Question 1

Which of the following is a correct statement regarding the bank reconciliation?

Accepted Answer

A)  The bank reconciliation is part of the general ledger. 
B)  Journal entries need to be made for all transactions on the bank side to get the accounts up-to-date. 
C)  Journal entries need to be made for all transactions on the book side to get the accounts up-to-date. 
D)  The bank reconciliation is part of the journal. 
A)  The bank reconciliation is part of the general ledger. 
B)  Journal entries need to be made for all transactions on the bank side to get the accounts up-to-date. 
C)  Journal entries need to be made for all transactions on the book side to get the accounts up-to-date. 
D)  The bank reconciliation is part of the journal.

Question 2

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 sum of 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 sum of 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.

Question 3

Under a compensating balance agreement:

Accepted Answer

A)  the minimum compensating balance is considered a cash equivalent. 
B)  the compensating balance is available for day-to-day use. 
C)  the net result is that the actual interest rate is higher than the stated interest rate. 
D)  all of the above are true. 
A)  the minimum compensating balance is considered a cash equivalent. 
B)  the compensating balance is available for day-to-day use. 
C)  the net result is that the actual interest rate is higher than the stated interest rate. 
D)  all of the above are true.

Question 4

Aaron's Electronics sells very expensive computer chips. These chips are small, but sell for $5,000 each. Aaron is worried that his employees may be tempted to steal the chips, since they can easily be concealed in their pocket. At any one time, the maximum number of computer chips in inventory is 100. Explain how a point-of-sale terminal can help Aaron with his concern.

Accepted Answer

Point-of-sale terminals provide control

Question 5

The ABC Jewelry Store sells mostly costume jewelry, but it also sells an expensive watch brand. The owner of the store is concerned about monitoring sales and inventory of the watches. He decided to perform a quick inventory count of the watches on a daily basis as a control procedure. The owner counts 58 watches at the end of business on Thursday. On Friday, a shipment of 23 watches is received. The point-of-sale terminal for Friday indicates that 7 watches were sold that day. A quick inventory of watches at the end of business on Friday indicates that 72 watches are on hand. How many, if any, watches are unaccounted for?

Accepted Answer

2 watches

Question 6

Herbert Company deposited $25,000 in its bank on the same day as, but after the bank prepared Herbert 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 7

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 8

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.

Question 9

The type of fraud committed by company managers who make false and misleading entries in the books, making the financial results of the company appear better than they actually are, 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.

Question 10

Fraudulent financial reporting:

Accepted Answer

A)  is committed by lower level employees of a company. 
B)  makes the company appear in poor financial condition. 
C)  deceives investors and creditors. 
D)  involves stealing cash or inventory from the company. 
A)  is committed by lower level employees of a company. 
B)  makes the company appear in poor financial condition. 
C)  deceives investors and creditors. 
D)  involves stealing cash or inventory from the company.

Question 11

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 12

Morgan's Fine Meats Co. has the following information for the second quarter of 2012:
   The minimum cash balance for any month is $10,000.
Prepare a cash budget for the second quarter of 2012, showing any excess cash or any financing needed. Any interest on the financing will be deferred until the fiscal year end in December. Assume that any cash in excess of the $10,000 is invested and deducted from the cash account.

Accepted Answer

The answer of Morgan's Fine Meats Co. has the following...

Question 13

Requiring employees to take annual vacations is a part of which characteristic of internal control?

Accepted Answer

A)  Assignment of responsibilities 
B)  Separation of duties 
C)  Proper authorization 
D)  Competent and reliable personnel 
A)  Assignment of responsibilities 
B)  Separation of duties 
C)  Proper authorization 
D)  Competent and reliable personnel

Question 14

XYZ 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 XYZ's cash budget for the upcoming year. The cash balance at the beginning of the year is $46,400. he minimum cash balance according to management is $50,000.

Accepted Answer

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

Question 15

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 16

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 17

The Public Company Oversight Board was created to oversee:

Accepted Answer

A)  the SEC. 
B)  the audits of non-profit organizations. 
C)  the audits of public companies. 
D)  the FASB. 
A)  the SEC. 
B)  the audits of non-profit organizations. 
C)  the audits of public companies. 
D)  the FASB.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Deposits that have been recorded on the book, but have not yet been recorded by the bank are:

Accepted Answer

A)  nonsufficient funds deposits. 
B)  outstanding deposits. 
C)  deposits in transit. 
D)  electronic funds deposits. 
A)  nonsufficient funds deposits. 
B)  outstanding deposits. 
C)  deposits in transit. 
D)  electronic funds deposits.

Question 20

Managers can use records produced by point-of-sale terminals to check inventory levels.

Accepted Answer

A) True 
 B)False

Which of the following is a correct statement regarding the bank reconciliation?

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

Under a compensating balance agreement:

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

The three main components of the fraud triangle are:

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 type of fraud committed by company managers who make false and misleading entries in the books, making the financial results of the company appear better than they actually are, is called:

Fraudulent financial reporting:

The person who prepares the bank reconciliation:

Requiring employees to take annual vacations is a part of which characteristic of internal control?

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

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

The Public Company Oversight Board was created to oversee:

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

Deposits that have been recorded on the book, but have not yet been recorded by the bank are:

Managers can use records produced by point-of-sale terminals to check inventory levels.

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

The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 4: Internal Control Cash

Which of the following is a correct statement regarding the bank reconciliation?

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

Under a compensating balance agreement:

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

The three main components of the fraud triangle are:

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 type of fraud committed by company managers who make false and misleading entries in the books, making the financial results of the company appear better than they actually are, is called:

Fraudulent financial reporting:

The person who prepares the bank reconciliation:

Requiring employees to take annual vacations is a part of which characteristic of internal control?

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

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

The Public Company Oversight Board was created to oversee:

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

Deposits that have been recorded on the book, but have not yet been recorded by the bank are:

Managers can use records produced by point-of-sale terminals to check inventory levels.

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

The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters

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