Question 1

Personnel who handle cash receipts should have the option of taking a vacation or not.

Accepted Answer

A) True 
 B)False

Question 2

A highly automated computerized system of accounting eliminates the need for internal controls.

Accepted Answer

A) True 
 B)False

Question 3

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 4

If employees are bonded,

Accepted Answer

A) it means that they are not allowed to handle cash. 
B) they have worked for the company for at least 10 years. 
C) they have been insured against misappropriation of assets. 
D) it is impossible for them to steal from the company. 
A) it means that they are not allowed to handle cash. 
B) they have worked for the company for at least 10 years. 
C) they have been insured against misappropriation of assets. 
D) it is impossible for them to steal from the company.

Question 5

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 6

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Accepted Answer

A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of good internal control. 
D) is a good example of safeguarding the company's assets. 
A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of good internal control. 
D) is a good example of safeguarding the company's assets.

Question 7

Having one person post entries to the accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

Accepted Answer

A) inadequate internal control. 
B) duplication of effort. 
C) external verification. 
D) segregation of duties. 
A) inadequate internal control. 
B) duplication of effort. 
C) external verification. 
D) segregation of duties.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Macrinez Company assembled the following information in completing its July bank reconciliation: balance per bank $22,920; outstanding checks $4,650; deposits in transit $7,500; NSF check $480; bank service charge $150; cash balance per books $26,400.As a result of this reconciliation, Macrinez will

Accepted Answer

A) reduce its cash account by $150. 
B) reduce its cash account by $630. 
C) reduce its cash account by $2,850. 
D) increase its cash account by $330. 
A) reduce its cash account by $150. 
B) reduce its cash account by $630. 
C) reduce its cash account by $2,850. 
D) increase its cash account by $330.

Question 12

In preparing its August 31, 2021 bank reconciliation, Annie Corp.has available the following information:   At August 31, 2021, Annie's adjusted cash balance is

Accepted Answer

A) $56,700. 
B) $56,400. 
C) $68,400. 
D) $61,500. 
A) $56,700. 
B) $56,400. 
C) $68,400. 
D) $61,500.

Question 13

In preparing its bank reconciliation for the month of April 2021, Delano, Inc.has available the following information.   What should be the adjusted cash balance at April 30, 2021?

Accepted Answer

A) $77,260. 
B) $77,600. 
C) $78,020. 
D) $78,200. 
A) $77,260. 
B) $77,600. 
C) $78,020. 
D) $78,200.

Question 14

GAAP, compared to IFRS, tends to be more

Accepted Answer

A) simple in accounting requirements. 
B) rules-based. 
C) principles-based. 
D) simple in disclosures requirements.
IFRS 
A) simple in accounting requirements. 
B) rules-based. 
C) principles-based. 
D) simple in disclosures requirements.
IFRS

Question 15

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

Accepted Answer

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

Question 16

Cash is defined by IFRS as

Accepted Answer

A) cash on hand. 
B) demand deposits. 
C) cash on hand and demand deposits. 
D) cash on hand, demand deposits, and highly liquid investments.
IFRS 
A) cash on hand. 
B) demand deposits. 
C) cash on hand and demand deposits. 
D) cash on hand, demand deposits, and highly liquid investments.
IFRS

Question 17

A company stamps checks received in the mail with the words "For Deposit Only".This endorsement is called a(n)

Accepted Answer

A) blank endorsement. 
B) rubber stamp. 
C) restrictive endorsement. 
D) operational endorsement. 
A) blank endorsement. 
B) rubber stamp. 
C) restrictive endorsement. 
D) operational endorsement.

Question 18

For accounting purposes, postdated checks (checks payable in the future) are considered to be

Accepted Answer

A) money orders. 
B) cash. 
C) petty cash. 
D) accounts receivable. 
A) money orders. 
B) cash. 
C) petty cash. 
D) accounts receivable.

Question 19

A $100 petty cash fund has cash of $12 and receipts of $85.The journal entry to replenish the account would include a credit to

Accepted Answer

A) Cash for $88. 
B) Petty Cash for $88. 
C) Cash Over and Short for $2. 
D) Cash for $85. 
A) Cash for $88. 
B) Petty Cash for $88. 
C) Cash Over and Short for $2. 
D) Cash for $85.

Question 20

Internal auditors

Accepted Answer

A) are hired by CPA firms to audit business firms. 
B) are employees of the IRS 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 CPA firms to audit business firms. 
B) are employees of the IRS 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.

Personnel who handle cash receipts should have the option of taking a vacation or not.

A highly automated computerized system of accounting eliminates the need for internal controls.

Maximum benefit from independent internal verification is obtained when

If employees are bonded,

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

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Having one person post entries to the accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

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

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

An example of poor internal control is

Macrinez Company assembled the following information in completing its July bank reconciliation: balance per bank $22,920; outstanding checks $4,650; deposits in transit $7,500; NSF check $480; bank service charge $150; cash balance per books $26,400.As a result of this reconciliation, Macrinez will

In preparing its August 31, 2021 bank reconciliation, Annie Corp.has available the following information: At August 31, 2021, Annie's adjusted cash balance is

In preparing its bank reconciliation for the month of April 2021, Delano, Inc.has available the following information. What should be the adjusted cash balance at April 30, 2021?

GAAP, compared to IFRS, tends to be more

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

Cash is defined by IFRS as

A company stamps checks received in the mail with the words "For Deposit Only".This endorsement is called a(n)

For accounting purposes, postdated checks (checks payable in the future) are considered to be

A $100 petty cash fund has cash of $12 and receipts of $85.The journal entry to replenish the account would include a credit to

Internal auditors

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: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Time Value of Money

Payroll Accounting

Other Significant Liabilities

Filters

Exam 7: Fraud, Internal Control and Cash

Personnel who handle cash receipts should have the option of taking a vacation or not.

A highly automated computerized system of accounting eliminates the need for internal controls.

Maximum benefit from independent internal verification is obtained when

If employees are bonded,

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

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Having one person post entries to the accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

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

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

An example of poor internal control is

In preparing its August 31, 2021 bank reconciliation, Annie Corp.has available the following information: At August 31, 2021, Annie's adjusted cash balance is

In preparing its bank reconciliation for the month of April 2021, Delano, Inc.has available the following information. What should be the adjusted cash balance at April 30, 2021?

GAAP, compared to IFRS, tends to be more

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

Cash is defined by IFRS as

A company stamps checks received in the mail with the words "For Deposit Only".This endorsement is called a(n)

For accounting purposes, postdated checks (checks payable in the future) are considered to be

A $100 petty cash fund has cash of $12 and receipts of $85.The journal entry to replenish the account would include a credit to

Internal auditors

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: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Time Value of Money

Payroll Accounting

Other Significant Liabilities

Filters