Question 1

Which of the following describes the internal control procedure documents and records?

Accepted Answer

A)  Separate the custody of assets from accounting. 
B)  A company should purchase a fireproof vault. 
C)  Mandatory vacations will improve internal control. 
D)  Prenumber invoices and other documents. 
A)  Separate the custody of assets from accounting. 
B)  A company should purchase a fireproof vault. 
C)  Mandatory vacations will improve internal control. 
D)  Prenumber invoices and other documents.

Question 2

Which of the following should the purchasing agent NOT be able to do?

Accepted Answer

A)  Receive the goods 
B)  Contact the supplier of the goods 
C)  Negotiate prices with suppliers 
D)  Prepare the purchase order 
A)  Receive the goods 
B)  Contact the supplier of the goods 
C)  Negotiate prices with suppliers 
D)  Prepare the purchase order

Question 3

Which of the following describes the internal control procedure separation of duties?

Accepted Answer

A)  External auditors will monitor internal controls. 
B)  Cashiers must not have access to accounting records. 
C)  The information system is critical. 
D)  Prenumber invoices and other documents. 
A)  External auditors will monitor internal controls. 
B)  Cashiers must not have access to accounting records. 
C)  The information system is critical. 
D)  Prenumber invoices and other documents.

Question 4

Journal entries must be made to record the reconciling items on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 5

The use of electronic data interchange (EDI)bypasses the need for people and documents in cash payment procedures.

Accepted Answer

A) True 
 B)False

Question 6

An accountant is under pressure to maximise the company's profit at year-end.He is told to delay orders of important services until the following year.This action would be considered unethical because it is a misrepresentation of actual transactions.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements describes a voucher?

Accepted Answer

A)  It is a report showing that the goods have been received in good condition, as ordered. 
B)  It is a statement from the supplier showing the goods purchased and the amount due. 
C)  It is an order to purchase goods from a supplier. 
D)  It is a document authorising a payment to a supplier. 
A)  It is a report showing that the goods have been received in good condition, as ordered. 
B)  It is a statement from the supplier showing the goods purchased and the amount due. 
C)  It is an order to purchase goods from a supplier. 
D)  It is a document authorising a payment to a supplier.

Question 8

Which of the following items does NOT cause a difference in the bank balance and the book balance on a bank reconciliation?

Accepted Answer

A)  Cancelled cheques 
B)  Deposits in transit 
C)  Dishonoured cheques 
D)  Outstanding cheques 
A)  Cancelled cheques 
B)  Deposits in transit 
C)  Dishonoured cheques 
D)  Outstanding cheques

Question 9

If the bank reconciliation includes a book error,no journal entries are required.

Accepted Answer

A) True 
 B)False

Question 10

Cheque number 6135 for $576 was incorrectly entered as $657.Which adjustment needs to be made?

Accepted Answer

A)  Decrease the book balance. 
B)  Increase the bank statement balance. 
C)  Decrease the bank statement balance. 
D)  Increase the book balance. 
A)  Decrease the book balance. 
B)  Increase the bank statement balance. 
C)  Decrease the bank statement balance. 
D)  Increase the book balance.

Question 11

If the bank reconciliation includes interest revenue,a journal entry is required that debits Cash and credits Interest revenue.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following describes the internal control component information system?

Accepted Answer

A)  Control procedures are designed to ensure that the business's goals are achieved. 
B)  Only authorised users have access to various parts of the information system. 
C)  The information system is the 'tone at the top' of the business. 
D)  Internal auditors monitor company controls to safeguard assets and external auditors monitor the controls to ensure that the accounting records are accurate. 
A)  Control procedures are designed to ensure that the business's goals are achieved. 
B)  Only authorised users have access to various parts of the information system. 
C)  The information system is the 'tone at the top' of the business. 
D)  Internal auditors monitor company controls to safeguard assets and external auditors monitor the controls to ensure that the accounting records are accurate.

Question 13

In the following situation,which internal control procedure needs strengthening?
Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.That employee has not yet been adequately trained on the maintenance needs of the equipment.

Accepted Answer

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

Question 14

If an accountant takes an action that is deliberately designed to improve the company's financial results,it would be considered unethical if:

Accepted Answer

A)  the action was taken specifically for the purpose of showing higher profit. 
B)  the action is not in the best interests of the business's owners. 
C)  the action will require a special journal entry. 
D)  it deliberately misrepresents facts. 
A)  the action was taken specifically for the purpose of showing higher profit. 
B)  the action is not in the best interests of the business's owners. 
C)  the action will require a special journal entry. 
D)  it deliberately misrepresents facts.

Question 15

A malicious program that enters program code or destroys data without authorisation is an example of:

Accepted Answer

A)  a password. 
B)  phishing. 
C)  a virus. 
D)  encryption. 
A)  a password. 
B)  phishing. 
C)  a virus. 
D)  encryption.

Question 16

Which of the following is retained by the customer as proof of a deposit transaction?

Accepted Answer

A)  A deposit slip 
B)  A bank reconciliation 
C)  A cancelled cheque 
D)  A signature card 
A)  A deposit slip 
B)  A bank reconciliation 
C)  A cancelled cheque 
D)  A signature card

Question 17

In a bank reconciliation,a dishonoured cheque will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 18

In reconciling a bank statement,the bank balance is $1 000 and the chequebook balance is $1 205.Which of the following is the MOST probable reason why the chequebook balance is larger than the bank balance?

Accepted Answer

A)  The bank has not cleared certain cheques. 
B)  A deposit in transit was made at the end of the month. 
C)  The bank has added interest revenue to the account balance. 
D)  The bank received an EFT from a customer. 
A)  The bank has not cleared certain cheques. 
B)  A deposit in transit was made at the end of the month. 
C)  The bank has added interest revenue to the account balance. 
D)  The bank received an EFT from a customer.

Question 19

Reducing expense to increase operating profit is representative of:

Accepted Answer

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

Question 20

Which of the following is a security procedure designed for e-commerce that rearranges text messages by a mathematical process?

Accepted Answer

A)  Trojans 
B)  Phishing 
C)  Encryption 
D)  Firewalls 
A)  Trojans 
B)  Phishing 
C)  Encryption 
D)  Firewalls

Exam 8: Internal Control and Cash

Which of the following describes the internal control procedure documents and records?

Which of the following should the purchasing agent NOT be able to do?

Which of the following describes the internal control procedure separation of duties?

Journal entries must be made to record the reconciling items on the bank side of the reconciliation.

The use of electronic data interchange (EDI)bypasses the need for people and documents in cash payment procedures.

An accountant is under pressure to maximise the company's profit at year-end.He is told to delay orders of important services until the following year.This action would be considered unethical because it is a misrepresentation of actual transactions.

Which of the following statements describes a voucher?

Which of the following items does NOT cause a difference in the bank balance and the book balance on a bank reconciliation?

If the bank reconciliation includes a book error,no journal entries are required.

Cheque number 6135 for $576 was incorrectly entered as $657.Which adjustment needs to be made?

If the bank reconciliation includes interest revenue,a journal entry is required that debits Cash and credits Interest revenue.

Which of the following describes the internal control component information system?

In the following situation,which internal control procedure needs strengthening? Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.That employee has not yet been adequately trained on the maintenance needs of the equipment.

If an accountant takes an action that is deliberately designed to improve the company's financial results,it would be considered unethical if:

A malicious program that enters program code or destroys data without authorisation is an example of:

Which of the following is retained by the customer as proof of a deposit transaction?

In a bank reconciliation,a dishonoured cheque will be shown on the bank side of the reconciliation.

In reconciling a bank statement,the bank balance is $1 000 and the chequebook balance is $1 205.Which of the following is the MOST probable reason why the chequebook balance is larger than the bank balance?

Reducing expense to increase operating profit is representative of:

Which of the following is a security procedure designed for e-commerce that rearranges text messages by a mathematical process?

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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