Question 1

Each cash drawer is assigned to only one employee in a supermarket.This is an example of the internal control principle of:

Accepted Answer

A)  establishing responsibility. 
B)  segregating duties. 
C)  independently verifying. 
D)  bonding employees. 
A)  establishing responsibility. 
B)  segregating duties. 
C)  independently verifying. 
D)  bonding employees.

Question 2

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

Accepted Answer

A)  loan covenant. 
B)  credit rating. 
C)  bond rating. 
D)  call feature. 
A)  loan covenant. 
B)  credit rating. 
C)  bond rating. 
D)  call feature.

Question 3

A weak system of internal ______ provides the ______ to commit fraud.

Accepted Answer

A)  controls; opportunity 
B)  audits; rationalization 
C)  financial statements; opportunity 
D)  loan covenants; incentive 
A)  controls; opportunity 
B)  audits; rationalization 
C)  financial statements; opportunity 
D)  loan covenants; incentive

Question 4

When preparing this month's bank reconciliation,you find that you failed to record a $95 deposit for a payment you received from a customer.You immediately prepare a journal entry to record the deposit.Which of the following describes the actions to be taken when preparing next month's bank reconciliation?

Accepted Answer

A)  You must decrease the balance per bank by $95 
B)  You must increase the balance per bank by $95 
C)  You must increase the balance per books by $95 
D)  No further action is necessary. 
A)  You must decrease the balance per bank by $95 
B)  You must increase the balance per bank by $95 
C)  You must increase the balance per books by $95 
D)  No further action is necessary.

Question 5

In a bank reconciliation,an outstanding check is:

Accepted Answer

A)  deducted from the bank balance 
B)  added to the book balance 
C)  deducted from the book balance 
D)  added to the bank balance 
A)  deducted from the bank balance 
B)  added to the book balance 
C)  deducted from the book balance 
D)  added to the bank balance

Question 6

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Accepted Answer

A)  Debit Accounts Receivable and credit Cash in the amount of $776 
B)  Debit Cash and credit Accounts Receivable in the amount of $776 
C)  Debit NSF Check Expense and credit Accounts Receivable in the amount of $776 
D)  No journal entry is necessary. 
A)  Debit Accounts Receivable and credit Cash in the amount of $776 
B)  Debit Cash and credit Accounts Receivable in the amount of $776 
C)  Debit NSF Check Expense and credit Accounts Receivable in the amount of $776 
D)  No journal entry is necessary.

Question 7

Employee fraud is often grouped into three categories,including corruption,asset misappropriation,and embezzlement.

Accepted Answer

A) True 
 B)False

Question 8

Acme,Inc.'s books show an ending cash balance of $10,000 before preparing the bank reconciliation.Given the bank reconciliation shows outstanding checks of $3,000,deposits in transit of $2,000,NSF check of $100,and interest earned on the bank account of $10,the company's up-to-date ending cash balance equals:

Accepted Answer

A)  $9,910 
B)  $6,910 
C)  $8,910 
D)  $10,110 
A)  $9,910 
B)  $6,910 
C)  $8,910 
D)  $10,110

Question 9

The fraud triangle contains three elements that must exist for accounting fraud to occur.The elements are:

Accepted Answer

A)  fear, greed, and satisfaction. 
B)  greed, larceny, and access. 
C)  motive, opportunity, and means. 
D)  incentive, opportunity, and rationalization. 
A)  fear, greed, and satisfaction. 
B)  greed, larceny, and access. 
C)  motive, opportunity, and means. 
D)  incentive, opportunity, and rationalization.

Question 10

Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

A check that you have written has cleared the bank when:

Accepted Answer

A)  funds have been withdrawn from your bank account to cover the check 
B)  the bank notifies you that you have insufficient funds to cover the check (NSF) 
C)  the supplier to whom you gave the check records the payment received 
D)  the supplier to whom you gave the check deposits it in his bank account 
A)  funds have been withdrawn from your bank account to cover the check 
B)  the bank notifies you that you have insufficient funds to cover the check (NSF) 
C)  the supplier to whom you gave the check records the payment received 
D)  the supplier to whom you gave the check deposits it in his bank account

Question 12

On October 31,2015,the bank statement shows that your company has $12,956.73 in its checking account.You are aware of three outstanding checks for a total of $2,112.19.During October,2015,the bank rejected two deposited checks from customers totaling $654.19 because of insufficient funds and charged you $12.00 in service fees.You had not yet received notice about the bad checks,but you were aware of and have recorded the $12.00 of service fees.Prior to adjustment on October 31,2015,your Cash account would have a balance of:

Accepted Answer

A)  $14,402.73. 
B)  $15,711.11. 
C)  $11,498.73. 
D)  $10,202.35. 
A)  $14,402.73. 
B)  $15,711.11. 
C)  $11,498.73. 
D)  $10,202.35.

Question 13

A bank reconciliation item that a company's bank may not know about would be:

Accepted Answer

A)  Electronic fund transfers 
B)  Deposits in transit 
C)  NSF checks 
D)  Service charges 
A)  Electronic fund transfers 
B)  Deposits in transit 
C)  NSF checks 
D)  Service charges

Question 14

What is the primary goal of internal controls for cash payments?

Accepted Answer

A)  To ensure the lowest prices possible are paid 
B)  To make payments as quickly as possible 
C)  To ensure that payments are made only for properly authorized transactions 
D)  To independently verify cash payments 
A)  To ensure the lowest prices possible are paid 
B)  To make payments as quickly as possible 
C)  To ensure that payments are made only for properly authorized transactions 
D)  To independently verify cash payments

Question 15

When you identify outstanding checks in performing a bank reconciliation,you must:

Accepted Answer

A)  deduct the amount of the outstanding checks from the balance per books. 
B)  deduct the amount of the outstanding checks from the balance per bank. 
C)  add the amount of the outstanding checks to the balance per books. 
D)  add the amount of the outstanding checks to the balance per bank. 
A)  deduct the amount of the outstanding checks from the balance per books. 
B)  deduct the amount of the outstanding checks from the balance per bank. 
C)  add the amount of the outstanding checks to the balance per books. 
D)  add the amount of the outstanding checks to the balance per bank.

Question 16

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not an internal control for checks received through the mail?

Accepted Answer

A)  The mail clerk sends the cash receipts list and the customers' remittance advices to the accounting department 
B)  The mail clerk gives checks and money orders to the person who makes the bank deposit 
C)  The accounting department verifies the bank deposit by comparing the cash receipts list with the deposit slip from the bank 
D)  The accounting department counts the cash, prepares the deposit slip and deposits the cash in the bank 
A)  The mail clerk sends the cash receipts list and the customers' remittance advices to the accounting department 
B)  The mail clerk gives checks and money orders to the person who makes the bank deposit 
C)  The accounting department verifies the bank deposit by comparing the cash receipts list with the deposit slip from the bank 
D)  The accounting department counts the cash, prepares the deposit slip and deposits the cash in the bank

Question 18

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Accepted Answer

A)  interest earned. 
B)  deposits in transit. 
C)  service charge. 
D)  a customer's check returned NSF. 
A)  interest earned. 
B)  deposits in transit. 
C)  service charge. 
D)  a customer's check returned NSF.

Question 19

A company established a $400 petty cash.On October 15,there was $16 remaining in the petty cash fund on that date and there were petty cash receipts for travel expense,$39,delivery expense,$138,and office expenses,$214.The petty cash fund was replenished and increased to $1,000 in total.
Required:
Prepare the journal entry,if any,required,to record the replenishment of the petty cash fund and the increase in its amount on October 15.

Accepted Answer

The answer of A company established a $400 petty cash.On...

Question 20

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Accepted Answer

A)  Enron Act 
B)  Federal Accounting Standards Board Act 
C)  Sarbanes-Oxley Act 
D)  Securities and Exchange Act 
A)  Enron Act 
B)  Federal Accounting Standards Board Act 
C)  Sarbanes-Oxley Act 
D)  Securities and Exchange Act

Each cash drawer is assigned to only one employee in a supermarket.This is an example of the internal control principle of:

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

A weak system of internal provides the to commit fraud.

In a bank reconciliation,an outstanding check is:

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Employee fraud is often grouped into three categories,including corruption,asset misappropriation,and embezzlement.

The fraud triangle contains three elements that must exist for accounting fraud to occur.The elements are:

Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

A check that you have written has cleared the bank when:

A bank reconciliation item that a company's bank may not know about would be:

What is the primary goal of internal controls for cash payments?

When you identify outstanding checks in performing a bank reconciliation,you must:

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Which of the following is not an internal control for checks received through the mail?

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

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

Exam 5: Fraud, Internal Control, and Cash

Each cash drawer is assigned to only one employee in a supermarket.This is an example of the internal control principle of:

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

A weak system of internal ______ provides the ______ to commit fraud.

In a bank reconciliation,an outstanding check is:

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Employee fraud is often grouped into three categories,including corruption,asset misappropriation,and embezzlement.

The fraud triangle contains three elements that must exist for accounting fraud to occur.The elements are:

Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

A check that you have written has cleared the bank when:

A bank reconciliation item that a company's bank may not know about would be:

What is the primary goal of internal controls for cash payments?

When you identify outstanding checks in performing a bank reconciliation,you must:

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Which of the following is not an internal control for checks received through the mail?

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

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

A weak system of internal provides the to commit fraud.