Question 1

Under an effective system of internal control errors occur only as a result of fraud or dishonesty.

Accepted Answer

A) True 
 B)False

Question 2

Sam's Grocery Store has the following policy.'Only one cashier can have access to a cash drawer.' Which internal control principle supports this policy?

Accepted Answer

A) Documentation procedures. 
B) Segregation of duties. 
C) Physical controls. 
D) Establishment of responsibilities. 
A) Documentation procedures. 
B) Segregation of duties. 
C) Physical controls. 
D) Establishment of responsibilities.

Question 3

Zahler Company's July bank statement shows that $177800 in checks cleared the bank during the month.A check from one of Zahler Company's customers in the amount of $1800 was also returned marked "NSF." Use the following tabular analysis to determine the impact of the adjusting entry for the NSF check on Zahler's accounts:

Accepted Answer

A) Increase Cash and increase Accounts Payable by $1800. 
B) Decrease Cash and increase Accounts Receivable by $1800. 
C) Increase Cash and decrease Accounts Receivable by $1800. 
D) Decrease Cash and decrease Accounts Payable by $1800. 
A) Increase Cash and increase Accounts Payable by $1800. 
B) Decrease Cash and increase Accounts Receivable by $1800. 
C) Increase Cash and decrease Accounts Receivable by $1800. 
D) Decrease Cash and decrease Accounts Payable by $1800.

Question 4

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

Accepted Answer

A) True 
 B)False

Question 5

For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

Accepted Answer

A) Check written for $63 but 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 written for $57 but recorded by the company as $75. 
A) Check written for $63 but 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 written for $57 but recorded by the company as $75.

Question 6

Under the concept of establishment of responsibility how many people should have the ultimate responsibility?

Accepted Answer

A) Everyone in the organization. 
B) An individual and his/her supervisor. 
C) Only one individual. 
D) The CEO. 
A) Everyone in the organization. 
B) An individual and his/her supervisor. 
C) Only one individual. 
D) The CEO.

Question 7

Which of the following would not be reported on the balance sheet as a cash equivalent?

Accepted Answer

A) Money market fund. 
B) Commercial paper. 
C) Treasury bill. 
D) Restricted cash. 
A) Money market fund. 
B) Commercial paper. 
C) Treasury bill. 
D) Restricted cash.

Question 8

A company's past experience indicates that 60% of its credit sales are collected in the month of sale 30% in the next month and 5% in the second month after the sale; the remainder is never collected.Budgeted credit sales were: $$\begin{array} { l r } 
\text { April } & \$ 250,000 \
\text { May } & 150,000 \
\text { June } & 375,000
\end{array}$$ The cash inflow in the month of June is expected to be

Accepted Answer

A) $282500. 
B) $213750. 
C) $225000. 
D) $270000. 
A) $282500. 
B) $213750. 
C) $225000. 
D) $270000.

Question 9

Each of the following is a feature of internal control except

Accepted Answer

A) an extensive marketing plan. 
B) bonding of employees. 
C) separation of duties. 
D) recording of all transactions. 
A) an extensive marketing plan. 
B) bonding of employees. 
C) separation of duties. 
D) recording of all transactions.

Question 10

What is the rationale for the internal control principle segregation of duties?

Accepted Answer

A) History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties. 
B) The work of one employee should without duplication of effort provide a reliable basis for evaluating the work of another employee. 
C) Control is most effective when only one person is responsible for a given task. 
D) Segregation of duties causes companies to hire more employees and thus it supports the economy. 
A) History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties. 
B) The work of one employee should without duplication of effort provide a reliable basis for evaluating the work of another employee. 
C) Control is most effective when only one person is responsible for a given task. 
D) Segregation of duties causes companies to hire more employees and thus it supports the economy.

Question 11

Which one of the following would not cause a bank to decrease a depositor's account?

Accepted Answer

A) Bank service charge. 
B) Collection of a note receivable. 
C) Wiring of funds to other locations. 
D) Checks marked NSF. 
A) Bank service charge. 
B) Collection of a note receivable. 
C) Wiring of funds to other locations. 
D) Checks marked NSF.

Question 12

The following credit sales are budgeted by Gonzalez Company: $$\begin{array} { l r } 
\text { January } & \$ 170,000 \
\text { February } & 250,000 \
\text { March } & 350,000
\end{array}$$ 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 March is

Accepted Answer

A) $330000. 
B) $280000. 
C) $350000. 
D) $340000. 
A) $330000. 
B) $280000. 
C) $350000. 
D) $340000.

Question 13

All of the following are items that would most likely be paid from a petty cash fund except

Accepted Answer

A) postage due. 
B) taxi fares. 
C) administrative wages. 
D) freight-out. 
A) postage due. 
B) taxi fares. 
C) administrative wages. 
D) freight-out.

Question 14

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

Accepted Answer

A) Outstanding checks. 
B) NSF checks. 
C) Check printing charge. 
D) Service charges. 
A) Outstanding checks. 
B) NSF checks. 
C) Check printing charge. 
D) Service charges.

Question 16

To obtain maximum benefit from a bank reconciliation the reconciliation should be prepared by the employee authorized to sign checks.

Accepted Answer

A) True 
 B)False

Question 17

Bonding means insuring a company against theft by employees.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) Check written for $63 but 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 written for $57 but recorded by the company as $75. 
A) Check written for $63 but 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 written for $57 but recorded by the company as $75.

Question 19

In the month of November (its first period of operations) Gavin Company Inc.wrote checks in the amount of $46250.In December checks in the amount of $63290 were written.During November $42340 of these checks were presented to the bank for payment and $54415 during December.What is the amount of outstanding checks at the end of December?

Accepted Answer

A) $8875. 
B) $3910. 
C) $12785. 
D) $17750. 
A) $8875. 
B) $3910. 
C) $12785. 
D) $17750.

Question 20

Only large companies need to be concerned with a system of internal control.

Accepted Answer

A) True 
 B)False

Under an effective system of internal control errors occur only as a result of fraud or dishonesty.

Sam's Grocery Store has the following policy.'Only one cashier can have access to a cash drawer.' Which internal control principle supports this policy?

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

Under the concept of establishment of responsibility how many people should have the ultimate responsibility?

Which of the following would not be reported on the balance sheet as a cash equivalent?

Each of the following is a feature of internal control except

What is the rationale for the internal control principle segregation of duties?

Which one of the following would not cause a bank to decrease a depositor's account?

All of the following are items that would most likely be paid from a petty cash fund except

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

To obtain maximum benefit from a bank reconciliation the reconciliation should be prepared by the employee authorized to sign checks.

Bonding means insuring a company against theft by employees.

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

Only large companies need to be concerned with a system of internal control.

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

Under an effective system of internal control errors occur only as a result of fraud or dishonesty.

Sam's Grocery Store has the following policy.'Only one cashier can have access to a cash drawer.' Which internal control principle supports this policy?

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

Under the concept of establishment of responsibility how many people should have the ultimate responsibility?

Which of the following would not be reported on the balance sheet as a cash equivalent?

Each of the following is a feature of internal control except

What is the rationale for the internal control principle segregation of duties?

Which one of the following would not cause a bank to decrease a depositor's account?

All of the following are items that would most likely be paid from a petty cash fund except

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

To obtain maximum benefit from a bank reconciliation the reconciliation should be prepared by the employee authorized to sign checks.

Bonding means insuring a company against theft by employees.

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

Only large companies need to be concerned with a system of internal control.

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