Question 1

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

Accepted Answer

A) True 
 B)False

Question 2

A debit memorandum could show the collection of a note receivable by the bank.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following is not necessarily a party to a check?

Accepted Answer

A) Maker 
B) Buyer 
C) Payee 
D) Payer 
A) Maker 
B) Buyer 
C) Payee 
D) Payer

Question 4

On a bank reconciliation, deposits in transit are

Accepted Answer

A) added to the bank balance. 
B) deducted from the bank balance. 
C) added to the book balance. 
D) deducted from the book balance. 
A) added to the bank balance. 
B) deducted from the bank balance. 
C) added to the book balance. 
D) deducted from the book balance.

Question 5

Internal auditors

Accepted Answer

A) are hired by accounting firms to audit business firms. 
B) are employees of the taxing authority 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 company that employs them because they are not independent. 
A) are hired by accounting firms to audit business firms. 
B) are employees of the taxing authority 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 company that employs them because they are not independent.

Question 6

Quayle Company gathered the following reconciling information in preparing its August bank reconciliation: $\begin{array}{lr}
\text { Cash balance per books, } 8 / 31 & \$ 7,000 \
\text { Deposits in transit } & 300 \
\text { Notes receivable and interest collected by bank } & 1,700 \
\text { Bank charge for check printing } & 40 \
\text { Outstanding checks } & 4,000 \
\text { NSF check } & 340
\end{array}$ The adjusted cash balance per books on August 31 is

Accepted Answer

A) $8,320. 
B) $8,020. 
C) $4,620. 
D) $4,920. 
A) $8,320. 
B) $8,020. 
C) $4,620. 
D) $4,920.

Question 7

Use the following information to answer questions . On May 1, 2011, Vuitton Company established a petty cash fund by issuing a check for $€250$ to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2011 , Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is $€ 10$ cash in the fund: $$\begin{array} { l r } 
\text { Freight-in } & € 83 \
\text { Office Supplies Expense } & 65 \
\text { Entertainment of clients } & 62 \
\text { Postage Expense } & 25
\end{array}$$
-$\text { The journal entry to replenish the account would include a }$

Accepted Answer

A)  debit to Cash Over and Short for $ € 5 $. 
B)  credit to petty Cash for $ € 235 $. 
C)  debit to cash for $ € 235 $. 
D)   credit to cash for $ € 250 $. 
A)  debit to Cash Over and Short for $ € 5 $. 
B)  credit to petty Cash for $ € 235 $. 
C)  debit to cash for $ € 235 $. 
D)   credit to cash for $ € 250 $.

Question 8

A voucher system is a series of prescribed control procedures

Accepted Answer

A) to check the credit worthiness of customers. 
B) designed to assure that disbursements by check are proper. 
C) which eliminates the need for a sales journal. 
D) specifically designed for small firms who may not have checking accounts. 
A) to check the credit worthiness of customers. 
B) designed to assure that disbursements by check are proper. 
C) which eliminates the need for a sales journal. 
D) specifically designed for small firms who may not have checking accounts.

Question 9

Blank checks

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 10

Employees sometimes commit fraud because of personal financial problems caused by too much debt.

Accepted Answer

A) True 
 B)False

Question 11

If the month-end bank statement shows a balance of $54,000, outstanding checks are $18,000, a deposit of $6,000 was in transit at month end, and a check for $750 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Accepted Answer

A) $41,250. 
B) $42,750. 
C) $30,750. 
D) $65,250. 
A) $41,250. 
B) $42,750. 
C) $30,750. 
D) $65,250.

Question 12

Internal control consists of all the related methods and measures adopted within an organisation to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.

Accepted Answer

A) True 
 B)False

Question 13

A CHF110 petty cash fund has cash of CHF27 and receipts of CHF80.The journal entry to replenish the account would include a

Accepted Answer

A) debit to Cash for CHF80. 
B) credit to Petty Cash for CHF110. 
C) debit to Cash Over and Short for CHF3. 
D) credit to cash for CHF80. 
A) debit to Cash for CHF80. 
B) credit to Petty Cash for CHF110. 
C) debit to Cash Over and Short for CHF3. 
D) credit to cash for CHF80.

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

Internal control systems must be monitored periodically for their adequacy.

Accepted Answer

A) True 
 B)False

Question 16

In preparing its bank reconciliation for the month of April 2011, Gantner, Inc.has available the following information. $\begin{array}{lr}
\text { Balance per bank statement, } 4 / 30 / 11 & \$ 78,280 \
\text { NSF check returned with } 4 / 30 / 11 \text { bank statement } & 900 \
\text { Deposits in transit, } 4 / 30 / 11 & 10,000 \
\text { Outstanding checks, } 4 / 30 / 11 & 10,400 \
\text { Bank service charges for April } & 40
\end{array}$ What should be the adjusted cash balance at April 30, 2011?

Accepted Answer

A) $78,740. 
B) $77,880. 
C) $76,980. 
D) $76,940. 
A) $78,740. 
B) $77,880. 
C) $76,980. 
D) $76,940.

Question 17

A $200 petty cash fund has cash of $36 and receipts of $172.The journal entry to replenish the account would include a

Accepted Answer

A) debit to Cash for $172. 
B) credit to Petty Cash for $172. 
C) credit to Cash Over and Short for $8. 
D) credit to Cash for $172. 
A) debit to Cash for $172. 
B) credit to Petty Cash for $172. 
C) credit to Cash Over and Short for $8. 
D) credit to Cash for $172.

Question 18

Mrs.Smith has worked for Grand Inc., for 20 years without taking a vacation.An internal control feature that would address this situation would be

Accepted Answer

A) human resource controls. 
B) establishment of responsibility. 
C) physical controls. 
D) documentation procedures. 
A) human resource controls. 
B) establishment of responsibility. 
C) physical controls. 
D) documentation procedures.

Question 19

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Accepted Answer

A) True 
 B)False

Question 20

Petty cash funds are not included in the cash balance reported on the statement of financial position.

Accepted Answer

A) True 
 B)False

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

A debit memorandum could show the collection of a note receivable by the bank.

Which one of the following is not necessarily a party to a check?

On a bank reconciliation, deposits in transit are

Internal auditors

A voucher system is a series of prescribed control procedures

Blank checks

Employees sometimes commit fraud because of personal financial problems caused by too much debt.

If the month-end bank statement shows a balance of $54,000, outstanding checks are $18,000, a deposit of $6,000 was in transit at month end, and a check for $750 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Internal control consists of all the related methods and measures adopted within an organisation to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.

A CHF110 petty cash fund has cash of CHF27 and receipts of CHF80.The journal entry to replenish the account would include a

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

Internal control systems must be monitored periodically for their adequacy.

A $200 petty cash fund has cash of $36 and receipts of $172.The journal entry to replenish the account would include a

Mrs.Smith has worked for Grand Inc., for 20 years without taking a vacation.An internal control feature that would address this situation would be

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Petty cash funds are not included in the cash balance reported on the statement of financial position.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Fraud, Internal Control, and Cash

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

A debit memorandum could show the collection of a note receivable by the bank.

Which one of the following is not necessarily a party to a check?

On a bank reconciliation, deposits in transit are

Internal auditors

A voucher system is a series of prescribed control procedures

Blank checks

Employees sometimes commit fraud because of personal financial problems caused by too much debt.

If the month-end bank statement shows a balance of $54,000, outstanding checks are $18,000, a deposit of $6,000 was in transit at month end, and a check for $750 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Internal control consists of all the related methods and measures adopted within an organisation to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.

A CHF110 petty cash fund has cash of CHF27 and receipts of CHF80.The journal entry to replenish the account would include a

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

Internal control systems must be monitored periodically for their adequacy.

A $200 petty cash fund has cash of $36 and receipts of $172.The journal entry to replenish the account would include a

Mrs.Smith has worked for Grand Inc., for 20 years without taking a vacation.An internal control feature that would address this situation would be

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Petty cash funds are not included in the cash balance reported on the statement of financial position.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters