 
B)  review and reconciliation. 
C)  segregation of duties. 
D)  assignment of responsibility.

Question 10

Blank cheques

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 prenumbered. 
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 prenumbered.

Question 11

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 12

Stardust Corporation gathered the following reconciling information in preparing its October bank reconciliation:   The reconciled cash balance per books at October 31 is

Accepted Answer

A)  $7,125. 
B)  $6,900. 
C)  $5,200. 
D)  $5,650. 
A)  $7,125. 
B)  $6,900. 
C)  $5,200. 
D)  $5,650.

Question 13

Arthur is warehouse custodian and also maintains the accounting records of the inventory held at the warehouse. Which control activity is violated?

Accepted Answer

A)  documentation 
B)  review and reconciliation 
C)  segregation of duties 
D)  assignment of responsibility 
A)  documentation 
B)  review and reconciliation 
C)  segregation of duties 
D)  assignment of responsibility

Question 14

Angel Hair Limited gathered the following reconciling information in preparing its November bank reconciliation:   The reconciled cash balance per books at November 30 is

Accepted Answer

A)  $16,675. 
B)  $21,175. 
C)  $39,275. 
D)  $36,775. 
A)  $16,675. 
B)  $21,175. 
C)  $39,275. 
D)  $36,775.

Question 15

The use of a bank account makes internal control over cash more difficult.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a suggested procedure to establish a good control activity over cash disbursements?

Accepted Answer

A)  pre-signed blank cheques 
B)  Different individuals approve and make payments. 
C)  Blank cheques are stored with limited access. 
D)  The bank statement is reconciled monthly. 
A)  pre-signed blank cheques 
B)  Different individuals approve and make payments. 
C)  Blank cheques are stored with limited access. 
D)  The bank statement is reconciled monthly.

Question 17

Internal auditors

Accepted Answer

A)  are hired by independent accounting firms to audit companies. 
B)  are employees of the government who evaluate the internal controls of companies filing tax returns. 
C)  evaluate the system of internal controls for the companies that employ them. 
D)  cannot evaluate the system of internal controls of the companies that employ them because they are not independent. 
A)  are hired by independent accounting firms to audit companies. 
B)  are employees of the government who evaluate the internal controls of companies filing tax returns. 
C)  evaluate the system of internal controls for the companies that employ them. 
D)  cannot evaluate the system of internal controls of the companies that employ them because they are not independent.

Question 18

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not true with respect to the reporting of cash?

Accepted Answer

A)  Cash equivalents are normally combined with cash and reported as a current asset. 
B)  Compensating balances are minimum cash balances required by the bank. 
C)  Restricted cash can be either a current or a non-current asset, depending on when it is expected to be used. 
D)  Cash overdrafts are reported as contra-assets. 
A)  Cash equivalents are normally combined with cash and reported as a current asset. 
B)  Compensating balances are minimum cash balances required by the bank. 
C)  Restricted cash can be either a current or a non-current asset, depending on when it is expected to be used. 
D)  Cash overdrafts are reported as contra-assets.

Question 20

On the April 30 bank reconciliation, a deposit made by a company to its bank account on April 18 will likely appear as a(n)

Accepted Answer

A)  addition to the balance per books. 
B)  deduction from the balance per books. 
C)  deduction from the balance per bank. 
D)  This will not affect the current period's bank reconciliation. 
A)  addition to the balance per books. 
B)  deduction from the balance per books. 
C)  deduction from the balance per bank. 
D)  This will not affect the current period's bank reconciliation.

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

A compensating balance is always reported as a non-current asset.

Debt investments due within three months are normally classified as cash equivalents.

Internal controls are concerned with all of the following except

On a bank reconciliation, which of the following would be deducted from the balance per bank?

All of the following are examples of a control activity except

Idle cash should be reported as restricted cash.

Which of the following is not a control activity over cash?

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

Blank cheques

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

Stardust Corporation gathered the following reconciling information in preparing its October bank reconciliation: The reconciled cash balance per books at October 31 is

Arthur is warehouse custodian and also maintains the accounting records of the inventory held at the warehouse. Which control activity is violated?

Angel Hair Limited gathered the following reconciling information in preparing its November bank reconciliation: The reconciled cash balance per books at November 30 is

The use of a bank account makes internal control over cash more difficult.

Which of the following is not a suggested procedure to establish a good control activity over cash disbursements?

Internal auditors

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

Which of the following is not true with respect to the reporting of cash?

On the April 30 bank reconciliation, a deposit made by a company to its bank account on April 18 will likely appear as a(n)

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 7: Internal Control and Cash

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

A compensating balance is always reported as a non-current asset.

Debt investments due within three months are normally classified as cash equivalents.

Internal controls are concerned with all of the following except

On a bank reconciliation, which of the following would be deducted from the balance per bank?

All of the following are examples of a control activity except

Idle cash should be reported as restricted cash.

Which of the following is not a control activity over cash?

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

Blank cheques

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

Stardust Corporation gathered the following reconciling information in preparing its October bank reconciliation: The reconciled cash balance per books at October 31 is

Arthur is warehouse custodian and also maintains the accounting records of the inventory held at the warehouse. Which control activity is violated?

Angel Hair Limited gathered the following reconciling information in preparing its November bank reconciliation: The reconciled cash balance per books at November 30 is

The use of a bank account makes internal control over cash more difficult.

Which of the following is not a suggested procedure to establish a good control activity over cash disbursements?

Internal auditors

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

Which of the following is not true with respect to the reporting of cash?

On the April 30 bank reconciliation, a deposit made by a company to its bank account on April 18 will likely appear as a(n)

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters