Exam 8: Internal Control and Cash

All publicly listed companies are obliged to follow the guidelines established by the Corporate Governance Council of the Australian Securities Exchange.

A company urgently needs to repair its fire alarm system, which will cost $6 000. The two senior managers who are authorised to approve payments over $5 000 are both on holiday and cannot be reached. The office manager is only authorised to approve payments up to $5 000, but is concerned about the risks and safety factors involved, and wants to have the repair work done immediately. She asks if the contractor could split up the repair bill into two separate invoices, one for parts, and one for labor, so that she could approve both of them separately, and get the work done right away. This action would not be considered unethical, as long as the office manager does not violate specific company rules, or deliberately misrepresent the facts of the situation.

Which of the following is NOT a key element of good internal control?

Which of the following statements describes the decision guidelines for an ethical decision?

An accountant is under pressure to maximise the company's profit at year- end. He is told to record expense payments made in December as if they were actually made the following January. This action would be considered unethical because it is a misrepresentation of actual transactions.

In the following situation, which internal control procedure needs strengthening? Hofstra Services hired a new accountant to be responsible for the petty cash fund and the cash receipts. The newly hired employee has an accounting degree and a criminal record.

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account, supported by the fund (cash plus petty cash slips)totalling the same amount.

Which of the following is TRUE about a bank reconciliation?

As part of the internal control over cash receipts by mail, the mailroom sends both the customer cheques and the remittance advices to the accounting department.

Journal entries that are necessitated by reconciling items on the book side of the reconciliation all include either a debit to Cash or a credit to Cash.

A manager will be unconcerned if the 'cash short and over' balance is large as this is a normal part of doing business.

Risk assessment is the 'tone at the top' of a business, starting with the owner and the top managers.

In order to maintain strong internal control in a voucher system, it is important for the voucher to be prepared by the officer who signs the cheques.

Which of the following is NOT a problem that must be addressed in the internal controls for commerce?

A fund for petty cash of $200 has $17 remaining in cash, $3 in miscellaneous cash receipts and an additional $180 in specific cash receipts. The debit to Cash short and over would be:

As long as the same person deposits customer cheques and records the deposits into the ledger, there will be good internal control over cash receipts.

The following information is available for Matt's Unlimited Company for the current month. What is the adjusted book balance on the bank reconciliation?

In a system of good internal control, a payment to a supplier requires which documents for proper approval?

Which of the following must be signed by the person authorised to write cheques drawn on a bank account?

A malicious program that enters program code or destroys data without authorization is an example of: