Deck 7: Internal Control and Cash

Question 1

When one individual is responsible for all of the related activities, the potential for errors and fraud is increased.

Answer 1

True

Question 2

Independent reviews should occur periodically and should be done by someone who is independent of the employee responsible for the information

Answer 2

True

Question 3

Bank debit memorandum increases the bank balance.

Answer 3

False

Question 4

Companies that have a lot of cash payments often use a special journal, called a cash payments journal, to record all payments of cash

Question 5

Cash proceeds collected by the bank for a depositor would be identified in the bank statement by a credit memorandum to explain the entry.

Question 6

EFT transactions have resulted in better internal control.

Question 7

Each of the following is a control activity except:

A) segregation of duties.
B) establishment of responsibility.
C) independent checks of performance.
D) a sound marketing plan.

Question 8

The following explain limitations of internal control except:

A) Lack of proper employee training
B) The size of the company which makes segregation of duties difficult
C) Collusion occurring between two or more employees
D) If a company requires its employees to take vacations

Question 9

Internal control is more effective when ___________________________ (one person is, two people are) responsible for a task.

Question 10

Related activities should be assigned to _______ (the same person, different people)

Question 11

The separation of accounting responsibility from the custody of assets is especially important for what assets?__________________________________________