Question 1

The type of fraud committed by company managers who make false and misleading entries in the books in order to improve a company's financial statements is called:

Accepted Answer

A) misappropriation of assets. 
B) fraudulent financial reporting. 
C) embezzlement. 
D) collusion. 
A) misappropriation of assets. 
B) fraudulent financial reporting. 
C) embezzlement. 
D) collusion. B

Question 2

________ is the element in the fraud triangle that results from weak internal controls.

Accepted Answer

A) Motive 
B) Opportunity 
C) Rationalization 
D) Reasoning 
A) Motive 
B) Opportunity 
C) Rationalization 
D) Reasoning B

Question 3

The person performing the bank reconciliation should not have any other cash duties.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation?

Accepted Answer

A) book errors 
B) bank errors 
C) EFT payments by bank 
D) EFT receipts by bank 
A) book errors 
B) bank errors 
C) EFT payments by bank 
D) EFT receipts by bank

Question 5

The bookkeeper recorded a payment on account as $120 instead of the correct amount of $210.What journal entry is required?

Accepted Answer

A) Debit Accounts Payable for $210 and credit Cash for $210. 
B) Debit Accounts Receivable for $210 and credit Cash for $210. 
C) Debit Accounts Payable for $90 and credit Cash for $90. 
D) Debit Cash for $90 and credit Accounts Payable for $90. 
A) Debit Accounts Payable for $210 and credit Cash for $210. 
B) Debit Accounts Receivable for $210 and credit Cash for $210. 
C) Debit Accounts Payable for $90 and credit Cash for $90. 
D) Debit Cash for $90 and credit Accounts Payable for $90.

Question 6

The objectives of internal control do NOT include:

Accepted Answer

A) safeguard assets. 
B) encourage employees to follow company policy. 
C) ensure accurate,reliable accounting records. 
D) strong control environment. 
A) safeguard assets. 
B) encourage employees to follow company policy. 
C) ensure accurate,reliable accounting records. 
D) strong control environment.

Question 7

The information below was used to prepare a bank reconciliation for Lorena Company at October 31:
• According to the bank statement,the bank balance as of October 31 was $8,765.According to the books,the cash balance as of October 31 is $9,557.
• Outstanding checks totaled $1,433.
• A customer's check for $999 was returned for NSF.
• October's service charge was $100.
• Bank collected $1,600 from a customer of Lorena Company in payment of a note receivable,including interest of $100.
• A new bookkeeper had problems posting checks and recording cash receipts:
   • A deposit was made by the company for $900.This was the correct amount,however,the bank made a mistake and recorded the deposit as $890.
• Deposits made at month-end totaled $4,516; these were not shown on the bank statement.
Required:
1.Prepare the bank reconciliation at October 31.
2.Prepare the journal entries at October 31.

Accepted Answer

The answer of The information below was used to prepare...

Question 8

A bank reconciliation included an outstanding check of $850 for the payment of salaries.The journal entry to record this reconciling item:

Accepted Answer

A) should debit Salaries Expense and credit Cash for $850. 
B) should debit Cash and credit Salaries Expense for $850. 
C) should debit Accounts Payable and credit Cash for $850. 
D) is not required. 
A) should debit Salaries Expense and credit Cash for $850. 
B) should debit Cash and credit Salaries Expense for $850. 
C) should debit Accounts Payable and credit Cash for $850. 
D) is not required.

Question 9

A company receives customer checks in the mail for credit sales.Which people are involved in processing the checks?

Accepted Answer

A) mailroom employee,treasurer,cashier in treasurer's department 
B) mailroom employee,bookkeeper in accounting department,controller 
C) mailroom employee,bookkeeper in accounting department,controller,treasurer 
D) mailroom employee,bookkeeper in accounting department,controller,treasurer,cashier in treasurer's department 
A) mailroom employee,treasurer,cashier in treasurer's department 
B) mailroom employee,bookkeeper in accounting department,controller 
C) mailroom employee,bookkeeper in accounting department,controller,treasurer 
D) mailroom employee,bookkeeper in accounting department,controller,treasurer,cashier in treasurer's department

Question 10

Olde Shoppe has the following information at August 31: • Two deposits made on August 31 were not on the bank statement,totaling $5,300.
• The bank collected an EFT payment on a note receivable for $2,750.Of this amount,$150 represented interest on the note.
• August 31 balance in Cash was $11,677.
• The bookkeeper forgot to record check #1578 for $843 which was cashed by the bank on August 15th.
• The balance on the bank statement as of August 31 was $10,500.
• A check printing fee of $40 was shown on the bank statement.NSF check $100.
  What is the adjusted book balance at August 31?

Accepted Answer

A) $11,667 
B) $13,444 
C) $13,584 
D) $14,427 
A) $11,667 
B) $13,444 
C) $13,584 
D) $14,427

Question 11

Marjorie Company's cash balance per the books at the end of the month was $6,500.After comparing the company's records with the monthly bank statement,Marjorie's accountant identified the following reconciling items: outstanding checks,$800; deposits in transit,$700; bank service charge,$30; and NSF check,$500.The bank collection of a note receivable was $1,000 plus interest of $100.There also was an EFT payment of $100.What is the adjusted book balance at the end of the month?

Accepted Answer

A) $5,970 
B) $6,400 
C) $6,500 
D) $6,970 
A) $5,970 
B) $6,400 
C) $6,500 
D) $6,970

Question 12

Debit cards are being used:

Accepted Answer

A) in place of petty cash funds. 
B) for small purchases. 
C) for package delivery fees. 
D) all of the above. 
A) in place of petty cash funds. 
B) for small purchases. 
C) for package delivery fees. 
D) all of the above.

Question 13

In the cash budget,the beginning balance Cash plus budgeted cash receipts minus ________,equals Cash available before new financing.

Accepted Answer

A) budgeted cash disbursements 
B) budgeted cash balance 
C) cash used for investing activities 
D) cash used for investing and financing activities 
A) budgeted cash disbursements 
B) budgeted cash balance 
C) cash used for investing activities 
D) cash used for investing and financing activities

Question 14

Access to sensitive data files in a business should be protected by Trojan horses.

Accepted Answer

A) True 
 B)False

Question 15

What is the purpose of fraudulent reporting?

Accepted Answer

A) Net income and total assets are understated so managers can receive their bonuses. 
B) Net income and total assets are overstated so managers can receive their bonuses. 
C) So the stock price increases and managers benefit from share appreciation of stock held. 
D) B and C 
A) Net income and total assets are understated so managers can receive their bonuses. 
B) Net income and total assets are overstated so managers can receive their bonuses. 
C) So the stock price increases and managers benefit from share appreciation of stock held. 
D) B and C

Question 16

When a company receives customers' checks by mail:

Accepted Answer

A) the mailroom sends all customer checks to the treasurer,who has the cashier deposit the checks in the bank. 
B) the treasurer prepares the journal entries. 
C) the mailroom employee prepares the journal entries. 
D) the cashier in the treasury department prepares the journal entries. 
A) the mailroom sends all customer checks to the treasurer,who has the cashier deposit the checks in the bank. 
B) the treasurer prepares the journal entries. 
C) the mailroom employee prepares the journal entries. 
D) the cashier in the treasury department prepares the journal entries.

Question 17

Johnny Company deposited $25,000 in its bank on the same day as,but after the bank prepared Johnny Company's bank statement.The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):

Accepted Answer

A) addition to the bank balance; outstanding deposit 
B) addition to the bank balance; deposit in transit 
C) deduction to the bank balance; deposit in transit 
D) deduction to the bank balance; outstanding deposit 
A) addition to the bank balance; outstanding deposit 
B) addition to the bank balance; deposit in transit 
C) deduction to the bank balance; deposit in transit 
D) deduction to the bank balance; outstanding deposit

Question 18

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 19

Hill Company purchased stamps for $46 using the petty cash fund.What journal entry is required?

Accepted Answer

A) Debit Postage Expense for $46 and credit Cash for $46. 
B) Debit Accounts Payable for $46 and credit Cash for $46. 
C) Debit Petty Cash for $46 and credit Cash for $46. 
D) No journal entry is required until the petty cash fund is replenished at the end of the month. 
A) Debit Postage Expense for $46 and credit Cash for $46. 
B) Debit Accounts Payable for $46 and credit Cash for $46. 
C) Debit Petty Cash for $46 and credit Cash for $46. 
D) No journal entry is required until the petty cash fund is replenished at the end of the month.

Question 20

Which of the following is a CORRECT statement about the petty cash fund?

Accepted Answer

A) To set up the petty cash fund,a check is issued to the chief financial officer. 
B) The custodian of the fund has sole responsibility for accounting for the fund. 
C) The cash in the fund must always equal the opening balance of the fund. 
D) The petty cash fund must be maintained at a bank. 
A) To set up the petty cash fund,a check is issued to the chief financial officer. 
B) The custodian of the fund has sole responsibility for accounting for the fund. 
C) The cash in the fund must always equal the opening balance of the fund. 
D) The petty cash fund must be maintained at a bank.

The type of fraud committed by company managers who make false and misleading entries in the books in order to improve a company's financial statements is called:

________ is the element in the fraud triangle that results from weak internal controls.

The person performing the bank reconciliation should not have any other cash duties.

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation?

The bookkeeper recorded a payment on account as $120 instead of the correct amount of $210.What journal entry is required?

The objectives of internal control do NOT include:

A bank reconciliation included an outstanding check of $850 for the payment of salaries.The journal entry to record this reconciling item:

A company receives customer checks in the mail for credit sales.Which people are involved in processing the checks?

Debit cards are being used:

In the cash budget,the beginning balance Cash plus budgeted cash receipts minus ________,equals Cash available before new financing.

Access to sensitive data files in a business should be protected by Trojan horses.

What is the purpose of fraudulent reporting?

When a company receives customers' checks by mail:

Johnny Company deposited $25,000 in its bank on the same day as,but after the bank prepared Johnny Company's bank statement.The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):

An internal control system can be circumvented by:

Hill Company purchased stamps for $46 using the petty cash fund.What journal entry is required?

Which of the following is a CORRECT statement about the petty cash fund?

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Long-Term Investments: The Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

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Exam 4: Internal Control Cash

The type of fraud committed by company managers who make false and misleading entries in the books in order to improve a company's financial statements is called:

________ is the element in the fraud triangle that results from weak internal controls.

The person performing the bank reconciliation should not have any other cash duties.

Which of the following items can be added to or subtracted from the bank balance when preparing the bank reconciliation?

The bookkeeper recorded a payment on account as $120 instead of the correct amount of $210.What journal entry is required?

The objectives of internal control do NOT include:

A bank reconciliation included an outstanding check of $850 for the payment of salaries.The journal entry to record this reconciling item:

A company receives customer checks in the mail for credit sales.Which people are involved in processing the checks?

Debit cards are being used:

In the cash budget,the beginning balance Cash plus budgeted cash receipts minus ________,equals Cash available before new financing.

Access to sensitive data files in a business should be protected by Trojan horses.

What is the purpose of fraudulent reporting?

When a company receives customers' checks by mail:

Johnny Company deposited $25,000 in its bank on the same day as,but after the bank prepared Johnny Company's bank statement.The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):

An internal control system can be circumvented by:

Hill Company purchased stamps for $46 using the petty cash fund.What journal entry is required?

Which of the following is a CORRECT statement about the petty cash fund?

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Long-Term Investments: The Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters