Question 1

The separation of duties feature of internal control can be negated when several employees are involved in a scheme.

Accepted Answer

A) True 
 B)False

Question 2

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A) Check for $63 recorded by the company as $36. 
B) Deposit of $600 recorded by the bank as $60. 
C) A returned $300 check recorded by the bank as $30. 
D) Check for $75 recorded by the company as $57. 
A) Check for $63 recorded by the company as $36. 
B) Deposit of $600 recorded by the bank as $60. 
C) A returned $300 check recorded by the bank as $30. 
D) Check for $75 recorded by the company as $57.

Question 3

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not included in the cash disbursements section of a cash budget?

Accepted Answer

A) Payments for materials. 
B) Payments for income taxes. 
C) Repayments of borrowed funds. 
D) All of these answer choices are included. 
A) Payments for materials. 
B) Payments for income taxes. 
C) Repayments of borrowed funds. 
D) All of these answer choices are included.

Question 5

Which of the following items on a bank reconciliation would require an adjustment on the company's books?

Accepted Answer

A) An error by the bank. 
B) Outstanding checks. 
C) A bank service charge. 
D) A deposit in transit. 
A) An error by the bank. 
B) Outstanding checks. 
C) A bank service charge. 
D) A deposit in transit.

Question 6

The following information was taken from Hobson Company's cash budget for the month of June $$\begin{array} { l r } 
\text { Beginning cash balance } & \$ 180,000 \
\text { Cash receipts } & 174,000 \
\text { Cash disbursements } & 204,000
\end{array}$$ If the company has a policy of maintaining an end-of-the-month cash balance of $150000 the amount the company would have to borrow is

Accepted Answer

A) $66000. 
B) $30000. 
C) $0 
D) $90000. 
A) $66000. 
B) $30000. 
C) $0 
D) $90000.

Question 7

In the month of November (its first period of operations) Gavin Company Inc.wrote checks in the amount of $55500.In December checks in the amount of $75948 were written.During November $50808 of these checks were presented to the bank for payment and $65298 during December.What is the amount of outstanding checks at the end of December?

Accepted Answer

A) $10650. 
B) $15342. 
C) $4692. 
D) $21300. 
A) $10650. 
B) $15342. 
C) $4692. 
D) $21300.

Question 8

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjustments to the cash account.

Accepted Answer

A) True 
 B)False

Question 9

Nilson Company gathered the following reconciling information in preparing its August bank reconciliation: $$\begin{array} { l r } 
\text { Cash balance per books, } 8 / 31 & \$ 28,000 \
\text { Deposits in transit } & 1,200 \
\text { Notes receivable and interest collected by bank } & 6,800 \
\text { Bank charge for check printing } & 160 \
\text { Outstanding checks } & 16,000 \
\text { NSF check } & 1,360
\end{array}$$ The adjusted cash balance per books on August 31 is

Accepted Answer

A) $33280. 
B) $32080. 
C) $18400. 
D) $19680. 
A) $33280. 
B) $32080. 
C) $18400. 
D) $19680.

Question 10

Bank errors

Accepted Answer

A) occur because of time lags. 
B) must be corrected by debit memorandums. 
C) are infrequent in occurrence. 
D) are corrected by making an adjustment on the depositor's books. 
A) occur because of time lags. 
B) must be corrected by debit memorandums. 
C) are infrequent in occurrence. 
D) are corrected by making an adjustment on the depositor's books.

Question 11

The cash receipts section of a cash budget includes all of the following except

Accepted Answer

A) cash sales. 
B) collections from customers. 
C) receipts of interest and dividends. 
D) expected borrowings. 
A) cash sales. 
B) collections from customers. 
C) receipts of interest and dividends. 
D) expected borrowings.

Question 12

The following credit sales are budgeted by Garcia Company: $$\begin{array} { l r } 
\text { January } & \$ 306,000 \
\text { February } & 450,000 \
\text { March } & 630,000 \
\text { April } & 540,000
\end{array}$$ The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale 20% in the month following the sale and 8% in the second month following the sale.The anticipated cash inflow for the month of March is

Accepted Answer

A) $555480. 
B) $504000. 
C) $540000. 
D) $529200. 
A) $555480. 
B) $504000. 
C) $540000. 
D) $529200.

Question 13

Maximum benefit from independent internal verification is obtained when

Accepted Answer

A) it is made on a pre-announced basis. 
B) it is done by the employee possessing custody of the asset. 
C) discrepancies are reported to management. 
D) it is done at the time of the audit. 
A) it is made on a pre-announced basis. 
B) it is done by the employee possessing custody of the asset. 
C) discrepancies are reported to management. 
D) it is done at the time of the audit.

Question 14

Larson Company gathered the following reconciling information in preparing its August bank reconciliation: $$\begin{array} { l r } 
\text { Cash balance per books, } 8 / 31 & \$ 34,800 \
\text { Deposits in transit } & 1,200 \
\text { Bank charge for check printing } & 160 \
\text { Outstanding checks } & 16,000 \
\text { NSF check } & 1,360
\end{array}$$ Use the following tabular analysis to determine the required adjustments to Larson's accounts:

Accepted Answer

A) Cash would increase by $1200. 
B) Accounts Receivable would decrease by $1360. 
C) Accounts Payable would increase by $160. 
D) Cash would decrease by $1520. 
A) Cash would increase by $1200. 
B) Accounts Receivable would decrease by $1360. 
C) Accounts Payable would increase by $160. 
D) Cash would decrease by $1520.

Question 15

The following credit sales are budgeted by Gonzalez Company: $\begin{array}{ll}
\text { February } & 200,000 \
\text { March } & 280,000 \
\text { April } & 240,000
\end{array}$ The company's past experience indicates that 80% of the accounts receivable are collected in the month of sale 20% in the month following the sale.The anticipated cash inflow for the month of April is

Accepted Answer

A) $172800. 
B) $201600. 
C) $216000. 
D) $248000. 
A) $172800. 
B) $201600. 
C) $216000. 
D) $248000.

Question 16

Which one of the following items would never appear on a cash budget?

Accepted Answer

A) Office salaries expense. 
B) Interest expense. 
C) Depreciation expense. 
D) Travel expense. 
A) Office salaries expense. 
B) Interest expense. 
C) Depreciation expense. 
D) Travel expense.

Question 17

Which of the following is not an internal control procedure for cash?

Accepted Answer

A) Payments should be made with cash. 
B) There should be limited access to cash. 
C) The amount of cash on hand should be kept to a minimum. 
D) Cash should be deposited daily. 
A) Payments should be made with cash. 
B) There should be limited access to cash. 
C) The amount of cash on hand should be kept to a minimum. 
D) Cash should be deposited daily.

Question 18

If the cash budget showed a projected cash shortage the company would most likely

Accepted Answer

A) make fewer purchases of inventory so they could control costs. 
B) lay off workers for that period. 
C) arrange to borrow the necessary cash for that period. 
D) cut salaries for that period. 
A) make fewer purchases of inventory so they could control costs. 
B) lay off workers for that period. 
C) arrange to borrow the necessary cash for that period. 
D) cut salaries for that period.

Question 19

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

Accepted Answer

A) An accounting policies manual. 
B) Tracing any debit memorandums from the bank to the company's records. 
C) The use of prenumbered checks. 
D) A review of the cash budget. 
A) An accounting policies manual. 
B) Tracing any debit memorandums from the bank to the company's records. 
C) The use of prenumbered checks. 
D) A review of the cash budget.

Question 20

The use of prenumbered checks is an example of

Accepted Answer

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

The separation of duties feature of internal control can be negated when several employees are involved in a scheme.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash.

Which of the following is not included in the cash disbursements section of a cash budget?

Which of the following items on a bank reconciliation would require an adjustment on the company's books?

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjustments to the cash account.

Bank errors

The cash receipts section of a cash budget includes all of the following except

Maximum benefit from independent internal verification is obtained when

Which one of the following items would never appear on a cash budget?

Which of the following is not an internal control procedure for cash?

If the cash budget showed a projected cash shortage the company would most likely

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

The use of prenumbered checks is an example of

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 5: Fraud, Internal Control, and Cash

The separation of duties feature of internal control can be negated when several employees are involved in a scheme.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash.

Which of the following is not included in the cash disbursements section of a cash budget?

Which of the following items on a bank reconciliation would require an adjustment on the company's books?

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjustments to the cash account.

Bank errors

The cash receipts section of a cash budget includes all of the following except

Maximum benefit from independent internal verification is obtained when

Which one of the following items would never appear on a cash budget?

Which of the following is not an internal control procedure for cash?

If the cash budget showed a projected cash shortage the company would most likely

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

The use of prenumbered checks is an example of

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters