Question 1

check for payment must be signed by:

Accepted Answer

A)  the treasurer. 
B)  the CFO. 
C)  an authorized official. 
D)  the controller. 
A)  the treasurer. 
B)  the CFO. 
C)  an authorized official. 
D)  the controller. C

Question 2

Which of the following describes the internal control component "control procedures"?

Accepted Answer

A)  A company must identify its risks. 
B)  Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate. 
C)  Control procedures are the "tone at the top" of the business. 
D)  Control procedures are designed to ensure that the business's goals are achieved. 
A)  A company must identify its risks. 
B)  Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate. 
C)  Control procedures are the "tone at the top" of the business. 
D)  Control procedures are designed to ensure that the business's goals are achieved. D

Question 3

Which of the following is NOT a control over petty cash?

Accepted Answer

A)  A specific amount of cash must be kept on hand. 
B)  All petty cash payments must be supported by a petty cash ticket. 
C)  Several employees must be designated as petty cash custodian. 
D)  All of the above are controls over petty cash. 
A)  A specific amount of cash must be kept on hand. 
B)  All petty cash payments must be supported by a petty cash ticket. 
C)  Several employees must be designated as petty cash custodian. 
D)  All of the above are controls over petty cash. C

Question 4

of the following is a voucher?

Accepted Answer

A)  An approval for the cash payment of an expenditure 
B)  A check 
C)  A receipt for a cash payment 
D)  None of the above 
A)  An approval for the cash payment of an expenditure 
B)  A check 
C)  A receipt for a cash payment 
D)  None of the above

Question 5

At the Hollywood Theatre, pre-numbered tickets are stored in the ticket booth so that the ticket sales personnel can replace the ticket machine when it runs out. Which internal control procedure is being demonstrated correctly by Hollywood Theatre?

Accepted Answer

A)  Proper authorization is essential. 
B)  Documents should be pre-numbered. 
C)  The information system is critical. 
D)  External auditors will monitor internal controls. 
A)  Proper authorization is essential. 
B)  Documents should be pre-numbered. 
C)  The information system is critical. 
D)  External auditors will monitor internal controls.

Question 6

Why are certified public accountants expected to maintain higher standards than society in general?

Accepted Answer

A)  They are required to do so by federal law. 
B)  Their ability to attract business depends entirely upon their reputation. 
C)  They are only required to do so if they are auditing publicly held companies. 
D)  They are not employees. 
A)  They are required to do so by federal law. 
B)  Their ability to attract business depends entirely upon their reputation. 
C)  They are only required to do so if they are auditing publicly held companies. 
D)  They are not employees.

Question 7

of the following should the purchasing agent not be able to do?

Accepted Answer

A)  Sign the voucher for payment 
B)  Receive goods 
C)  Purchase the goods 
D)  Both A and B 
A)  Sign the voucher for payment 
B)  Receive goods 
C)  Purchase the goods 
D)  Both A and B

Question 8

A petty cash fund was established with a $300 balance. It currently has cash of $78 and petty cash tickets totaling $222. Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A)  A credit to petty cash for $222 
B)  A debit to petty cash for $78 
C)  A credit to cash in bank for $300 
D)  Debits to various expenses for $222 
A)  A credit to petty cash for $222 
B)  A debit to petty cash for $78 
C)  A credit to cash in bank for $300 
D)  Debits to various expenses for $222

Question 9

Which of the following describes the controller of a large company?

Accepted Answer

A)  The controller is the chief accounting officer. 
B)  The controller reports to the vice-president of production. 
C)  The controller is responsible for cash management. 
D)  The controller reports to the audit committee. 
A)  The controller is the chief accounting officer. 
B)  The controller reports to the vice-president of production. 
C)  The controller is responsible for cash management. 
D)  The controller reports to the audit committee.

Question 10

any internal control procedure is initiated, the overriding concern is:

Accepted Answer

A)  stopping all theft. 
B)  having the best security money can buy. 
C)  how much benefit will be derived from the cost. 
D)  not listed in any of the above. 
A)  stopping all theft. 
B)  having the best security money can buy. 
C)  how much benefit will be derived from the cost. 
D)  not listed in any of the above.

Question 11

The Allnight Convenience store has problems attracting employees to work the midnight shift. New employees for this shift are paid a twenty percent premium for working that shift. Which internal control procedure is being violated by The Allnight Convenience store?

Accepted Answer

A)  To validate their accounting records, a company should have an audit by an external accountant. 
B)  External auditors will monitor internal controls. 
C)  External auditors will monitor internal controls 
D)  None are being violated. 
A)  To validate their accounting records, a company should have an audit by an external accountant. 
B)  External auditors will monitor internal controls. 
C)  External auditors will monitor internal controls 
D)  None are being violated.

Question 12

is not a risk that needs to be considered in doing e-commerce?

Accepted Answer

A)  phishing expeditions 
B)  hacking into and stealing passwords/account numbers 
C)  computer viruses 
D)  all are risks of e-commerce 
A)  phishing expeditions 
B)  hacking into and stealing passwords/account numbers 
C)  computer viruses 
D)  all are risks of e-commerce

Question 13

Which of the following are internal control procedures commonly used by companies to protect their assets?

Accepted Answer

A)  The purchase of fidelity bonds on cashiers 
B)  Mandatory vacations for employees 
C)  Both A and B 
D)  Neither A nor B 
A)  The purchase of fidelity bonds on cashiers 
B)  Mandatory vacations for employees 
C)  Both A and B 
D)  Neither A nor B

Question 14

law, the provisions of Sarbanes-Oxley apply to:

Accepted Answer

A)  all companies. 
B)  private companies. 
C)  public companies. 
D)  public companies with sales greater than one billion dollars. 
A)  all companies. 
B)  private companies. 
C)  public companies. 
D)  public companies with sales greater than one billion dollars.

Question 15

of the following items will NOT appear on the books side of the reconciliation?

Accepted Answer

A)  The bank collected a note receivable of $1,000. 
B)  A nonsufficient funds check of $75 returned to the bank. 
C)  The bank recorded a $2,000 deposit as $200. 
D)  The bank charged a service fee of $20. 
A)  The bank collected a note receivable of $1,000. 
B)  A nonsufficient funds check of $75 returned to the bank. 
C)  The bank recorded a $2,000 deposit as $200. 
D)  The bank charged a service fee of $20.

Question 16

bank statement is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

Accepted Answer

A) True 
 B)False

Question 17

Sarbanes-Oxley was passed in response to which of the following?

Accepted Answer

A)  The .com implosion 
B)  The savings and loan bailout 
C)  The implosion of WorldCom and Enron 
D)  None of the above 
A)  The .com implosion 
B)  The savings and loan bailout 
C)  The implosion of WorldCom and Enron 
D)  None of the above

Question 18

of the following are the three parties to a check?

Accepted Answer

A)  The bank, the maker, and the payor 
B)  The maker, the payee, and the bank 
C)  The signer, the depositor, and the endorser 
D)  The bank, the payee, and the IRS 
A)  The bank, the maker, and the payor 
B)  The maker, the payee, and the bank 
C)  The signer, the depositor, and the endorser 
D)  The bank, the payee, and the IRS

Question 19

Internal and external auditors are part of:

Accepted Answer

A)  evaluate and test controls. 
B)  information systems. 
C)  control procedures. 
D)  environment control. 
A)  evaluate and test controls. 
B)  information systems. 
C)  control procedures. 
D)  environment control.

Question 20

of the following is NOT one of the shields provided by internal control?

Accepted Answer

A)  Internal control shields against waste. 
B)  Internal control shields against Sarbanes-Oxley requirements. 
C)  Internal control shields against theft. 
D)  Internal control shields against inefficiency. 
A)  Internal control shields against waste. 
B)  Internal control shields against Sarbanes-Oxley requirements. 
C)  Internal control shields against theft. 
D)  Internal control shields against inefficiency.

Exam 7: Internal Control and Cash

check for payment must be signed by:

Which of the following describes the internal control component "control procedures"?

Which of the following is NOT a control over petty cash?

of the following is a voucher?

At the Hollywood Theatre, pre-numbered tickets are stored in the ticket booth so that the ticket sales personnel can replace the ticket machine when it runs out. Which internal control procedure is being demonstrated correctly by Hollywood Theatre?

Why are certified public accountants expected to maintain higher standards than society in general?

of the following should the purchasing agent not be able to do?

A petty cash fund was established with a $300 balance. It currently has cash of $78 and petty cash tickets totaling $222. Which of the following would be included in the entry to replenish the fund?

Which of the following describes the controller of a large company?

any internal control procedure is initiated, the overriding concern is:

The Allnight Convenience store has problems attracting employees to work the midnight shift. New employees for this shift are paid a twenty percent premium for working that shift. Which internal control procedure is being violated by The Allnight Convenience store?

is not a risk that needs to be considered in doing e-commerce?

Which of the following are internal control procedures commonly used by companies to protect their assets?

law, the provisions of Sarbanes-Oxley apply to:

of the following items will NOT appear on the books side of the reconciliation?

bank statement is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

Sarbanes-Oxley was passed in response to which of the following?

of the following are the three parties to a check?

Internal and external auditors are part of:

of the following is NOT one of the shields provided by internal control?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Receivables

Plant Assets and Intangibles

Current Liabilities, Payroll, and Long-Term Liabilities

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Appendix: Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

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