Question 1

Cash and cash equivalents are divided by ________ to determine the cash ratio.

Accepted Answer

A) total current liabilities 
B) fixed assets 
C) equity 
D) total long-term liabilities 
A) total current liabilities 
B) fixed assets 
C) equity 
D) total long-term liabilities

Question 2

The payee is the issuer of a check.

Accepted Answer

A) True 
 B)False

Question 3

Strict internal controls must be implemented,regardless of the cost.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements describes an invoice from a supplier?

Accepted Answer

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

Question 5

Collusion involves two or more people working together to circumvent internal controls and defraud a company.

Accepted Answer

A) True 
 B)False

Question 6

The bank charged a service fee of $55.How would this information be included on the bank reconciliation?

Accepted Answer

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

Question 7

Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?

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 8

Electronic data interchange (EDI)allows a retailer's computers to communicate with the computers of suppliers.

Accepted Answer

A) True 
 B)False

Question 9

When a lock-box system is used,a bank employee empties the box daily and records the deposits in the company's journal.

Accepted Answer

A) True 
 B)False

Question 10

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the journal.How would this information be included on the bank reconciliation?

Accepted Answer

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

Question 11

Separating the custody of assets from accounting implies that the accountants must not handle cash and the cashier must not have access to the accounting records.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is NOT a reason why paying by check is an important internal control?

Accepted Answer

A) The check provides a record of the payment. 
B) The check must be signed by an authorized official. 
C) Before signing the check,the purchasing agent reviews the invoice or other evidence supporting the payment. 
D) All of the above statements are correct. 
A) The check provides a record of the payment. 
B) The check must be signed by an authorized official. 
C) Before signing the check,the purchasing agent reviews the invoice or other evidence supporting the payment. 
D) All of the above statements are correct.

Question 13

Which of the following is an objective of internal control?

Accepted Answer

A) to encourage employees to follow company policies 
B) to ensure timely payment of accounts payable 
C) to ensure timely collection of accounts receivable 
D) to guarantee that a business makes a profit 
A) to encourage employees to follow company policies 
B) to ensure timely payment of accounts payable 
C) to ensure timely collection of accounts receivable 
D) to guarantee that a business makes a profit

Question 14

As long as the same person deposits customer checks and makes the journal entry to customer accounts,there will be good internal control over cash receipts.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following illustrates the internal control procedure-separation of duties?

Accepted Answer

A) Cashiers must not have access to accounting records. 
B) External auditors will monitor internal controls. 
C) Electronic devices must be installed to reduce theft. 
D) The invoices and other documents must be pre-numbered. 
A) Cashiers must not have access to accounting records. 
B) External auditors will monitor internal controls. 
C) Electronic devices must be installed to reduce theft. 
D) The invoices and other documents must be pre-numbered.

Question 16

A check payment for $658 was incorrectly entered in the Cash account as $856.Which of the following adjustments needs to be made?

Accepted Answer

A) decrease the book balance 
B) decrease the bank statement balance 
C) increase the book balance 
D) increase the bank statement balance 
A) decrease the book balance 
B) decrease the bank statement balance 
C) increase the book balance 
D) increase the bank statement balance

Question 17

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Accepted Answer

A) True 
 B)False

Question 18

The cash balance in a company's general ledger and the company's bank balance on the bank statement will always be the same.

Accepted Answer

A) True 
 B)False

Question 19

Debit cards offer the customer the convenience of buying something without having to pay cash immediately.

Accepted Answer

A) True 
 B)False

Question 20

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

Cash and cash equivalents are divided by ________ to determine the cash ratio.

The payee is the issuer of a check.

Strict internal controls must be implemented,regardless of the cost.

Which of the following statements describes an invoice from a supplier?

Collusion involves two or more people working together to circumvent internal controls and defraud a company.

The bank charged a service fee of $55.How would this information be included on the bank reconciliation?

Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?

Electronic data interchange (EDI)allows a retailer's computers to communicate with the computers of suppliers.

When a lock-box system is used,a bank employee empties the box daily and records the deposits in the company's journal.

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the journal.How would this information be included on the bank reconciliation?

Separating the custody of assets from accounting implies that the accountants must not handle cash and the cashier must not have access to the accounting records.

Which of the following is NOT a reason why paying by check is an important internal control?

Which of the following is an objective of internal control?

As long as the same person deposits customer checks and makes the journal entry to customer accounts,there will be good internal control over cash receipts.

Which of the following illustrates the internal control procedure-separation of duties?

A check payment for $658 was incorrectly entered in the Cash account as $856.Which of the following adjustments needs to be made?

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

The cash balance in a company's general ledger and the company's bank balance on the bank statement will always be the same.

Debit cards offer the customer the convenience of buying something without having to pay cash immediately.

Which of the following describes a firewall?

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

Filters

Exam 8: Internal Control and Cash

Cash and cash equivalents are divided by ________ to determine the cash ratio.

The payee is the issuer of a check.

Strict internal controls must be implemented,regardless of the cost.

Which of the following statements describes an invoice from a supplier?

Collusion involves two or more people working together to circumvent internal controls and defraud a company.

The bank charged a service fee of $55.How would this information be included on the bank reconciliation?

Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?

Electronic data interchange (EDI)allows a retailer's computers to communicate with the computers of suppliers.

When a lock-box system is used,a bank employee empties the box daily and records the deposits in the company's journal.

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the journal.How would this information be included on the bank reconciliation?

Separating the custody of assets from accounting implies that the accountants must not handle cash and the cashier must not have access to the accounting records.

Which of the following is NOT a reason why paying by check is an important internal control?

Which of the following is an objective of internal control?

As long as the same person deposits customer checks and makes the journal entry to customer accounts,there will be good internal control over cash receipts.

Which of the following illustrates the internal control procedure-separation of duties?

A check payment for $658 was incorrectly entered in the Cash account as $856.Which of the following adjustments needs to be made?

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

The cash balance in a company's general ledger and the company's bank balance on the bank statement will always be the same.

Debit cards offer the customer the convenience of buying something without having to pay cash immediately.

Which of the following describes a firewall?

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

Filters