Question 1

A petty cash system is a system where the total of all receipts less the cash in the box equals the amount of the fund.

Accepted Answer

A) True 
 B)False

Question 2

The chief accounting officer of a business is the:

Accepted Answer

A) staff accountant. 
B) treasurer. 
C) controller. 
D) mail clerk. 
A) staff accountant. 
B) treasurer. 
C) controller. 
D) mail clerk.

Question 3

A plan of organization and a system of procedures, implemented by company management and the board of directors, is called:

Accepted Answer

A) the budget. 
B) the audit. 
C) internal control. 
D) the Sarbanes -Oxley Act. 
A) the budget. 
B) the audit. 
C) internal control. 
D) the Sarbanes -Oxley Act.

Question 4

If a company uses a sophisticated IT system, the basic attributes of internal control are the same as under a manual system.

Accepted Answer

A) True 
 B)False

Question 5

Depository accounts are "one-way" accounts, since local management can write checks on the account but cannot deposit money into the account.

Accepted Answer

A) True 
 B)False

Question 6

A bank reconciliation included an outstanding check of $1,300 for the purchase of supplies. The journal entry to record this reconciling item:

Accepted Answer

A) should debit Supplies and credit Cash for $1,300. 
B) should debit Cash and credit Supplies for $1,300. 
C) should debit Accounts Receivable and credit Cash for $1,300. 
D) is not required. 
A) should debit Supplies and credit Cash for $1,300. 
B) should debit Cash and credit Supplies for $1,300. 
C) should debit Accounts Receivable and credit Cash for $1,300. 
D) is not required.

Question 7

Which of the following steps should be performed by the accounting department prior to the approval of a disbursement?

Accepted Answer

A) The invoice should be compared with a copy of the purchase order and invoice. 
B) The mathematical accuracy of the invoice should be proved. 
C) The invoice should be compared with the disbursing report. 
D) The check should be processed and signed by the purchasing department supervisor. 
A) The invoice should be compared with a copy of the purchase order and invoice. 
B) The mathematical accuracy of the invoice should be proved. 
C) The invoice should be compared with the disbursing report. 
D) The check should be processed and signed by the purchasing department supervisor.

Question 8

A compensating balance requires a borrower to maintain a maximum balance in a checking account.

Accepted Answer

A) True 
 B)False

Question 9

The person who prepares the bank reconciliation:

Accepted Answer

A) should also be responsible for cash receipts. 
B) should also be responsible for cash disbursements. 
C) should be responsible for both cash receipts and cash disbursements. 
D) should have no other cash duties. 
A) should also be responsible for cash receipts. 
B) should also be responsible for cash disbursements. 
C) should be responsible for both cash receipts and cash disbursements. 
D) should have no other cash duties.

Question 10

Internal controls are the primary means by which fraud, as well as unintentional financial statement errors, are prevented.

Accepted Answer

A) True 
 B)False

Question 11

Proper segregation of duties increases the chances for fraud and promotes the accuracy of accounting records.

Accepted Answer

A) True 
 B)False

Question 12

The processing of a transaction so that no one person or group of persons can process the transaction completely without being checked by another person or group is part of the control procedure of:

Accepted Answer

A) information systems. 
B) monitoring of controls. 
C) control procedures. 
D) control processing. 
A) information systems. 
B) monitoring of controls. 
C) control procedures. 
D) control processing.

Question 13

Three key duties must always be separated under a good system of internal controls:

Accepted Answer

A) asset handling, record keeping and transaction approval. 
B) asset handling, hiring and safeguarding of assets. 
C) asset handling, recordkeeping and safeguarding of assets. 
D) record keeping, transaction analysis and transaction approval. 
A) asset handling, record keeping and transaction approval. 
B) asset handling, hiring and safeguarding of assets. 
C) asset handling, recordkeeping and safeguarding of assets. 
D) record keeping, transaction analysis and transaction approval.

Question 14

A malicious program that enters program code without consent and performs destructive actions in the victim's computer files or programs 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 15

Payment by check is an important internal control since:

Accepted Answer

A) the check provides a record of the payment. 
B) the check must be signed by an authorized official who should study the evidence supporting the payment. 
C) all checks must be approved by the bank's internal audit department before they are paid. 
D) both A and B are true. 
A) the check provides a record of the payment. 
B) the check must be signed by an authorized official who should study the evidence supporting the payment. 
C) all checks must be approved by the bank's internal audit department before they are paid. 
D) both A and B are true.

Question 16

When opening incoming mail, the mailroom employee should compare the amount of the check received with the amount shown on the:

Accepted Answer

A) sales invoice. 
B) customer order form. 
C) purchase order. 
D) remittance advice. 
A) sales invoice. 
B) customer order form. 
C) purchase order. 
D) remittance advice.

Question 17

The bank statement showed a NSF check of $300. In a bank reconciliation, this would be shown as a:

Accepted Answer

A) $300 deduction from the bank balance. 
B) $300 addition to the bank balance. 
C) $300 deduction from the book balance. 
D) $300 addition to the book balance. 
A) $300 deduction from the bank balance. 
B) $300 addition to the bank balance. 
C) $300 deduction from the book balance. 
D) $300 addition to the book balance.

Question 18

Hints of where fraud, mistakes or financial harm can occur in a company is called:

Accepted Answer

A) the control environment. 
B) risk assessment. 
C) control procedures. 
D) the tone at the top. 
A) the control environment. 
B) risk assessment. 
C) control procedures. 
D) the tone at the top.

Question 19

The bank statement balance is $6,450 and shows a service charge of $30, interest earned of $25, and a NSF check for $475. Deposits in transit total $1,850; outstanding checks are $1,125. What is the adjusted bank balance?

Accepted Answer

A) $5,725 
B) $5,970 
C) $7,175 
D) $7,655 
A) $5,725 
B) $5,970 
C) $7,175 
D) $7,655

Question 20

Three of the five components of internal control are:

Accepted Answer

A) control environment, risk assessment and control policies. 
B) monitoring of controls, information database and risk assessment. 
C) monitoring of controls, risk assessment and control environment. 
D) risk assessment, control procedures and information database. 
A) control environment, risk assessment and control policies. 
B) monitoring of controls, information database and risk assessment. 
C) monitoring of controls, risk assessment and control environment. 
D) risk assessment, control procedures and information database.

A petty cash system is a system where the total of all receipts less the cash in the box equals the amount of the fund.

The chief accounting officer of a business is the:

A plan of organization and a system of procedures, implemented by company management and the board of directors, is called:

If a company uses a sophisticated IT system, the basic attributes of internal control are the same as under a manual system.

Depository accounts are "one-way" accounts, since local management can write checks on the account but cannot deposit money into the account.

A bank reconciliation included an outstanding check of $1,300 for the purchase of supplies. The journal entry to record this reconciling item:

Which of the following steps should be performed by the accounting department prior to the approval of a disbursement?

A compensating balance requires a borrower to maintain a maximum balance in a checking account.

The person who prepares the bank reconciliation:

Internal controls are the primary means by which fraud, as well as unintentional financial statement errors, are prevented.

Proper segregation of duties increases the chances for fraud and promotes the accuracy of accounting records.

The processing of a transaction so that no one person or group of persons can process the transaction completely without being checked by another person or group is part of the control procedure of:

Three key duties must always be separated under a good system of internal controls:

A malicious program that enters program code without consent and performs destructive actions in the victim's computer files or programs is a(n):

Payment by check is an important internal control since:

When opening incoming mail, the mailroom employee should compare the amount of the check received with the amount shown on the:

The bank statement showed a NSF check of $300. In a bank reconciliation, this would be shown as a:

Hints of where fraud, mistakes or financial harm can occur in a company is called:

The bank statement balance is $6,450 and shows a service charge of $30, interest earned of $25, and a NSF check for $475. Deposits in transit total $1,850; outstanding checks are $1,125. What is the adjusted bank balance?

Three of the five components of internal control are:

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 petty cash system is a system where the total of all receipts less the cash in the box equals the amount of the fund.

The chief accounting officer of a business is the:

A plan of organization and a system of procedures, implemented by company management and the board of directors, is called:

If a company uses a sophisticated IT system, the basic attributes of internal control are the same as under a manual system.

Depository accounts are "one-way" accounts, since local management can write checks on the account but cannot deposit money into the account.

A bank reconciliation included an outstanding check of $1,300 for the purchase of supplies. The journal entry to record this reconciling item:

Which of the following steps should be performed by the accounting department prior to the approval of a disbursement?

A compensating balance requires a borrower to maintain a maximum balance in a checking account.

The person who prepares the bank reconciliation:

Internal controls are the primary means by which fraud, as well as unintentional financial statement errors, are prevented.

Proper segregation of duties increases the chances for fraud and promotes the accuracy of accounting records.

The processing of a transaction so that no one person or group of persons can process the transaction completely without being checked by another person or group is part of the control procedure of:

Three key duties must always be separated under a good system of internal controls:

A malicious program that enters program code without consent and performs destructive actions in the victim's computer files or programs is a(n):

Payment by check is an important internal control since:

When opening incoming mail, the mailroom employee should compare the amount of the check received with the amount shown on the:

The bank statement showed a NSF check of $300. In a bank reconciliation, this would be shown as a:

Hints of where fraud, mistakes or financial harm can occur in a company is called:

The bank statement balance is $6,450 and shows a service charge of $30, interest earned of $25, and a NSF check for $475. Deposits in transit total $1,850; outstanding checks are $1,125. What is the adjusted bank balance?

Three of the five components of internal control are:

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