Question 1

Segregation of duties means that a company assigns responsibilities so that:

Accepted Answer

A)  sufficient workers are available to cover all necessary jobs. 
B)  responsibilities for related activities are assigned to two or more people. 
C)  employees are restricted to jobs for which they have adequate training. 
D)  workers are divided into those who do the same tasks but on different days. 
A)  sufficient workers are available to cover all necessary jobs. 
B)  responsibilities for related activities are assigned to two or more people. 
C)  employees are restricted to jobs for which they have adequate training. 
D)  workers are divided into those who do the same tasks but on different days.

Question 2

Before reconciling its bank statement,Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250.The bank reconciliation for the month contained the following items:
 
Given the above information,what up-to-date ending cash balance should Lauren report at month-end?

Accepted Answer

A)  $4,500 
B)  $4,820 
C)  $5,160 
D)  $5,590 
A)  $4,500 
B)  $4,820 
C)  $5,160 
D)  $5,590

Question 3

The control components used by companies as a framework when analyzing their internal control systems include all of the following except:

Accepted Answer

A)  control environment. 
B)  compliance. 
C)  monitoring activities. 
D)  risk assessment. 
A)  control environment. 
B)  compliance. 
C)  monitoring activities. 
D)  risk assessment.

Question 4

The entry to record to replenishing the petty cash fund involves debiting ______ and crediting:

Accepted Answer

A)  expense accounts; Cash 
B)  Petty Cash; Petty Cash Expense 
C)  Petty Cash; Cash 
D)  Petty Cash Expense; expense accounts 
A)  expense accounts; Cash 
B)  Petty Cash; Petty Cash Expense 
C)  Petty Cash; Cash 
D)  Petty Cash Expense; expense accounts

Question 5

Employee fraud includes all of the following categories except:

Accepted Answer

A)  asset misappropriation. 
B)  corruption. 
C)  deception. 
D)  financial statement fraud. 
A)  asset misappropriation. 
B)  corruption. 
C)  deception. 
D)  financial statement fraud.

Question 6

Which of the following statements is correct regarding a voucher system

Accepted Answer

A) The journal entry to record the asset purchased and liability owed should be recorded when the bill for goods or services is received. 
B)  A voucher system is most commonly used in very small companies to make up for the lack of other internal controls. 
C)  A well-designed voucher system will allow employees requiring office supplies to place orders directly with suppliers for control purposes. 
D)  A well designed voucher system will eliminate fraud and errors. 
A) The journal entry to record the asset purchased and liability owed should be recorded when the bill for goods or services is received. 
B)  A voucher system is most commonly used in very small companies to make up for the lack of other internal controls. 
C)  A well-designed voucher system will allow employees requiring office supplies to place orders directly with suppliers for control purposes. 
D)  A well designed voucher system will eliminate fraud and errors.

Question 7

If the company's accountant mistakenly recorded a $58 deposit as $85,the error would be shown on the bank reconciliation as a(n):

Accepted Answer

A)  $27 addition to the book balance 
B)  $85 deduction from the book balance 
C)  $27 deduction from the book balance 
D)  $85 addition to the book balance 
A)  $27 addition to the book balance 
B)  $85 deduction from the book balance 
C)  $27 deduction from the book balance 
D)  $85 addition to the book balance

Question 8

Which of the following statements concerning a petty cash fund is not correct?

Accepted Answer

A)  A petty cash fund acts as a control by establishing a limited amount of cash to use for specific types of expenses. 
B)  A petty cash fund is similar to an imprest payroll account. 
C)  The company's petty cash custodian is responsible for operating the petty cash fund. 
D)  To avoid the administrative costs of the use of purchasing cards, or Pcards, many organizations have started using petty cash funds. 
A)  A petty cash fund acts as a control by establishing a limited amount of cash to use for specific types of expenses. 
B)  A petty cash fund is similar to an imprest payroll account. 
C)  The company's petty cash custodian is responsible for operating the petty cash fund. 
D)  To avoid the administrative costs of the use of purchasing cards, or Pcards, many organizations have started using petty cash funds.

Question 9

Which of the following statement about internal control is not correct?

Accepted Answer

A)  It guarantees the management will behave ethically. 
B)  It helps protect against the theft of assets. 
C)  It enhances the reliability of accounting information. 
D)  It promotes efficient and effective operations. 
A)  It guarantees the management will behave ethically. 
B)  It helps protect against the theft of assets. 
C)  It enhances the reliability of accounting information. 
D)  It promotes efficient and effective operations.

Question 10

While preparing the bank reconciliation for March,the accountant for ABC Company discovered that a $694 check in payment of an account payable had been entered incorrectly in the journal as $649.Which of the following is true?

Accepted Answer

A)  An adjusting entry must be made to debit Accounts Payable and credit Cash for $45. 
B)  An entry must be made to debit Cash and credit Accounts Payable for $45. 
C)  The bank should be notified, and the bank should correct its records by adding $45 to the company's account. 
D)  No entry is needed for the reconciling item because it appears on the bank's side of the reconciliation. 
A)  An adjusting entry must be made to debit Accounts Payable and credit Cash for $45. 
B)  An entry must be made to debit Cash and credit Accounts Payable for $45. 
C)  The bank should be notified, and the bank should correct its records by adding $45 to the company's account. 
D)  No entry is needed for the reconciling item because it appears on the bank's side of the reconciliation.

Question 11

Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins plus $387.50 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

Accepted Answer

A)  debit to Cash for $387.50. 
B)  debit to Petty Cash for $387.50. 
C)  credit to Petty Cash for $387.50. 
D)  credit to Cash for $387.50. 
A)  debit to Cash for $387.50. 
B)  debit to Petty Cash for $387.50. 
C)  credit to Petty Cash for $387.50. 
D)  credit to Cash for $387.50.

Question 12

McDermott Company's bank statement for September 30 showed an ending cash balance of $1,350.The company's Cash account in its general ledger showed a $995 debit balance.The following information was also available as of September 30.
-The bank deducted $125 for an NSF check from a customer deposited on September 15.
-The September 30 cash receipts,$1,250,were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement.
-A $15 debit memorandum for checks printed by the bank was included with the canceled checks.
-Outstanding checks amounted to $1,145.
-Included with the bank statement was a credit memo in the amount of $875 for an EFT in payment of a customer's account.
-Included with the canceled checks was a check for $275,drawn on the account of another company.
Required:
Part a.Prepare a bank reconciliation as of September 30.
Part b.Prepare the journal entries for the items on the company's bank reconciliation as of September 30.

Accepted Answer

Part a
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Question 13

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Accepted Answer

A)  tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices 
B)  fines of up to $5 million plus repayment of any fraud proceeds 
C)  evaluation and reporting on the effectiveness of internal control over financial reporting for large public companies by external auditors 
D)  evaluation and reporting on the effectiveness of internal control over financial reporting for all public companies by management with disclosure that management is not responsible for the internal control system 
A)  tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices 
B)  fines of up to $5 million plus repayment of any fraud proceeds 
C)  evaluation and reporting on the effectiveness of internal control over financial reporting for large public companies by external auditors 
D)  evaluation and reporting on the effectiveness of internal control over financial reporting for all public companies by management with disclosure that management is not responsible for the internal control system

Question 14

Following are seven items (a)through (g)that would cause Coyle Company's book balance of cash to differ from its bank statement balance of cash.
(a)A service charge imposed by the bank.
(b)A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month.
(c)A customer's check returned by the bank is marked "Not Sufficient Funds.(NSF)"
(d)A deposit that was mailed to the bank on the last day of the current month and is unrecorded on this month's bank statement.
(e)A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at $109.
(f)An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company and deposited the proceeds in the company's account.
(g)A check was written in the current period that is not yet paid or returned by the bank.
Indicate where each item (a)through (g)would appear on Coyle's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

Accepted Answer

The answer of Following are seven items (a)through (g)that would...

Question 15

The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as:

Accepted Answer

A)  duplication of responsibility. 
B)  mandatory vacations. 
C)  segregation of duties. 
D)  rotation of duties. 
A)  duplication of responsibility. 
B)  mandatory vacations. 
C)  segregation of duties. 
D)  rotation of duties.

Question 16

For each of the independent cases below,identify and describe the principle of internal control that is violated and recommend what should be done to remedy the violation.

Accepted Answer

Case A.Document procedures
To ensure tha

Question 17

The customer typically explains the purpose of the payment using a(n):

Accepted Answer

A)  remittance advice. 
B)  invoice. 
C)  purchase order. 
D)  check. 
A)  remittance advice. 
B)  invoice. 
C)  purchase order. 
D)  check.

Question 18

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Accepted Answer

A)  evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies. 
B)  evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies. 
C)  establishment of an audit committee of independent directors to ensure the company's accounting, internal control, and audit functions are effective. 
D)  adoption of a code of ethics covering all employees. 
A)  evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies. 
B)  evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies. 
C)  establishment of an audit committee of independent directors to ensure the company's accounting, internal control, and audit functions are effective. 
D)  adoption of a code of ethics covering all employees.

Question 19

On October 31,2015,your company's records say that the company has $16,451.03 in its checking account.A review of the bank statement shows you have three outstanding checks totaling $5,643.01,and the bank has paid you interest of $12.19 and charged you $9.00 in service charges.The bank statement dated October 31,2015 would report a balance of:

Accepted Answer

A)  $22,090.85. 
B)  $16,454.22. 
C)  $22,097.23. 
D)  $10,804.83. 
A)  $22,090.85. 
B)  $16,454.22. 
C)  $22,097.23. 
D)  $10,804.83.

Question 20

Common control principles include all of the following,except:

Accepted Answer

A)  outsource work to third parties. 
B)  segregate of duties. 
C)  independently verify. 
D)  restrict access to assets and information. 
A)  outsource work to third parties. 
B)  segregate of duties. 
C)  independently verify. 
D)  restrict access to assets and information.

Segregation of duties means that a company assigns responsibilities so that:

The control components used by companies as a framework when analyzing their internal control systems include all of the following except:

The entry to record to replenishing the petty cash fund involves debiting ______ and crediting:

Employee fraud includes all of the following categories except:

Which of the following statements is correct regarding a voucher system

If the company's accountant mistakenly recorded a $58 deposit as $85,the error would be shown on the bank reconciliation as a(n):

Which of the following statements concerning a petty cash fund is not correct?

Which of the following statement about internal control is not correct?

While preparing the bank reconciliation for March,the accountant for ABC Company discovered that a $694 check in payment of an account payable had been entered incorrectly in the journal as $649.Which of the following is true?

Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins plus $387.50 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as:

For each of the independent cases below,identify and describe the principle of internal control that is violated and recommend what should be done to remedy the violation.

The customer typically explains the purpose of the payment using a(n):

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Common control principles include all of the following,except:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 5: Fraud, Internal Control, and Cash

Segregation of duties means that a company assigns responsibilities so that:

The control components used by companies as a framework when analyzing their internal control systems include all of the following except:

The entry to record to replenishing the petty cash fund involves debiting ______ and crediting:

Employee fraud includes all of the following categories except:

Which of the following statements is correct regarding a voucher system

If the company's accountant mistakenly recorded a $58 deposit as $85,the error would be shown on the bank reconciliation as a(n):

Which of the following statements concerning a petty cash fund is not correct?

Which of the following statement about internal control is not correct?

While preparing the bank reconciliation for March,the accountant for ABC Company discovered that a $694 check in payment of an account payable had been entered incorrectly in the journal as $649.Which of the following is true?

Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins plus $387.50 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as:

For each of the independent cases below,identify and describe the principle of internal control that is violated and recommend what should be done to remedy the violation.

The customer typically explains the purpose of the payment using a(n):

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Common control principles include all of the following,except:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters