Question 1

Which of the following describes the internal control component risk assessment?

Accepted Answer

A)  Internal auditors monitor company controls to safeguard assets and external auditors monitor the controls to ensure that the accounting records are accurate. 
B)  A company must identify its risks. 
C)  Risk assessment is designed to ensure that the business's goals are achieved. 
D)  Risk assessment is the 'tone at the top' of the business. 
A)  Internal auditors monitor company controls to safeguard assets and external auditors monitor the controls to ensure that the accounting records are accurate. 
B)  A company must identify its risks. 
C)  Risk assessment is designed to ensure that the business's goals are achieved. 
D)  Risk assessment is the 'tone at the top' of the business.

Question 2

An outstanding cheque is a cheque issued by the company and recorded on its books but not yet paid by its bank.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following items found on a bank reconciliation does NOT require an adjusting entry?

Accepted Answer

A)  Interest earned 
B)  A bill receivable collected by the bank 
C)  A bank service charge 
D)  Deposits in transit 
A)  Interest earned 
B)  A bill receivable collected by the bank 
C)  A bank service charge 
D)  Deposits in transit

Question 4

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

Accepted Answer

A) True 
 B)False

Question 5

For good controls over cash payments,the company officer approving a payment voucher should be the same as the person who ordered the goods to ensure that the correct amount of cash is paid.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following describes the internal control procedure assignment of responsibilities?

Accepted Answer

A)  To validate its accounting records, a company should have an audit by an external accountant. 
B)  The external auditors will monitor internal controls. 
C)  The company should separate the custody of assets from accounting. 
D)  Have clearly assigned responsibilities for each position. 
A)  To validate its accounting records, a company should have an audit by an external accountant. 
B)  The external auditors will monitor internal controls. 
C)  The company should separate the custody of assets from accounting. 
D)  Have clearly assigned responsibilities for each position.

Question 7

Keeping office supplies under lock and key is representative of:

Accepted Answer

A)  promoting operations efficiency. 
B)  following company policies. 
C)  safeguarding assets. 
D)  ensuring accurate, reliable accounting records. 
A)  promoting operations efficiency. 
B)  following company policies. 
C)  safeguarding assets. 
D)  ensuring accurate, reliable accounting records.

Question 8

A company cheque for payment must be signed by:

Accepted Answer

A)  a person specifically authorised by the company. 
B)  the external auditor. 
C)  a bank employee. 
D)  any employee of the company. 
A)  a person specifically authorised by the company. 
B)  the external auditor. 
C)  a bank employee. 
D)  any employee of the company.

Question 9

Which of the following is a benefit of internet banking?

Accepted Answer

A)  The business can reduce its internal controls over cash receipts. 
B)  The bank reconciliation is not necessary. 
C)  The business can reconcile with the bank's balance at any time. 
D)  A company's book balance will always equal the bank's balance. 
A)  The business can reduce its internal controls over cash receipts. 
B)  The bank reconciliation is not necessary. 
C)  The business can reconcile with the bank's balance at any time. 
D)  A company's book balance will always equal the bank's balance.

Question 10

Which of the following describes the internal control procedure competent,reliable and ethical personnel?

Accepted Answer

A)  External auditors monitor internal controls. 
B)  A company purchases burglar alarms. 
C)  A company must train and supervise high-quality employees. 
D)  The information system is critical. 
A)  External auditors monitor internal controls. 
B)  A company purchases burglar alarms. 
C)  A company must train and supervise high-quality employees. 
D)  The information system is critical.

Question 11

Which of the following describes the control environment?

Accepted Answer

A)  Internal auditors monitor company controls to safeguard assets and external auditors monitor the controls to ensure that the accounting records are accurate. 
B)  A company must identify its risks. 
C)  The control environment is the 'tone at the top' of the business. 
D)  The control environment is designed to ensure that the business's goals are achieved. 
A)  Internal auditors monitor company controls to safeguard assets and external auditors monitor the controls to ensure that the accounting records are accurate. 
B)  A company must identify its risks. 
C)  The control environment is the 'tone at the top' of the business. 
D)  The control environment is designed to ensure that the business's goals are achieved.

Question 12

Which of the following describes the internal control component monitoring of controls?

Accepted Answer

A)  Monitoring of controls is designed to ensure that the business's goals are achieved. 
B)  Monitoring of controls is the 'tone at the top' of the business. 
C)  A company must identify its risks. 
D)  Internal auditors monitor company controls to safeguard assets and external auditors evaluate the controls to ensure that the accounting records are accurate. 
A)  Monitoring of controls is designed to ensure that the business's goals are achieved. 
B)  Monitoring of controls is the 'tone at the top' of the business. 
C)  A company must identify its risks. 
D)  Internal auditors monitor company controls to safeguard assets and external auditors evaluate the controls to ensure that the accounting records are accurate.

Question 13

As part of the internal control over cash receipts by mail,the mailroom sends both the customer cheques and the remittance advices to the accounting department.

Accepted Answer

A) True 
 B)False

Question 14

The following information is available for Jack's Unlimited Company for the current month.
$$\begin{array} { | l | l | } 
\hline \text { Book balance end of the month } & \$ 7100 \
\hline \text { Outstanding cheques } & 700 \
\hline \text { Deposits in transit } & 4000 \
\hline \text { Service charges } & 95 \
\hline \text { Interest revenue } & 35 \
\hline
\end{array}$$
What is the adjusted book balance on the bank reconciliation?

Accepted Answer

A)  $10,270 
B)  $7040 
C)  $7740 
D)  $6970 
A)  $10,270 
B)  $7040 
C)  $7740 
D)  $6970

Question 15

Separation of duties limits fraud and promotes the accuracy of the account records.

Accepted Answer

A) True 
 B)False

Question 16

A receiving report should be matched with the supplier invoice before a payment to the supplier is approved.

Accepted Answer

A) True 
 B)False

Question 17

In the following situation,which internal control procedure needs strengthening?
At Hofstra Services,the junior accountant collects cheques and cash from customers and records the transactions into the Journal.The controller approves the journal entries and bank reconciliations.The treasurer signs cheques and approves contracts.

Accepted Answer

A)  Competent, reliable and ethical personnel 
B)  Assignment of responsibilities 
C)  Separation of duties 
D)  Documents and records 
A)  Competent, reliable and ethical personnel 
B)  Assignment of responsibilities 
C)  Separation of duties 
D)  Documents and records

Question 18

The voucher system improves internal control by requiring all expenditures to be approved before payment can be made.

Accepted Answer

A) True 
 B)False

Question 19

The voucher system helps the business to streamline its internal controls over cash receipts.

Accepted Answer

A) True 
 B)False

Question 20

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Exam 8: Internal Control and Cash

Which of the following describes the internal control component risk assessment?

An outstanding cheque is a cheque issued by the company and recorded on its books but not yet paid by its bank.

Which of the following items found on a bank reconciliation does NOT require an adjusting entry?

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

For good controls over cash payments,the company officer approving a payment voucher should be the same as the person who ordered the goods to ensure that the correct amount of cash is paid.

Which of the following describes the internal control procedure assignment of responsibilities?

Keeping office supplies under lock and key is representative of:

A company cheque for payment must be signed by:

Which of the following is a benefit of internet banking?

Which of the following describes the internal control procedure competent,reliable and ethical personnel?

Which of the following describes the control environment?

Which of the following describes the internal control component monitoring of controls?

As part of the internal control over cash receipts by mail,the mailroom sends both the customer cheques and the remittance advices to the accounting department.

The following information is available for Jack's Unlimited Company for the current month. Book balance end of the month \ 7100 Outstanding cheques 700 Deposits in transit 4000 Service charges 95 Interest revenue 35 What is the adjusted book balance on the bank reconciliation?

Separation of duties limits fraud and promotes the accuracy of the account records.

A receiving report should be matched with the supplier invoice before a payment to the supplier is approved.

The voucher system improves internal control by requiring all expenditures to be approved before payment can be made.

The voucher system helps the business to streamline its internal controls over cash receipts.

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Receivables

Non-Current Assets: Property, plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities,debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

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