Question 1

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following describes a firewall?

Accepted Answer

A) a malicious program that enters program code or destroys data without authorization 
B) when two or more people cooperate together to defraud a company 
C) a technique for protecting data 
D) when a company defrauds its suppliers by making false claims 
A) a malicious program that enters program code or destroys data without authorization 
B) when two or more people cooperate together to defraud a company 
C) a technique for protecting data 
D) when a company defrauds its suppliers by making false claims

Question 3

The ________ is a measure of a company's ability to pay its current liabilities from cash and cash equivalents.

Accepted Answer

A) cash conversion cycle 
B) cash ratio 
C) gross profit 
D) debt equity ratio 
A) cash conversion cycle 
B) cash ratio 
C) gross profit 
D) debt equity ratio

Question 4

In a bank reconciliation,outstanding checks will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following is true of a signature card?

Accepted Answer

A) It shows each authorized person's signature for a bank account. 
B) It is the same as a deposit receipt and acts as a proof of the deposit transaction. 
C) It can be used as a debit card. 
D) It can only be used for bank accounts of individuals,not for the bank accounts of businesses. 
A) It shows each authorized person's signature for a bank account. 
B) It is the same as a deposit receipt and acts as a proof of the deposit transaction. 
C) It can be used as a debit card. 
D) It can only be used for bank accounts of individuals,not for the bank accounts of businesses.

Question 6

As long as the same person deposits customer checks and records the deposits into the journal,there will be good internal control over cash receipts.

Accepted Answer

A) True 
 B)False

Question 7

A petty cash fund was established with a $250 balance.It currently has cash of $38 and petty cash tickets totaling $212 for travel expense.Provide the journal entry to record the replenishment of the fund.

Accepted Answer

The answer of A petty cash fund was established with...

Question 8

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

Accepted Answer

A) assignment of responsibilities 
B) competent,reliable,and ethical personnel 
C) separation of duties 
D) documents 
A) assignment of responsibilities 
B) competent,reliable,and ethical personnel 
C) separation of duties 
D) documents

Question 9

Bank errors are posting errors made by the bank that either incorrectly increase or decrease the bank balance.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?

Accepted Answer

A) an encryption system 
B) an imprest system 
C) a lock-box system 
D) a firewall system 
A) an encryption system 
B) an imprest system 
C) a lock-box system 
D) a firewall system

Question 11

A check for which a maker's bank account has inadequate money to pay the check is known as ________.

Accepted Answer

A) nonsufficient funds check 
B) outstanding check 
C) restrictive check 
D) canceled check 
A) nonsufficient funds check 
B) outstanding check 
C) restrictive check 
D) canceled check

Question 12

Which of the following is representative of safeguarding assets?

Accepted Answer

A) attaching electronic sensors to merchandise inventory 
B) reducing expense to increase operating profit 
C) increasing operating profit to increase net income 
D) allowing company accountants to handle cash 
A) attaching electronic sensors to merchandise inventory 
B) reducing expense to increase operating profit 
C) increasing operating profit to increase net income 
D) allowing company accountants to handle cash

Question 13

An information system is one of the five components by which a company can achieve its internal control objectives.

Accepted Answer

A) True 
 B)False

Question 14

Having a cash ratio below 1 is a good thing.

Accepted Answer

A) True 
 B)False

Question 15

The bank recorded a $3,000 deposit as $300.How would this information be included on the bank reconciliation?

Accepted Answer

A) a deduction on the bank side 
B) a deduction on the book side 
C) an addition on the book side 
D) an addition on the bank side 
A) a deduction on the bank side 
B) a deduction on the book side 
C) an addition on the book side 
D) an addition on the bank side

Question 16

Which of the following is an issue that must be addressed in the internal controls for e-commerce?

Accepted Answer

A) burglar alarms 
B) tone at the top 
C) phishing expeditions 
D) need for outside auditors 
A) burglar alarms 
B) tone at the top 
C) phishing expeditions 
D) need for outside auditors

Question 17

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Smith Electronics reported the following figures in its 2017 and 2016 financial statements.
   
Compute the cash ratio for 2017 and 2016.What does the cash ratio measure? Use this information to discuss the business performance of Smith Electronics.

Accepted Answer

@#IMG-DLM& The cash ratio measures the company's a

Question 20

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

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) Risk assessment is the "tone at the top" of the business. 
C) A company must identify its risks and take necessary steps to minimize them. 
D) Risk assessment 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) Risk assessment is the "tone at the top" of the business. 
C) A company must identify its risks and take necessary steps to minimize them. 
D) Risk assessment is designed to ensure that the business's goals are achieved.

Exam 8: Internal Control and Cash

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

Which of the following describes a firewall?

The ________ is a measure of a company's ability to pay its current liabilities from cash and cash equivalents.

In a bank reconciliation,outstanding checks will be shown on the bank side of the reconciliation.

Which one of the following is true of a signature card?

As long as the same person deposits customer checks and records the deposits into the journal,there will be good internal control over cash receipts.

A petty cash fund was established with a $250 balance.It currently has cash of $38 and petty cash tickets totaling $212 for travel expense.Provide the journal entry to record the replenishment of the fund.

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

Bank errors are posting errors made by the bank that either incorrectly increase or decrease the bank balance.

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?

A check for which a maker's bank account has inadequate money to pay the check is known as ________.

Which of the following is representative of safeguarding assets?

An information system is one of the five components by which a company can achieve its internal control objectives.

Having a cash ratio below 1 is a good thing.

The bank recorded a $3,000 deposit as $300.How would this information be included on the bank reconciliation?

Which of the following is an issue that must be addressed in the internal controls for e-commerce?

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

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.

Smith Electronics reported the following figures in its 2017 and 2016 financial statements. Compute the cash ratio for 2017 and 2016.What does the cash ratio measure? Use this information to discuss the business performance of Smith Electronics.

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

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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