Question 1

Two or more people working together to circumvent internal controls and defraud a company is known as ________.

Accepted Answer

A) encryption 
B) firewall 
C) collusion 
D) separation of duties 
A) encryption 
B) firewall 
C) collusion 
D) separation of duties

Question 2

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A check of $300,000,deposited by a company,was returned to the bank for nonsufficient funds.How would this information be included on the bank reconciliation?

Accepted Answer

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

Question 5

A cash equivalent is a highly liquid investment that can be converted into cash in one year or less.

Accepted Answer

A) True 
 B)False

Question 6

A petty cash fund was established with a $400 balance.It currently has cash of $43 and petty cash tickets totaling $357.Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A) a credit to Petty Cash for $357 
B) a debit to Petty Cash for $43 
C) a credit to Cash for $43 
D) a debit to various expenses for $357 
A) a credit to Petty Cash for $357 
B) a debit to Petty Cash for $43 
C) a credit to Cash for $43 
D) a debit to various expenses for $357

Question 7

Which of the following is TRUE of internal control?

Accepted Answer

A) A company's outside auditor is responsible for the company's internal control system. 
B) One of the major purposes of internal control is to ensure that the assets are safeguarded. 
C) Internal control procedures tend to diminish the importance of operational efficiency. 
D) Internal controls are only necessary for public companies. 
A) A company's outside auditor is responsible for the company's internal control system. 
B) One of the major purposes of internal control is to ensure that the assets are safeguarded. 
C) Internal control procedures tend to diminish the importance of operational efficiency. 
D) Internal controls are only necessary for public companies.

Question 8

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

Accepted Answer

A) Real Time Gross Settlement 
B) Electronic Data Interchange 
C) Electronic Fund Transfer 
D) Evaluated Receipts Settlement 
A) Real Time Gross Settlement 
B) Electronic Data Interchange 
C) Electronic Fund Transfer 
D) Evaluated Receipts Settlement

Question 9

The bank statement reveals an EFT received from a customer 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 10

City Advertising Services hired a new accounting manager.He signed a contract for a new accounting information system,but his position did not specify whether he was authorized to do so or not.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 11

Electronic funds transfers ________.

Accepted Answer

A) are more expensive than mailing a check to make a payment 
B) are a way of moving cash by paper documents 
C) include direct deposits and debit card transactions 
D) do not appear on the bank statement 
A) are more expensive than mailing a check to make a payment 
B) are a way of moving cash by paper documents 
C) include direct deposits and debit card transactions 
D) do not appear on the bank statement

Question 12

A deposit receipt is ________.

Accepted Answer

A) retained by the customer as proof of a deposit transaction 
B) the same as a signature card 
C) used by the bank as an alternative to a remittance advice 
D) given by the customer to the bank as a proof of deposit 
A) retained by the customer as proof of a deposit transaction 
B) the same as a signature card 
C) used by the bank as an alternative to a remittance advice 
D) given by the customer to the bank as a proof of deposit

Question 13

Which of the following statements regarding a lock-box system is incorrect?

Accepted Answer

A) Customers send their checks directly to a post office box that belongs to the company. 
B) Internal control is tight because company personnel never touch incoming cash. 
C) A bank employee empties the box daily and records the deposits into the company's bank account. 
D) Cash is put into the company's bank account quickly. 
A) Customers send their checks directly to a post office box that belongs to the company. 
B) Internal control is tight because company personnel never touch incoming cash. 
C) A bank employee empties the box daily and records the deposits into the company's bank account. 
D) Cash is put into the company's bank account quickly.

Question 14

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Accepted Answer

A) True 
 B)False

Question 15

Regarding Electronic Data Interchange (EDI),which of the following statements is incorrect?

Accepted Answer

A) A manager approves the invoice,and then an electronic fund transfer sends the retailer's payment to the supplier. 
B) The retailer electronically sends an invoice to the supplier. 
C) EDI procedures are used for both cash payments and cash receipts in many companies. 
D) When a retailer's inventory reaches a low level,the computer creates and sends an electronic purchase order to the supplier. 
A) A manager approves the invoice,and then an electronic fund transfer sends the retailer's payment to the supplier. 
B) The retailer electronically sends an invoice to the supplier. 
C) EDI procedures are used for both cash payments and cash receipts in many companies. 
D) When a retailer's inventory reaches a low level,the computer creates and sends an electronic purchase order to the supplier.

Question 16

The bank's routing number ________.

Accepted Answer

A) contains 10 digits 
B) identifies the bank upon which the payment is drawn 
C) includes the account number of the business 
D) is not shown on the check 
A) contains 10 digits 
B) identifies the bank upon which the payment is drawn 
C) includes the account number of the business 
D) is not shown on the check

Question 17

Match each term to its definition.
-Receiving Report

Accepted Answer

A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted. 
A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted.

Question 18

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

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 19

If a bank reconciliation includes interest revenue collected by a bank,a journal entry is required which credits Cash and debits Interest Revenue.

Accepted Answer

A) True 
 B)False

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.

Two or more people working together to circumvent internal controls and defraud a company is known as ________.

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

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

A check of $300,000,deposited by a company,was returned to the bank for nonsufficient funds.How would this information be included on the bank reconciliation?

A cash equivalent is a highly liquid investment that can be converted into cash in one year or less.

A petty cash fund was established with a $400 balance.It currently has cash of $43 and petty cash tickets totaling $357.Which of the following would be included in the entry to replenish the fund?

Which of the following is TRUE of internal control?

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

The bank statement reveals an EFT received from a customer that has not yet been recorded in the journal.How would this information be included on the bank reconciliation?

City Advertising Services hired a new accounting manager.He signed a contract for a new accounting information system,but his position did not specify whether he was authorized to do so or not.Which internal control procedure needs strengthening?

Electronic funds transfers ________.

A deposit receipt is ________.

Which of the following statements regarding a lock-box system is incorrect?

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Regarding Electronic Data Interchange (EDI),which of the following statements is incorrect?

The bank's routing number ________.

Match each term to its definition. -Receiving Report

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

If a bank reconciliation includes interest revenue collected by a bank,a journal entry is required which credits Cash and debits Interest Revenue.

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

Filters

Exam 8: Internal Control and Cash

Two or more people working together to circumvent internal controls and defraud a company is known as ________.

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

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

A check of $300,000,deposited by a company,was returned to the bank for nonsufficient funds.How would this information be included on the bank reconciliation?

A cash equivalent is a highly liquid investment that can be converted into cash in one year or less.

A petty cash fund was established with a $400 balance.It currently has cash of $43 and petty cash tickets totaling $357.Which of the following would be included in the entry to replenish the fund?

Which of the following is TRUE of internal control?

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

The bank statement reveals an EFT received from a customer that has not yet been recorded in the journal.How would this information be included on the bank reconciliation?

City Advertising Services hired a new accounting manager.He signed a contract for a new accounting information system,but his position did not specify whether he was authorized to do so or not.Which internal control procedure needs strengthening?

Electronic funds transfers ________.

A deposit receipt is ________.

Which of the following statements regarding a lock-box system is incorrect?

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Regarding Electronic Data Interchange (EDI),which of the following statements is incorrect?

The bank's routing number ________.

Match each term to its definition. -Receiving Report

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

If a bank reconciliation includes interest revenue collected by a bank,a journal entry is required which credits Cash and debits Interest Revenue.

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

Filters