Question 1

Which of the following describes the internal control component monitoring of controls?

Accepted Answer

A) Monitoring of controls is designed to ensure that the business's goals are achieved. 
B) Monitoring of controls is the 'tone at the top' of the business. 
C) Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. 
D) A company must identify its risks. 
A) Monitoring of controls is designed to ensure that the business's goals are achieved. 
B) Monitoring of controls is the 'tone at the top' of the business. 
C) Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. 
D) A company must identify its risks. C

Question 2

Which of the following should the purchasing agent NOT be able to do?

Accepted Answer

A) Contact the supplier of the goods. 
B) Receive the goods. 
C) Prepare the purchase order. 
D) Negotiate prices with suppliers. 
A) Contact the supplier of the goods. 
B) Receive the goods. 
C) Prepare the purchase order. 
D) Negotiate prices with suppliers. B

Question 3

Which of the following is a common tactic to overcome internal controls?

Accepted Answer

A) Encryption 
B) Firewalls 
C) Separation of duties 
D) Collusion 
A) Encryption 
B) Firewalls 
C) Separation of duties 
D) Collusion D

Question 4

The voucher system improves internal control by requiring all expenditures to be approved before payment can be made.

Accepted Answer

A) True 
 B)False

Question 5

For good controls over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods, to ensure that the correct amount of cash is paid.

Accepted Answer

A) True 
 B)False

Question 6

When a cheque is issued, the party who is paying the cash is referred to as the:

Accepted Answer

A) depositor. 
B) drawer. 
C) bank signatory. 
D) payee. 
A) depositor. 
B) drawer. 
C) bank signatory. 
D) payee.

Question 7

Which is the MOST liquid of assets?

Accepted Answer

A) Cash 
B) Inventory 
C) Accounts receivable 
D) Supplies 
A) Cash 
B) Inventory 
C) Accounts receivable 
D) Supplies

Question 8

An accountant is under pressure to maximise the company's profit at year- end. He is told to delay orders of important services until the following year. This action would be considered unethical because it is a misrepresentation of actual transactions.

Accepted Answer

A) True 
 B)False

Question 9

A strong computer firewall is an essential element of good internal controls for e- commerce.

Accepted Answer

A) True 
 B)False

Question 10

The following information is needed to reconcile the cash balance for Woods Paper Products.
• A deposit of $5 794.62 is in transit.
• Outstanding cheques total $1 533.25.
• The book balance is $5 695.62.
• The bookkeeper recorded a $1 524.00 cheque as $15 240 in payment of the current month's rent.
• The bank balance at 28 February 2013 was $16 500.25.
• A deposit of $300 was credited by the bank for $3 000.
• A customer's cheque for $1 280 was returned for nonsufficient funds.
• The bank service charge is $70.
Based on this information, complete a bank reconciliation, in the format below, for Woods Paper Products as of 28 February 2013.

Accepted Answer

The answer of The following information is needed to reconcile...

Question 11

Which of the following is a general internal control, but is not classified as an 'accounting control'?

Accepted Answer

A) authorising transactions 
B) encouraging employees to follow organisational policy 
C) ensuring the accuracy of financial records 
D) safeguarding assets 
A) authorising transactions 
B) encouraging employees to follow organisational policy 
C) ensuring the accuracy of financial records 
D) safeguarding assets

Question 12

Which of the following is NOT one of the purposes of internal control?

Accepted Answer

A) To encourage employees to follow company policy 
B) To guarantee that a business makes a profit 
C) To safeguard the company's assets 
D) To ensure accurate, reliable accounting records 
A) To encourage employees to follow company policy 
B) To guarantee that a business makes a profit 
C) To safeguard the company's assets 
D) To ensure accurate, reliable accounting records

Question 13

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

Accepted Answer

A) True 
 B)False

Question 14

The journal entry to open a new petty cash fund includes a debit to the petty cash account and a credit to cash in bank.

Accepted Answer

A) True 
 B)False

Question 15

The following information is needed to reconcile the cash balance for Woods Paper Products. • A deposit of $5 794.62 is in transit.
• Outstanding cheques total $1 533.25.
• The book balance is $5 695.62.
• The bookkeeper recorded a $1 524.00 cheque as $15 240 in payment of the current month's rent.
• The bank balance at 28 February 2014 was $16 500.25.
• A deposit of $300 was credited by the bank for $3 000.
• A customer's cheque for $1 280 was returned for nonsufficient funds.
• The bank service charge is $70.
Which of the following journal entries is needed to adjust for the booking error?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 16

Which of the following is a security procedure designed for e- commerce which rearranges text messages by a mathematical process?

Accepted Answer

A) Phishing 
B) Trojans 
C) Firewalls 
D) Encryption 
A) Phishing 
B) Trojans 
C) Firewalls 
D) Encryption

Question 17

In reconciling a bank statement, the bank balance is $1 800 and the chequebook balance is $1 205. Which of the following is the MOST probable reason why the bank balance is larger than the book balance?

Accepted Answer

A) The bank has deducted certain amounts for bank service charges. 
B) There are outstanding cheques. 
C) The company erroneously recorded a cheque for an amount less than actual. 
D) A deposit in transit was made at the end of the month. 
A) The bank has deducted certain amounts for bank service charges. 
B) There are outstanding cheques. 
C) The company erroneously recorded a cheque for an amount less than actual. 
D) A deposit in transit was made at the end of the month.

Question 18

Journal entries must be made to record the reconciling items on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 19

Reducing expense to increase operating profit is representative of:

Accepted Answer

A) following company policies. 
B) ensuring accurate, reliable accounting records. 
C) safeguarding assets. 
D) promoting operational efficiency. 
A) following company policies. 
B) ensuring accurate, reliable accounting records. 
C) safeguarding assets. 
D) promoting operational efficiency.

Question 20

Which of the following describes the internal control component risk assessment?

Accepted Answer

A) Risk assessment is designed to ensure that the business's goals are achieved. 
B) A company must identify its risks. 
C) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate. 
D) Risk assessment is the 'tone at the top' of the business. 
A) Risk assessment is designed to ensure that the business's goals are achieved. 
B) A company must identify its risks. 
C) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate. 
D) Risk assessment is the 'tone at the top' of the business.

Exam 8: Internal Control and Cash

Which of the following describes the internal control component monitoring of controls?

Which of the following should the purchasing agent NOT be able to do?

Which of the following is a common tactic to overcome internal controls?

The voucher system improves internal control by requiring all expenditures to be approved before payment can be made.

For good controls over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods, to ensure that the correct amount of cash is paid.

When a cheque is issued, the party who is paying the cash is referred to as the:

Which is the MOST liquid of assets?

An accountant is under pressure to maximise the company's profit at year- end. He is told to delay orders of important services until the following year. This action would be considered unethical because it is a misrepresentation of actual transactions.

A strong computer firewall is an essential element of good internal controls for e- commerce.

Which of the following is a general internal control, but is not classified as an 'accounting control'?

Which of the following is NOT one of the purposes of internal control?

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

The journal entry to open a new petty cash fund includes a debit to the petty cash account and a credit to cash in bank.

Which of the following is a security procedure designed for e- commerce which rearranges text messages by a mathematical process?

In reconciling a bank statement, the bank balance is $1 800 and the chequebook balance is $1 205. Which of the following is the MOST probable reason why the bank balance is larger than the book balance?

Journal entries must be made to record the reconciling items on the bank side of the reconciliation.

Reducing expense to increase operating profit is representative of:

Which of the following describes the internal control component risk assessment?

The Role of Accounting in Business

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Share Capital and the Balance Sheet

Companies: Effects on Retained Earnings, Share Splits and Buy-Backs, and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Appendix

Filters