Question 1

Fraudulent financial reporting is committed by company managers.

Accepted Answer

A) True 
 B)False

Question 2

Another term for a "hot check" is:

Accepted Answer

A)  electronic check. 
B)  outstanding check. 
C)  nonsufficient funds (NSF) check. 
D)  cleared checks. 
A)  electronic check. 
B)  outstanding check. 
C)  nonsufficient funds (NSF) check. 
D)  cleared checks.

Question 3

A company has a beginning cash balance of $3,000. For the year, the company estimates cash disbursements of $85,900. It has a desired ending cash balance of $5,500 and anticipates no new financing. The estimated cash receipts are:

Accepted Answer

A)  $77,400 
B)  $79,900 
C)  $82,900 
D)  $88,400 
A)  $77,400 
B)  $79,900 
C)  $82,900 
D)  $88,400

Question 4

When preparing a cash budget, a company must determine how much cash it will need.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  Service charges 
B)  Bank errors 
C)  Deposits in transit 
D)  Outstanding checks 
A)  Service charges 
B)  Bank errors 
C)  Deposits in transit 
D)  Outstanding checks

Question 6

All of the following will appear on the bank statement EXCEPT for:

Accepted Answer

A)  Electronic funds transfers (EFT). 
B)  beginning and ending cash balance. 
C)  cash receipts and cash payments. 
D)  deposits in transit. 
A)  Electronic funds transfers (EFT). 
B)  beginning and ending cash balance. 
C)  cash receipts and cash payments. 
D)  deposits in transit.

Question 7

According to a recent survey taken by the Association for Certified Fraud Examiners (ACFE), occupational fraud and abuse results in losses equal to approximately ________ of total business revenue.

Accepted Answer

A)  45% 
B)  10% 
C)  6% 
D)  an unknown amount 
A)  45% 
B)  10% 
C)  6% 
D)  an unknown amount

Question 8

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 9

A petty cash fund:

Accepted Answer

A)  is established to pay large nonrecurring expenses. 
B)  is established to pay on-the-spot minor purchases. 
C)  should have a least two custodians. 
D)  should issue checks for certain purchases. 
A)  is established to pay large nonrecurring expenses. 
B)  is established to pay on-the-spot minor purchases. 
C)  should have a least two custodians. 
D)  should issue checks for certain purchases.

Question 10

There are two records of a business's cash:

Accepted Answer

A)  the cash account in the general ledger and the petty cash box. 
B)  the cash account in the general ledger and the journal entries from the bank reconciliation. 
C)  the bank statement and the cash account in the general ledger. 
D)  the bank statement and the cash in petty cash. 
A)  the cash account in the general ledger and the petty cash box. 
B)  the cash account in the general ledger and the journal entries from the bank reconciliation. 
C)  the bank statement and the cash account in the general ledger. 
D)  the bank statement and the cash in petty cash.

Question 11

A cash budget is:

Accepted Answer

A)  part of the bank reconciliation process. 
B)  used to facilitate minor cash disbursements. 
C)  a means of identifying future cash receipts and future cash payments. 
D)  all of the above. 
A)  part of the bank reconciliation process. 
B)  used to facilitate minor cash disbursements. 
C)  a means of identifying future cash receipts and future cash payments. 
D)  all of the above.

Question 12

A system of handling cash receipts by mail whereby customers remit payments directly to the bank, rather than through the company's mail is a(n):

Accepted Answer

A)  imprest system. 
B)  lock-box system. 
C)  phishing system. 
D)  online banking system. 
A)  imprest system. 
B)  lock-box system. 
C)  phishing system. 
D)  online banking system.

Question 13

All of the following will appear on the book side of the reconciliation EXCEPT for:

Accepted Answer

A)  service charges. 
B)  electronic funds transfers. 
C)  deposits in transit. 
D)  book errors. 
A)  service charges. 
B)  electronic funds transfers. 
C)  deposits in transit. 
D)  book errors.

Question 14

An employee states that he committed fraud because he was "underpaid and overworked." This is an example of:

Accepted Answer

A)  opportunity. 
B)  motive. 
C)  rationalization. 
D)  understanding. 
A)  opportunity. 
B)  motive. 
C)  rationalization. 
D)  understanding.

Question 15

For each of the following situations, indicate which internal control procedure ABC 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 cash and records the cash receipts.
_____ 6. There are no locks in the area where inventory is stored.
_____ 7. The hiring, firing and pay adjustments and made by the department foremen.

Accepted Answer

1. Smart hiring practices and segregatio

Question 16

The sum of the cash in the petty cash fund and the total of the paid vouchers should equal the opening balance in the petty cash account at all times.

Accepted Answer

A) True 
 B)False

Question 17

Managers control cash receipts and disbursements, as well as ending cash balance, through a(n):

Accepted Answer

A)  cash budget. 
B)  operating budget. 
C)  statement of cash flows. 
D)  sales budget. 
A)  cash budget. 
B)  operating budget. 
C)  statement of cash flows. 
D)  sales budget.

Question 18

One of the main elements of the fraud triangle is rationalization.

Accepted Answer

A) True 
 B)False

Question 19

The type of fraud committed by employees of an entity who steal money from the company and cover it up through erroneous entries in the books 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 20

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.

Fraudulent financial reporting is committed by company managers.

Another term for a "hot check" is:

A company has a beginning cash balance of $3,000. For the year, the company estimates cash disbursements of $85,900. It has a desired ending cash balance of $5,500 and anticipates no new financing. The estimated cash receipts are:

When preparing a cash budget, a company must determine how much cash it will need.

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

All of the following will appear on the bank statement EXCEPT for:

According to a recent survey taken by the Association for Certified Fraud Examiners (ACFE), occupational fraud and abuse results in losses equal to approximately ________ of total business revenue.

Payment by check is an important internal control since:

A petty cash fund:

There are two records of a business's cash:

A cash budget is:

A system of handling cash receipts by mail whereby customers remit payments directly to the bank, rather than through the company's mail is a(n):

All of the following will appear on the book side of the reconciliation EXCEPT for:

An employee states that he committed fraud because he was "underpaid and overworked." This is an example of:

The sum of the cash in the petty cash fund and the total of the paid vouchers should equal the opening balance in the petty cash account at all times.

Managers control cash receipts and disbursements, as well as ending cash balance, through a(n):

One of the main elements of the fraud triangle is rationalization.

The type of fraud committed by employees of an entity who steal money from the company and cover it up through erroneous entries in the books is called:

A payment packet of documents:

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

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Exam 4: Internal Control Cash

Fraudulent financial reporting is committed by company managers.

Another term for a "hot check" is:

A company has a beginning cash balance of $3,000. For the year, the company estimates cash disbursements of $85,900. It has a desired ending cash balance of $5,500 and anticipates no new financing. The estimated cash receipts are:

When preparing a cash budget, a company must determine how much cash it will need.

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

All of the following will appear on the bank statement EXCEPT for:

According to a recent survey taken by the Association for Certified Fraud Examiners (ACFE), occupational fraud and abuse results in losses equal to approximately ________ of total business revenue.

Payment by check is an important internal control since:

A petty cash fund:

There are two records of a business's cash:

A cash budget is:

A system of handling cash receipts by mail whereby customers remit payments directly to the bank, rather than through the company's mail is a(n):

All of the following will appear on the book side of the reconciliation EXCEPT for:

An employee states that he committed fraud because he was "underpaid and overworked." This is an example of:

The sum of the cash in the petty cash fund and the total of the paid vouchers should equal the opening balance in the petty cash account at all times.

Managers control cash receipts and disbursements, as well as ending cash balance, through a(n):

One of the main elements of the fraud triangle is rationalization.

The type of fraud committed by employees of an entity who steal money from the company and cover it up through erroneous entries in the books is called:

A payment packet of documents:

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