Question 1

A lock-box system:

Accepted Answer

A) prevents unauthorized access to cash. 
B) slows down the time it takes to deposit cash to the bank. 
C) is more susceptible to fraud, since employees of the company have access to the cash. 
D) can only be used by very large companies. 
A) prevents unauthorized access to cash. 
B) slows down the time it takes to deposit cash to the bank. 
C) is more susceptible to fraud, since employees of the company have access to the cash. 
D) can only be used by very large companies. A

Question 2

The three elements that are present in almost all cases of fraud are collectively known as the:

Accepted Answer

A) fraud triangle. 
B) imprest system. 
C) fraud system. 
D) fraud rationalization. 
A) fraud triangle. 
B) imprest system. 
C) fraud system. 
D) fraud rationalization. A

Question 3

The book side of a bank reconciliation includes:

Accepted Answer

A) deposits in transit, bank collections and NSF checks. 
B) NSF checks, bank collections and interest earned on the checking account. 
C) outstanding checks and deposits in transit. 
D) outstanding checks, NSF checks and cost of printed checks. 
A) deposits in transit, bank collections and NSF checks. 
B) NSF checks, bank collections and interest earned on the checking account. 
C) outstanding checks and deposits in transit. 
D) outstanding checks, NSF checks and cost of printed checks. B

Question 4

Processing cash receipts under a lock-box system is an example of the control procedure of:

Accepted Answer

A) limited access. 
B) proper approvals. 
C) adequate records. 
D) compliance monitoring. 
A) limited access. 
B) proper approvals. 
C) adequate records. 
D) compliance monitoring.

Question 5

When a company receives cash by mail, the bank deposit for the cash receipts should be made by the:

Accepted Answer

A) mail room clerk. 
B) certified public accountant. 
C) controller. 
D) treasurer. 
A) mail room clerk. 
B) certified public accountant. 
C) controller. 
D) treasurer.

Question 6

An internal control system can be circumvented by:

Accepted Answer

A) collusion, encryption and management override. 
B) collusion, management override and segregation of duties. 
C) collusion, management override and human limitations. 
D) nothing, if it is a good internal control system. 
A) collusion, encryption and management override. 
B) collusion, management override and segregation of duties. 
C) collusion, management override and human limitations. 
D) nothing, if it is a good internal control system.

Question 7

To maintain effective internal control, employees responsible for handling cash should have access to the accounting records.

Accepted Answer

A) True 
 B)False

Question 8

All employees should have a background check before being hired, and should be properly trained and supervised.

Accepted Answer

A) True 
 B)False

Question 9

The three main components of the fraud triangle are:

Accepted Answer

A) rationalization, opportunity and greed. 
B) opportunity, motive and lack of ethics. 
C) motive, opportunity and rationalization. 
D) none of the above. 
A) rationalization, opportunity and greed. 
B) opportunity, motive and lack of ethics. 
C) motive, opportunity and rationalization. 
D) none of the above.

Question 10

To maintain effective internal control, the majority of all payments in an organization should be made using checks.

Accepted Answer

A) True 
 B)False

Question 11

A bank statement included a NSF check from customer Kim Fields for $2,100. The journal entry to record this reconciling item should:

Accepted Answer

A) debit NSF and credit Cash for $2,100. 
B) debit Cash and credit Accounts Receivable for $2,100. 
C) debit Accounts Receivable and credit Cash for $2,100. 
D) debit Cash and credit NSF for $2,100. 
A) debit NSF and credit Cash for $2,100. 
B) debit Cash and credit Accounts Receivable for $2,100. 
C) debit Accounts Receivable and credit Cash for $2,100. 
D) debit Cash and credit NSF for $2,100.

Question 12

In a bank reconciliation, an EFT cash payment is:

Accepted Answer

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

Question 13

A payment packet:

Accepted Answer

A) reports the arrival of items purchased. 
B) is sent by the purchasing department to the vendor selling the item. 
C) identifies the need for merchandise and begins the purchasing process. 
D) includes the invoice, receiving report and purchase order. 
A) reports the arrival of items purchased. 
B) is sent by the purchasing department to the vendor selling the item. 
C) identifies the need for merchandise and begins the purchasing process. 
D) includes the invoice, receiving report and purchase order.

Question 14

There are two records of a business's cash-the cash account in the company's general ledger and the bank statement.

Accepted Answer

A) True 
 B)False

Question 15

All cash receipts should be deposited in the bank whenever the cash exceeds a certain amount.

Accepted Answer

A) True 
 B)False

Question 16

Proper separation of duties and physical safeguards to protect assets from theft are part of a company's:

Accepted Answer

A) information system. 
B) control procedures. 
C) control monitoring. 
D) personnel maintenance. 
A) information system. 
B) control procedures. 
C) control monitoring. 
D) personnel maintenance.

Question 17

In a bank reconciliation, outstanding checks would be added to the book balance.

Accepted Answer

A) True 
 B)False

Question 18

A malicious computer program that hides inside a legitimate program and works like a virus is a(n):

Accepted Answer

A) encryption device. 
B) phishing expedition. 
C) computer virus. 
D) Trojan horse. 
A) encryption device. 
B) phishing expedition. 
C) computer virus. 
D) Trojan horse.

Question 19

Factors that would lead an employee to commit a lapping scheme include:

Accepted Answer

A) a proper separation of duties. 
B) not allowing the bookkeeper to access to cash. 
C) appropriately monitoring the activities of employees who handle cash. 
D) allowing employees to not take time off for earned vacations. 
A) a proper separation of duties. 
B) not allowing the bookkeeper to access to cash. 
C) appropriately monitoring the activities of employees who handle cash. 
D) allowing employees to not take time off for earned vacations.

Question 20

Carla Company's cash balance at the end of the month was $6,500. After comparing the company's records with the monthly bank statement, Carla's accountant identified the following reconciling items: outstanding checks, $800; deposits in transit, $700; bank service charge, $30; NSF check, $500. What is the adjusted bank balance?

Accepted Answer

A) $6,600 
B) $5,970 
C) $6,370 
D) The adjusted bank balance cannot be determined from this information. 
A) $6,600 
B) $5,970 
C) $6,370 
D) The adjusted bank balance cannot be determined from this information.

A lock-box system:

The three elements that are present in almost all cases of fraud are collectively known as the:

The book side of a bank reconciliation includes:

Processing cash receipts under a lock-box system is an example of the control procedure of:

When a company receives cash by mail, the bank deposit for the cash receipts should be made by the:

An internal control system can be circumvented by:

To maintain effective internal control, employees responsible for handling cash should have access to the accounting records.

All employees should have a background check before being hired, and should be properly trained and supervised.

The three main components of the fraud triangle are:

To maintain effective internal control, the majority of all payments in an organization should be made using checks.

A bank statement included a NSF check from customer Kim Fields for $2,100. The journal entry to record this reconciling item should:

In a bank reconciliation, an EFT cash payment is:

A payment packet:

There are two records of a business's cash-the cash account in the company's general ledger and the bank statement.

All cash receipts should be deposited in the bank whenever the cash exceeds a certain amount.

Proper separation of duties and physical safeguards to protect assets from theft are part of a company's:

In a bank reconciliation, outstanding checks would be added to the book balance.

A malicious computer program that hides inside a legitimate program and works like a virus is a(n):

Factors that would lead an employee to commit a lapping scheme include:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Short-Term Investments Receivables

Inventory and Cost of Goods Sold

Plant Assets Intangibles

Liabilities

Stockholders Equity

Long-Term Investments International Operations

The Income Statement the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

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Exam 4: Internal Control Cash

A lock-box system:

The three elements that are present in almost all cases of fraud are collectively known as the:

The book side of a bank reconciliation includes:

Processing cash receipts under a lock-box system is an example of the control procedure of:

When a company receives cash by mail, the bank deposit for the cash receipts should be made by the:

An internal control system can be circumvented by:

To maintain effective internal control, employees responsible for handling cash should have access to the accounting records.

All employees should have a background check before being hired, and should be properly trained and supervised.

The three main components of the fraud triangle are:

To maintain effective internal control, the majority of all payments in an organization should be made using checks.

A bank statement included a NSF check from customer Kim Fields for $2,100. The journal entry to record this reconciling item should:

In a bank reconciliation, an EFT cash payment is:

A payment packet:

There are two records of a business's cash-the cash account in the company's general ledger and the bank statement.

All cash receipts should be deposited in the bank whenever the cash exceeds a certain amount.

Proper separation of duties and physical safeguards to protect assets from theft are part of a company's:

In a bank reconciliation, outstanding checks would be added to the book balance.

A malicious computer program that hides inside a legitimate program and works like a virus is a(n):

Factors that would lead an employee to commit a lapping scheme include:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Short-Term Investments Receivables

Inventory and Cost of Goods Sold

Plant Assets Intangibles

Liabilities

Stockholders Equity

Long-Term Investments International Operations

The Income Statement the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters