Question 1

The components of internal control do NOT include:

Accepted Answer

A) control environment. 
B) risk assessment. 
C) control procedures. 
D) safeguard assets. 
A) control environment. 
B) risk assessment. 
C) control procedures. 
D) safeguard assets.

Question 2

When preparing a bank reconciliation:

Accepted Answer

A) deposits in transit are added to the bank balance. 
B) service charges are subtracted from the bank balance. 
C) outstanding checks are deducted from the book balance. 
D) book errors are subtracted from the bank balance. 
A) deposits in transit are added to the bank balance. 
B) service charges are subtracted from the bank balance. 
C) outstanding checks are deducted from the book balance. 
D) book errors are subtracted from the bank balance.

Question 3

The following are examples of items that appear on a bank reconciliation.Classify each item as (a)an addition to the bank balance,(b)a subtraction from the bank balance,(c)an addition to the book balance,or (d)a subtraction from the book balance.
1.NSF check
2.Deposits in transit
3.Interest revenue on checking account
4.Bank error - the bank credited the company's account for a deposit made by another customer
5.EFT rent collection
6.Service charge
7.Book error - the company credited cash for $100 when the correct amount was $1,000
8.Outstanding checks
9.Bank collection of a note receivable on behalf of the company

Accepted Answer

1.d,2.a,3.

Question 4

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 5

After approving an invoice for payment:

Accepted Answer

A) the receiving department should examine the payment packet to make sure all the documents agree. 
B) after payment,the payment packet should be stamped "paid" by the person in the treasurer's department who has authorized the disbursement. 
C) checks should be returned to the department who prepared them for mailing. 
D) the person who ordered the goods should examine the payment package to make sure all the documents agree. 
A) the receiving department should examine the payment packet to make sure all the documents agree. 
B) after payment,the payment packet should be stamped "paid" by the person in the treasurer's department who has authorized the disbursement. 
C) checks should be returned to the department who prepared them for mailing. 
D) the person who ordered the goods should examine the payment package to make sure all the documents agree.

Question 6

A payment packet of documents:

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 7

For each of the following situations,indicate which internal control procedure Johnson Company has violated:
1.Since they are costly,background checks are not done for the employees.
2.Purchases of items on credit do not need the approval of the purchasing department.
3.All hard copies of documents are shredded after one month and electronic records are deleted after two months.
4.The company does not prepare operating or cash budgets.
5.The accountant receives the checks from customers in payment of amounts due and records the cash receipts.
6.There are no locks in the area where inventory is stored.
7.The hiring,firing and pay adjustments are made by the foremen in the manufacturing area.

Accepted Answer

1.Smart hiring practices and segregation

Question 8

Jerry's Company is looking at various financing agreements.New Credit Union has agreed to loan the company $500,000 at 8% interest.Happy Bank has agreed to loan the company $500,000 at an interest rate of 6%.This is the lowest interest rate the company has been offered.However,as a condition to the loan,the company must maintain a compensating balance amount equal to 20% of the loan.
Required:
1.Determine the company's actual effective interest rate on the bank loan.
2.Which loan has the lowest interest cost?

Accepted Answer

1.Bank loan:
Compensating balance = $500

Question 9

A receiving report informs a vendor of the amount of goods received by the purchaser.

Accepted Answer

A) True 
 B)False

Question 10

Use the information below to prepare a bank reconciliation for Martindale Company for the month of January.
• Outstanding checks as of January 31 amounted to $2,223.
• Deposits in transit as of January 31 amounted to $1,879.
• The ending balance per the January bank statement is $36,482.
• The bank statement shows that Martindale earned $150 of interest on its bank balance for the month of January.
• The bank mistakenly recorded a deposit of $2,800 as $280 on January 15.
• The company pays its insurance of $986 by EFT.
• Bank collected rent for the company,$3,000.Bank statement had EFT receipt from a Martindale customer of $481.
• There was a NSF check on the bank statement for $368
• The ending cash balance per the books for January before any adjustments was $36,381.

Accepted Answer

The answer of Use the information below to prepare a...

Question 11

Slowinski Company is preparing its cash budget for the upcoming year.It anticipates the following cash receipts and cash disbursements for the year:
   Using the information above,prepare Slowinski's cash budget for the upcoming year.The cash balance at the beginning of the year is $46,400.The minimum cash balance according to management is $100,000.

Accepted Answer

The answer of Slowinski Company is preparing its cash budget...

Question 12

The Public Company Oversight Board was created to oversee the:

Accepted Answer

A) SEC. 
B) management of public companies. 
C) audits of public companies. 
D) American Institute of Certified Public Accountants. 
A) SEC. 
B) management of public companies. 
C) audits of public companies. 
D) American Institute of Certified Public Accountants.

Question 13

On a bank reconciliation,electronic fund transfers are:

Accepted Answer

A) additions or deductions to the bank balance. 
B) additions or deductions to the book balance. 
C) not put on the bank reconciliation. 
D) only used for journal entries. 
A) additions or deductions to the bank balance. 
B) additions or deductions to the book balance. 
C) not put on the bank reconciliation. 
D) only used for journal entries.

Question 14

One of the most common types of fraud that impacts the financial statements is the misappropriation of assets.

Accepted Answer

A) True 
 B)False

Question 15

A check received from a customer for which there are not sufficient funds in the bank to cover the amount of the check is a(n):

Accepted Answer

A) service charge. 
B) error. 
C) nonsufficient funds check. 
D) blank check. 
A) service charge. 
B) error. 
C) nonsufficient funds check. 
D) blank check.

Question 16

With regard to customer checks received by mail,which statement is TRUE?

Accepted Answer

A) The Debit to Cash by the Accounting Department should equal the amount deposited in the bank by the mailroom employee. 
B) The customers' Accounts Receivable accounts should be adjusted by the Treasury Department for the payments received. 
C) The controller compares the customers' checks to the remittance advices sent from the mailroom. 
D) The Accounting Department handles the bookkeeping part and the cashier in the Treasurer's Department deposits the checks in the bank. 
A) The Debit to Cash by the Accounting Department should equal the amount deposited in the bank by the mailroom employee. 
B) The customers' Accounts Receivable accounts should be adjusted by the Treasury Department for the payments received. 
C) The controller compares the customers' checks to the remittance advices sent from the mailroom. 
D) The Accounting Department handles the bookkeeping part and the cashier in the Treasurer's Department deposits the checks in the bank.

Question 17

________ is the most common fraud,but ________ is the most expensive fraud.

Accepted Answer

A) Fraudulent financial reporting,misappropriation of assets 
B) Misappropriation of assets,fraudulent financial reporting 
C) Misappropriation of assets,cooking the books 
D) Cooking the books,misappropriation of assets 
A) Fraudulent financial reporting,misappropriation of assets 
B) Misappropriation of assets,fraudulent financial reporting 
C) Misappropriation of assets,cooking the books 
D) Cooking the books,misappropriation of assets

Question 18

The owner of Samuelson Inc.has reason to believe that an employee has been stealing cash from the company.The employee receives cash from clients,makes the bank deposit,and also prepares the monthly bank reconciliation.To check up on the employee,the owner prepares his own bank reconciliation,as follows:
     Does it appear the employee has stolen from the company? If so,how much? Explain your answer.
Which side of the bank reconciliation shows the company's TRUE cash balance?

Accepted Answer

Yes,it appears the employee has stolen $

Question 19

Outstanding checks are checks that have been recorded by the bank,but are not yet recorded on the books.

Accepted Answer

A) True 
 B)False

Question 20

A company has a policy that all checks over $5,000 need to have the signature of the owner in addition to the signature of the bookkeeper.This is an example of:

Accepted Answer

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

The components of internal control do NOT include:

When preparing a bank reconciliation:

In a bank reconciliation,an EFT cash payment is:

After approving an invoice for payment:

A payment packet of documents:

A receiving report informs a vendor of the amount of goods received by the purchaser.

The Public Company Oversight Board was created to oversee the:

On a bank reconciliation,electronic fund transfers are:

One of the most common types of fraud that impacts the financial statements is the misappropriation of assets.

A check received from a customer for which there are not sufficient funds in the bank to cover the amount of the check is a(n):

With regard to customer checks received by mail,which statement is TRUE?

is the most common fraud,but is the most expensive fraud.

Outstanding checks are checks that have been recorded by the bank,but are not yet recorded on the books.

A company has a policy that all checks over $5,000 need to have the signature of the owner in addition to the signature of the bookkeeper.This is an example of:

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

Exam 4: Internal Control Cash

The components of internal control do NOT include:

When preparing a bank reconciliation:

In a bank reconciliation,an EFT cash payment is:

After approving an invoice for payment:

A payment packet of documents:

A receiving report informs a vendor of the amount of goods received by the purchaser.

The Public Company Oversight Board was created to oversee the:

On a bank reconciliation,electronic fund transfers are:

One of the most common types of fraud that impacts the financial statements is the misappropriation of assets.

A check received from a customer for which there are not sufficient funds in the bank to cover the amount of the check is a(n):

With regard to customer checks received by mail,which statement is TRUE?

________ is the most common fraud,but ________ is the most expensive fraud.

Outstanding checks are checks that have been recorded by the bank,but are not yet recorded on the books.

A company has a policy that all checks over $5,000 need to have the signature of the owner in addition to the signature of the bookkeeper.This is an example of:

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

is the most common fraud,but is the most expensive fraud.