Question 1

An example of poor internal control is

Accepted Answer

A) The accountant should not have physical custody of the asset nor access to it. 
B) The custodian of an asset should not maintain or have access to the accounting records. 
C) One person should be responsible for handling related transactions. 
D) A salesperson makes the sale, and a different person ships the goods. 
A) The accountant should not have physical custody of the asset nor access to it. 
B) The custodian of an asset should not maintain or have access to the accounting records. 
C) One person should be responsible for handling related transactions. 
D) A salesperson makes the sale, and a different person ships the goods.

Question 2

Checks received through the mail should

Accepted Answer

A) immediately be endorsed "For Deposit Only." 
B) be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C) be cashed at the bank as soon as possible. 
D) be "rung up" on a cash register immediately. 
A) immediately be endorsed "For Deposit Only." 
B) be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C) be cashed at the bank as soon as possible. 
D) be "rung up" on a cash register immediately.

Question 3

In preparing its bank reconciliation for the month of April 2011, Franklin, Inc.has available the following information.   What should be the adjusted cash balance at April 30, 2011?

Accepted Answer

A) $39,370. 
B) $38,940. 
C) $38,490. 
D) $38,470. 
A) $39,370. 
B) $38,940. 
C) $38,490. 
D) $38,470.

Question 4

An employee authorized to sign checks should not record

Accepted Answer

A) owner cash contributions. 
B) mail receipts. 
C) cash disbursement transactions. 
D) sales transactions. 
A) owner cash contributions. 
B) mail receipts. 
C) cash disbursement transactions. 
D) sales transactions.

Question 5

Kline Company had checks outstanding totaling $12,800 on its May bank reconciliation.In June, Kline Company issued checks totaling $79,800.The July bank statement shows that $59,400 in checks cleared the bank in July.A check from one of Kline Company's customers in the amount of $600 was also returned marked "NSF." The amount of outstanding checks on Kline Company's July bank reconciliation should be

Accepted Answer

A) $39,200. 
B) $20,400. 
C) $33,200. 
D) $7,600. 
A) $39,200. 
B) $20,400. 
C) $33,200. 
D) $7,600.

Question 6

Which of the following items would currently be reported as cash on the statement of financial position?

Accepted Answer

A) Note payable due in 90 days. 
B) Cash equivalent. 
C) Cash that will be used for future expansion, beginning in eighteen months.. 
D) Restricted cash that will not be used within the upcoming year. 
A) Note payable due in 90 days. 
B) Cash equivalent. 
C) Cash that will be used for future expansion, beginning in eighteen months.. 
D) Restricted cash that will not be used within the upcoming year.

Question 7

The principle of establishing responsibility does not include

Accepted Answer

A) one person being responsible for one task. 
B) authorization of transactions. 
C) independent internal verification. 
D) approval of transactions. 
A) one person being responsible for one task. 
B) authorization of transactions. 
C) independent internal verification. 
D) approval of transactions.

Question 8

Tavarez Company assembled the following information in completing its July bank reconciliation: balance per bank $15,280; outstanding checks $3,100; deposits in transit $5,000; NSF check $320; bank service charge $100; cash balance per books $17,600.As a result of this reconciliation, Tavarez will

Accepted Answer

A) reduce its cash account by $1,900. 
B) reduce its cash account by $100. 
C) increase its cash account by $220. 
D) reduce its cash account by $420. 
A) reduce its cash account by $1,900. 
B) reduce its cash account by $100. 
C) increase its cash account by $220. 
D) reduce its cash account by $420.

Question 9

Cast equivalents, such as highly liquid investments that can be converted into a specific amount of cash, are currently reported with cash on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 10

Internal control systems must be monitored periodically for their adequacy.

Accepted Answer

A) True 
 B)False

Question 11

An exception to disbursements being made by check is acceptable when cash is paid

Accepted Answer

A) to an owner. 
B) to employees as wages. 
C) from petty cash. 
D) to employees as loans. 
A) to an owner. 
B) to employees as wages. 
C) from petty cash. 
D) to employees as loans.

Question 12

A system of internal control

Accepted Answer

A) is infallible. 
B) can be rendered ineffective by employee collusion. 
C) invariably will have costs exceeding benefits. 
D) is premised on the concept of absolute assurance. 
A) is infallible. 
B) can be rendered ineffective by employee collusion. 
C) invariably will have costs exceeding benefits. 
D) is premised on the concept of absolute assurance.

Question 13

Reconciling the bank statement monthly is an example of

Accepted Answer

A) segregation of duties. 
B) independent internal verification. 
C) establishment of responsibility. 
D) documentation procedures. 
A) segregation of duties. 
B) independent internal verification. 
C) establishment of responsibility. 
D) documentation procedures.

Question 14

When making a payment from the petty cash fund for postage stamps, the following journal entry is made.

Accepted Answer

A)    
B)    
C)    
D)  No entry is made. 
A)    
B)    
C)    
D)  No entry is made.

Question 15

Which of the following is not one of the main factors that contribute to fraudulent activity?

Accepted Answer

A) Opportunity 
B) Incompatible duties 
C) Financial pressure 
D) Rationalization 
A) Opportunity 
B) Incompatible duties 
C) Financial pressure 
D) Rationalization

Question 16

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

Accepted Answer

A) True 
 B)False

Question 17

Checks from customers who pay their accounts promptly are called outstanding checks.

Accepted Answer

A) True 
 B)False

Question 18

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Accepted Answer

A) True 
 B)False

Question 19

Because cash is the most liquid current asset it is listed first in the current assets section of the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 20

The petty cash fund eliminates the need for a bank checking account.

Accepted Answer

A) True 
 B)False

An example of poor internal control is

Checks received through the mail should

In preparing its bank reconciliation for the month of April 2011, Franklin, Inc.has available the following information. What should be the adjusted cash balance at April 30, 2011?

An employee authorized to sign checks should not record

Which of the following items would currently be reported as cash on the statement of financial position?

The principle of establishing responsibility does not include

Tavarez Company assembled the following information in completing its July bank reconciliation: balance per bank $15,280; outstanding checks $3,100; deposits in transit $5,000; NSF check $320; bank service charge $100; cash balance per books $17,600.As a result of this reconciliation, Tavarez will

Cast equivalents, such as highly liquid investments that can be converted into a specific amount of cash, are currently reported with cash on the statement of financial position.

Internal control systems must be monitored periodically for their adequacy.

An exception to disbursements being made by check is acceptable when cash is paid

A system of internal control

Reconciling the bank statement monthly is an example of

When making a payment from the petty cash fund for postage stamps, the following journal entry is made.

Which of the following is not one of the main factors that contribute to fraudulent activity?

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

Checks from customers who pay their accounts promptly are called outstanding checks.

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Because cash is the most liquid current asset it is listed first in the current assets section of the statement of financial position.

The petty cash fund eliminates the need for a bank checking account.

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

Payroll Accounting

Other Significant Liabilities

Filters

Exam 7: Fraud, Internal Control, and Cash

An example of poor internal control is

Checks received through the mail should

In preparing its bank reconciliation for the month of April 2011, Franklin, Inc.has available the following information. What should be the adjusted cash balance at April 30, 2011?

An employee authorized to sign checks should not record

Which of the following items would currently be reported as cash on the statement of financial position?

The principle of establishing responsibility does not include

Tavarez Company assembled the following information in completing its July bank reconciliation: balance per bank $15,280; outstanding checks $3,100; deposits in transit $5,000; NSF check $320; bank service charge $100; cash balance per books $17,600.As a result of this reconciliation, Tavarez will

Cast equivalents, such as highly liquid investments that can be converted into a specific amount of cash, are currently reported with cash on the statement of financial position.

Internal control systems must be monitored periodically for their adequacy.

An exception to disbursements being made by check is acceptable when cash is paid

A system of internal control

Reconciling the bank statement monthly is an example of

When making a payment from the petty cash fund for postage stamps, the following journal entry is made.

Which of the following is not one of the main factors that contribute to fraudulent activity?

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

Checks from customers who pay their accounts promptly are called outstanding checks.

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Because cash is the most liquid current asset it is listed first in the current assets section of the statement of financial position.

The petty cash fund eliminates the need for a bank checking account.

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

Payroll Accounting

Other Significant Liabilities

Filters