Question 1

Explain how checking accounts,bank statements,and a bank reconciliation are used to help a company control its cash.

Accepted Answer

Checking accounts allow entities an oppo

Question 2

Which of the following would not appear on a bank statement for a checking account?

Accepted Answer

A) Service charges 
B) Outstanding checks 
C) Credit memos 
D) Interest earned 
A) Service charges 
B) Outstanding checks 
C) Credit memos 
D) Interest earned

Question 3

A debit memo appeared on the May bank statement.How should this amount be treated on the May bank reconciliation?

Accepted Answer

A) Add it to the company's balance. 
B) Add it to the bank balance. 
C) Deduct it from the company's balance. 
D) Deduct it from the bank balance. 
A) Add it to the company's balance. 
B) Add it to the bank balance. 
C) Deduct it from the company's balance. 
D) Deduct it from the bank balance.

Question 4

Which of the following is not a generally recognized internal control activity?

Accepted Answer

A) Establishment of clear lines of authority to carry out specific tasks 
B) Preparation of bank reconciliations on a monthly basis 
C) Reducing the cost of hiring seasonal employees 
D) Limiting access to computerized accounting records 
A) Establishment of clear lines of authority to carry out specific tasks 
B) Preparation of bank reconciliations on a monthly basis 
C) Reducing the cost of hiring seasonal employees 
D) Limiting access to computerized accounting records

Question 5

While preparing a bank reconciliation,which of the following items would be subtracted from the balance per the company records?

Accepted Answer

A) Outstanding checks 
B) Deposits in transit 
C) Bank service charges 
D) Interest earned on the bank account 
A) Outstanding checks 
B) Deposits in transit 
C) Bank service charges 
D) Interest earned on the bank account

Question 6

A company's internal control system must be designed and maintained by its external auditors.

Accepted Answer

A) True 
 B)False

Question 7

A customer's check for $25 that had been deposited into the company's checking account the previous month was returned stamped "NSF" by the bank.Which of the following journal entries is required?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 8

Which of the following is not a requirement of the Sarbanes-Oxley Act?

Accepted Answer

A) Internal audit outsourcing can no longer be provided by a publicly-traded corporation's external auditors. 
B) All publicly-traded corporations must have an internal audit function. 
C) All publicly-traded corporations must provide internal controls over financial reporting that guarantees financial accuracy. 
D) The audit committee of a publicly-traded corporation must report to the company's board of directors. 
A) Internal audit outsourcing can no longer be provided by a publicly-traded corporation's external auditors. 
B) All publicly-traded corporations must have an internal audit function. 
C) All publicly-traded corporations must provide internal controls over financial reporting that guarantees financial accuracy. 
D) The audit committee of a publicly-traded corporation must report to the company's board of directors.

Question 9

Which of the following is an example of a credit memo?

Accepted Answer

A) Notice of a bank service charge 
B) Notice of interest earned on a checking account 
C) Outstanding checks 
D) A company's transposition error in the recording of a customer's check 
A) Notice of a bank service charge 
B) Notice of interest earned on a checking account 
C) Outstanding checks 
D) A company's transposition error in the recording of a customer's check

Question 10

The accountant must make journal entries for all items in the bank section of the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 11

The practice of monitoring activities within the internal control system is likely to be carried out by each of the following groups except:

Accepted Answer

A) external auditors 
B) internal auditors 
C) the board of directors 
D) managers 
A) external auditors 
B) internal auditors 
C) the board of directors 
D) managers

Question 12

The key to being classified as a cash equivalent is that the amount must be available to pay debts within a year's time or less.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is false regarding a credit memo and its relationship to a company's bank reconciliation procedures?

Accepted Answer

A) It must be recorded as a credit to the balance per the customer's records. 
B) It is issued to notify a company of interest earned which needs to be recorded on the company's records. 
C) It is issued when the bank collects a note on behalf of the company. 
D) It must be recorded as a debit to the balance per the company's records. 
A) It must be recorded as a credit to the balance per the customer's records. 
B) It is issued to notify a company of interest earned which needs to be recorded on the company's records. 
C) It is issued when the bank collects a note on behalf of the company. 
D) It must be recorded as a debit to the balance per the company's records.

Question 14

Explain some internal control procedures that a fast food restaurant like McDonald's may use to control cash receipts.

Accepted Answer

Each cashier should start with his or he

Question 15

Which of the following statements best describes the term "outstanding check" from a company's point of view?

Accepted Answer

A) A check written by the company and presented to the bank for payment. 
B) A check written by the company but not yet presented to the bank for payment. 
C) A check written by a customer to the company,and the check has been presented to the bank for payment. 
D) A check written by a customer to the company,but it has not yet been presented to the bank for payment. 
A) A check written by the company and presented to the bank for payment. 
B) A check written by the company but not yet presented to the bank for payment. 
C) A check written by a customer to the company,and the check has been presented to the bank for payment. 
D) A check written by a customer to the company,but it has not yet been presented to the bank for payment.

Question 16

Which of the following statements best describes the act of collusion?

Accepted Answer

A) Collusion is caused by an overstatement of ending inventory. 
B) Collusion is an intentional act of two or more employees to accomplish theft of company assets. 
C) Collusion is one of the necessary outcomes of a system of internal control over financial reporting. 
D) Collusion is enhanced by an effective system of independent reconciliations and other checks on recorded amounts. 
A) Collusion is caused by an overstatement of ending inventory. 
B) Collusion is an intentional act of two or more employees to accomplish theft of company assets. 
C) Collusion is one of the necessary outcomes of a system of internal control over financial reporting. 
D) Collusion is enhanced by an effective system of independent reconciliations and other checks on recorded amounts.

Question 17

In the reconciliation of a bank statement,deposits in transit should be:

Accepted Answer

A) added to the unadjusted balance per the company's records. 
B) subtracted from the unadjusted balance per the company's records. 
C) added to the unadjusted bank statement balance. 
D) subtracted from the unadjusted bank statement balance. 
A) added to the unadjusted balance per the company's records. 
B) subtracted from the unadjusted balance per the company's records. 
C) added to the unadjusted bank statement balance. 
D) subtracted from the unadjusted bank statement balance.

Question 18

The best response to an employee caught stealing from the company is to say,"Don't ever let me catch you doing that again!"

Accepted Answer

A) True 
 B)False

Question 19

The control activity "segregation of duties" is most effective in:

Accepted Answer

A) Increasing cost of sales 
B) Preventing collusion 
C) Assisting employees in performing risk assessment procedures 
D) Increasing the likelihood of embezzlement 
A) Increasing cost of sales 
B) Preventing collusion 
C) Assisting employees in performing risk assessment procedures 
D) Increasing the likelihood of embezzlement

Question 20

____________________ are those investments and deposits with financial institutions that are readily convertible into known amounts of cash and that have original maturities of three months or less.

Accepted Answer

The answer of ____________________ are those investments and deposits with...

Explain how checking accounts,bank statements,and a bank reconciliation are used to help a company control its cash.

Which of the following would not appear on a bank statement for a checking account?

A debit memo appeared on the May bank statement.How should this amount be treated on the May bank reconciliation?

Which of the following is not a generally recognized internal control activity?

While preparing a bank reconciliation,which of the following items would be subtracted from the balance per the company records?

A company's internal control system must be designed and maintained by its external auditors.

A customer's check for $25 that had been deposited into the company's checking account the previous month was returned stamped "NSF" by the bank.Which of the following journal entries is required?

Which of the following is not a requirement of the Sarbanes-Oxley Act?

Which of the following is an example of a credit memo?

The accountant must make journal entries for all items in the bank section of the bank reconciliation.

The practice of monitoring activities within the internal control system is likely to be carried out by each of the following groups except:

The key to being classified as a cash equivalent is that the amount must be available to pay debts within a year's time or less.

Which of the following statements is false regarding a credit memo and its relationship to a company's bank reconciliation procedures?

Explain some internal control procedures that a fast food restaurant like McDonald's may use to control cash receipts.

Which of the following statements best describes the term "outstanding check" from a company's point of view?

Which of the following statements best describes the act of collusion?

In the reconciliation of a bank statement,deposits in transit should be:

The best response to an employee caught stealing from the company is to say,"Don't ever let me catch you doing that again!"

The control activity "segregation of duties" is most effective in:

____________________ are those investments and deposits with financial institutions that are readily convertible into known amounts of cash and that have original maturities of three months or less.

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Sales and Receivables

Cost of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

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Exam 4: Internal Control and Cash

Explain how checking accounts,bank statements,and a bank reconciliation are used to help a company control its cash.

Which of the following would not appear on a bank statement for a checking account?

A debit memo appeared on the May bank statement.How should this amount be treated on the May bank reconciliation?

Which of the following is not a generally recognized internal control activity?

While preparing a bank reconciliation,which of the following items would be subtracted from the balance per the company records?

A company's internal control system must be designed and maintained by its external auditors.

A customer's check for $25 that had been deposited into the company's checking account the previous month was returned stamped "NSF" by the bank.Which of the following journal entries is required?

Which of the following is not a requirement of the Sarbanes-Oxley Act?

Which of the following is an example of a credit memo?

The accountant must make journal entries for all items in the bank section of the bank reconciliation.

The practice of monitoring activities within the internal control system is likely to be carried out by each of the following groups except:

The key to being classified as a cash equivalent is that the amount must be available to pay debts within a year's time or less.

Which of the following statements is false regarding a credit memo and its relationship to a company's bank reconciliation procedures?

Explain some internal control procedures that a fast food restaurant like McDonald's may use to control cash receipts.

Which of the following statements best describes the term "outstanding check" from a company's point of view?

Which of the following statements best describes the act of collusion?

In the reconciliation of a bank statement,deposits in transit should be:

The best response to an employee caught stealing from the company is to say,"Don't ever let me catch you doing that again!"

The control activity "segregation of duties" is most effective in:

____________________ are those investments and deposits with financial institutions that are readily convertible into known amounts of cash and that have original maturities of three months or less.

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Sales and Receivables

Cost of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters