Question 1

Stale-dated cheques would NOT be reported as cash on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

The increased use of debit and credit cards improves a company's internal control.

Accepted Answer

A) True 
 B)False

Question 3

Documentation procedures over cash payments include all of the following EXCEPT

Accepted Answer

A)  using pre-numbered cheques. 
B)  ensuring each cheque has an approved invoice. 
C)  accounting for the numerical sequence of all cheques. 
D)  reconciling bank statements monthly.

Question 4

The fees for credit cards are higher than the fees for debit cards.

Accepted Answer

A) True 
 B)False

Question 5

Internal control helps an organization achieve all of the following EXCEPT

Accepted Answer

A)  reliable financial reporting. 
B)  compliance with relevant laws and regulations. 
C)  absolute assurance that fraud will not occur. 
D)  effective and efficient operations.

Question 6

Entries are made to the Petty Cash account when

Accepted Answer

A)  establishing the fund. 
B)  making payments out of the fund. 
C)  recording shortages in the fund. 
D)  replenishing the fund.

Question 7

Sales using a bank credit card are considered cash sales by the retailer.

Accepted Answer

A) True 
 B)False

Question 8

All private companies are required to have an external audit.

Accepted Answer

A) True 
 B)False

Question 9

In terms of segregation of duties, which one of the following is NOT related to the other three?

Accepted Answer

A)  ordering the merchandise 
B)  making a sale 
C)  shipping the goods 
D)  billing the customer

Question 10

Notification by the bank that a deposited customer cheque was returned NSF requires that the company make the following adjusting entry:

Accepted Answer

A)  Accounts Receivable Cash 
B)  Cash Accounts Receivable 
C)  Miscellaneous Expense Accounts Receivable 
D)  No adjusting entry is necessary.

Question 11

In terms of segregation of duties, related buying activities include

Accepted Answer

A)  ordering, receiving, paying. 
B)  ordering, selling, paying. 
C)  ordering, shipping, billing. 
D)  selling, shipping, paying.

Question 12

For efficiency of operations and better control over all cash activities, a company should maintain only one bank account.

Accepted Answer

A) True 
 B)False

Question 13

One advantage of a cheque is that the retailer knows immediately whether the customer has enough money in their account to pay for the transaction.

Accepted Answer

A) True 
 B)False

Question 14

Sales using debit cards are considered "cash" transactions.

Accepted Answer

A) True 
 B)False

Question 15

Gator Supplies has an established petty cash fund of $100. At the replenish date of June 20, the petty cash fund has $15 cash and receipts for postage $25, office supplies $25, and miscellaneous $30. Gator also decided at the replenish date to increase the petty cash fund by $25 to a total fund of $125. What would be the required debit to Petty Cash in the combined replenish entry on June 20?

Accepted Answer

A)  $110 
B)  $85 
C)  $25 
D)  $0

Question 16

Which one of the following items would NOT be considered cash?

Accepted Answer

A)  coins 
B)  money orders 
C)  currency 
D)  postdated cheques

Question 17

Brown's Convenience is open 7 days a week. The cash receipts from Saturday and Sunday are kept in an envelope in a back storage room and are deposited each Monday morning. This process violates which internal control activity?

Accepted Answer

A)  establishment of responsibility 
B)  safeguarding of assets and records 
C)  segregation of duties 
D)  independent checks of performance

Question 18

In applying the control activity of segregation of duties, the responsibility for related activities should be assigned to the same individual.

Accepted Answer

A) True 
 B)False

Question 19

Restricted cash is defined as

Accepted Answer

A)  a temporary investment which is due in 90 days. 
B)  cash which is to be used for a special purpose. 
C)  cash which is held in a US bank. 
D)  a cash overdraft.

Question 20

Opportunity to commit fraud occurs when the workplace lacks sufficient controls to deter and detect fraud.

Accepted Answer

A) True 
 B)False

Exam 7: Internal Control and Cash

Stale-dated cheques would NOT be reported as cash on the balance sheet.

The increased use of debit and credit cards improves a company's internal control.

Documentation procedures over cash payments include all of the following EXCEPT

The fees for credit cards are higher than the fees for debit cards.

Internal control helps an organization achieve all of the following EXCEPT

Entries are made to the Petty Cash account when

Sales using a bank credit card are considered cash sales by the retailer.

All private companies are required to have an external audit.

In terms of segregation of duties, which one of the following is NOT related to the other three?

Notification by the bank that a deposited customer cheque was returned NSF requires that the company make the following adjusting entry:

In terms of segregation of duties, related buying activities include

For efficiency of operations and better control over all cash activities, a company should maintain only one bank account.

One advantage of a cheque is that the retailer knows immediately whether the customer has enough money in their account to pay for the transaction.

Sales using debit cards are considered "cash" transactions.

Which one of the following items would NOT be considered cash?

Brown's Convenience is open 7 days a week. The cash receipts from Saturday and Sunday are kept in an envelope in a back storage room and are deposited each Monday morning. This process violates which internal control activity?

In applying the control activity of segregation of duties, the responsibility for related activities should be assigned to the same individual.

Restricted cash is defined as

Opportunity to commit fraud occurs when the workplace lacks sufficient controls to deter and detect fraud.