Question 1

Deposits in transit require an adjustment to the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 2

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Accepted Answer

A)  fraud prevention. 
B)  collusion. 
C)  a division of duties. 
D)  assignment of responsibilities. 
A)  fraud prevention. 
B)  collusion. 
C)  a division of duties. 
D)  assignment of responsibilities.

Question 3

Outstanding cheques from the prior period which clear the bank in the current period

Accepted Answer

A)  should be added to the balance per books. 
B)  should be deducted from the balance per books. 
C)  should be deducted from the balance per bank. 
D)  do not affect the current period's bank reconciliation. 
A)  should be added to the balance per books. 
B)  should be deducted from the balance per books. 
C)  should be deducted from the balance per bank. 
D)  do not affect the current period's bank reconciliation.

Question 4

Independent internal reviews should be done

Accepted Answer

A)  at the end of each accounting period. 
B)  at the end of each month. 
C)  periodically on a surprise basis. 
D)  by the external auditor. 
A)  at the end of each accounting period. 
B)  at the end of each month. 
C)  periodically on a surprise basis. 
D)  by the external auditor.

Question 5

The use of electronic funds transfers

Accepted Answer

A)  normally results in better internal controls. 
B)  does not require segregation of duties. 
C)  eliminates opportunities for fraud. 
D)  does not require proper authorization. 
A)  normally results in better internal controls. 
B)  does not require segregation of duties. 
C)  eliminates opportunities for fraud. 
D)  does not require proper authorization.

Question 6

Which of the following bank reconciliation items would require an adjusting entry on the depositor's books?

Accepted Answer

A)  error by the bank 
B)  outstanding cheques 
C)  bank service charge 
D)  deposit in transit 
A)  error by the bank 
B)  outstanding cheques 
C)  bank service charge 
D)  deposit in transit

Question 7

Electronic funds transfers never have to be recorded.

Accepted Answer

A) True 
 B)False

Question 8

All of the following are examples of a control activity except

Accepted Answer

A)  using prenumbered documents. 
B)  reconciling the bank statement. 
C)  insistence that employees work overtime. 
D)  prenumbering cheques. 
A)  using prenumbered documents. 
B)  reconciling the bank statement. 
C)  insistence that employees work overtime. 
D)  prenumbering cheques.

Question 9

All documents should be prenumbered.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a basic principle of cash management?

Accepted Answer

A)  Increase collection of receivables. 
B)  Keep inventory levels high. 
C)  Delay payment of liabilities. 
D)  Invest idle cash. 
A)  Increase collection of receivables. 
B)  Keep inventory levels high. 
C)  Delay payment of liabilities. 
D)  Invest idle cash.

Question 11

All of the following bank reconciliation items would require an adjusting entry on the depositor's books except

Accepted Answer

A)  interest earned. 
B)  deposits in transit. 
C)  a bank service charge. 
D)  a customer's NSF cheque. 
A)  interest earned. 
B)  deposits in transit. 
C)  a bank service charge. 
D)  a customer's NSF cheque.

Question 12

Which one of the following is not a primary component of an internal control system?

Accepted Answer

A)  control activities 
B)  delay payment of liabilities 
C)  risk assessment 
D)  control environment 
A)  control activities 
B)  delay payment of liabilities 
C)  risk assessment 
D)  control environment

Question 13

Management only needs to know how much cash is available at the end of the month (when the bank reconciliation is prepared).

Accepted Answer

A) True 
 B)False

Question 14

Control over cash disbursements is generally more effective when

Accepted Answer

A)  all bills are paid in cash. 
B)  disbursements are made by the accounts payable subsidiary clerk. 
C)  payments are made by cheque or electronic funds transfer. 
D)  all purchases are made on credit. 
A)  all bills are paid in cash. 
B)  disbursements are made by the accounts payable subsidiary clerk. 
C)  payments are made by cheque or electronic funds transfer. 
D)  all purchases are made on credit.

Question 15

The use of electronic funds transfers normally results in better control over cash.

Accepted Answer

A) True 
 B)False

Deposits in transit require an adjustment to the cash balance per books.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Outstanding cheques from the prior period which clear the bank in the current period

Independent internal reviews should be done

The use of electronic funds transfers

Which of the following bank reconciliation items would require an adjusting entry on the depositor's books?

Electronic funds transfers never have to be recorded.

All of the following are examples of a control activity except

All documents should be prenumbered.

Which of the following is not a basic principle of cash management?

All of the following bank reconciliation items would require an adjusting entry on the depositor's books except

Which one of the following is not a primary component of an internal control system?

Management only needs to know how much cash is available at the end of the month (when the bank reconciliation is prepared).

Control over cash disbursements is generally more effective when

The use of electronic funds transfers normally results in better control over cash.

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

Deposits in transit require an adjustment to the cash balance per books.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Outstanding cheques from the prior period which clear the bank in the current period

Independent internal reviews should be done

The use of electronic funds transfers

Which of the following bank reconciliation items would require an adjusting entry on the depositor's books?

Electronic funds transfers never have to be recorded.

All of the following are examples of a control activity except

All documents should be prenumbered.

Which of the following is not a basic principle of cash management?

All of the following bank reconciliation items would require an adjusting entry on the depositor's books except

Which one of the following is not a primary component of an internal control system?

Management only needs to know how much cash is available at the end of the month (when the bank reconciliation is prepared).

Control over cash disbursements is generally more effective when

The use of electronic funds transfers normally results in better control over cash.

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