Question 1

Certain highly liquid, short-term investments of 90 days maturity or less are often combined with Cash and presented as a single amount called Cash and Cash Equivalents on the balance sheet.

Accepted Answer

A) True 
 B)False  True

Question 2

A compensating balance refers to:

Accepted Answer

A)   The minimum balance established for a petty cash fund
B)   A minimum balance that a financial institution requires a firm to maintain in its account as part of a borrowing arrangement
C)   The final cash balance achieved in a bank reconciliation
D)   The amount of cash invested temporarily in highly marketable securities
E)   None of the above B

Question 3

Which of the following is a poor internal accounting control feature?

Accepted Answer

A)   Segregation of duties.
B)   Combining authorization with custodianship.
C)   Rotation of personnel.
D)   Internal auditing.
E)   None of the above B

Question 4

Discuss and differentiate between prevention control and detection control. Provide an example of each.

Accepted Answer

The answer of Discuss and differentiate between prevention control and...

Question 5

At the end of an accounting period, the "cash balance per bank statement" on that date is usually the proper cash amount to show on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following features should not be included in a good system of internal accounting control over cash?

Accepted Answer

A)   All receipts are deposited daily in the bank.
B)   All major disbursements are made by check, and an imprest fund is used for petty cash disbursements.
C)   Cash handling is separated from the recording of cash transactions.
D)   Monthly bank reconciliations are prepared by the person who makes the daily bank deposits.
E)   All of the above are part of a good system of internal accounting control over cash.

Question 7

The following information pertains to Rodriguez Company:

Rodriguez should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Accepted Answer

A)   $6,770
B)   $8,445
C)   $7,420
D)   $8,055
E)   None of the above

Question 8

In reconciling the July bank statement, the vice president discovered that the bookkeeper had recorded a check written for $353 as $533 in the cash disbursements journal. For the bank reconciliation, the $180 error should be:

Accepted Answer

A)   Added to balance per bank statement
B)   Added to balance per general ledger
C)   Deducted from balance per bank statement
D)   Deducted from balance per general ledger
E)   None of the above

Question 9

Good internal accounting control over cash includes depositing all cash receipts in the bank each day.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an element of the fraud triangle?

Accepted Answer

A)   Perceived pressure
B)   Internal audits
C)   Opportunity
D)   Rationalization

Question 11

Outstanding checks are checks a company has written and recorded as cash disbursements that have not yet been presented to the bank for payment.

Accepted Answer

A) True 
 B)False

Question 12

Requiring employees to take vacations is an example of a good internal accounting control feature.

Accepted Answer

A) True 
 B)False

Question 13

Identify the principle of internal control that is violated in the following situation: Marvin Company is a very small business. Sam Jones, one of the two office clerks, opens the mail each day and removes the cash receipts that come in the mail. Sam then records the receipts in the cash records and the customer's account and deposits the cash in the bank.

Accepted Answer

A)   Insure assets and bond key employee
B)   Maintain adequate records
C)   Divide responsibility for related transactions.
D)   Perform regular and independent reviews

Question 14

In establishing an effective internal control structure, management should:

Accepted Answer

A)   Establish a good control environment.
B)   Provide an effective accounting system.
C)   Integrate control procedures into the control environment and accounting system.
D)   All of the above.
E)   None of the above

Question 15

Journal entries are required for all adjustments to the "cash balance per bank statement" in a bank reconciliation,

Accepted Answer

A) True 
 B)False

Question 16

The Cash amount properly shown on the year-end balance sheet is the

Accepted Answer

A)   Balance in the general ledger account before the year-end bank reconciliation
B)   Balance per the year-end bank statement
C)   Balance per the year-end bank statement less deposits in transit and plus outstanding checks
D)   Balance in the general ledger account after entries from the year-end bank reconciliation have been posted
E)   None of the above

Question 17

Use the following information to prepare a bank reconciliation for Forrester Company at April 30, 2019: 
(1) Cash account balance, April 30, $9,786.40.
(2) Bank statement balance, April 30, $10,758.20.
(3) Service charge on bank statement not recorded in books, $70.00.
(4) Deposits in transit, $1,438.60.
(5) Outstanding checks, April 30, $946.80.
(6) The bank statement included a charge of $466.40 for N. Ryan's NSF check. The check, returned with the bank statement, had been received by Forrester in payment on account.
(7) The bank collected a $2,000.00 note in April for Forrester. This amount was included in the bank statement, but Forrester had not yet recorded the collection. The bank's $70.00 service charge for April [see (3) above] included collection charge for the note.

Accepted Answer

The answer of Use the following information to prepare a...

Question 18

The Sarbanes-Oxley Act (SOX) mandates that all publicly traded US corporations must:

Accepted Answer

A)   Maintain an adequate system of internal controls
B)   Top management must ensure the reliability of the controls
C)   Outside independent auditors must attest to the adequacy of the controls
D)   All of the above.

Question 19

Internal auditing is a company function that:

Accepted Answer

A)   Audits the firm's financial statements and expresses an opinion on them
B)   Provides independent appraisals of the company's financial statements, its internal control, and its operations
C)   Prepares the firm's income tax returns
D)   All of the above
E)   None of the above

Question 20

The COSO framework is designed to help companies structure and evaluate their internal controls. Which of the following is not an internal control component under COSO?

Accepted Answer

A)   Risk assessment
B)   Monitoring activities
C)   Rationalization
D)   Control environment
E)   All above are internal control components under COSO

Exam 5: Internal Control and Cash

Certain highly liquid, short-term investments of 90 days maturity or less are often combined with Cash and presented as a single amount called Cash and Cash Equivalents on the balance sheet.

A compensating balance refers to:

Which of the following is a poor internal accounting control feature?

Discuss and differentiate between prevention control and detection control. Provide an example of each.

At the end of an accounting period, the "cash balance per bank statement" on that date is usually the proper cash amount to show on the balance sheet.

Which of the following features should not be included in a good system of internal accounting control over cash?

The following information pertains to Rodriguez Company: Rodriguez should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

In reconciling the July bank statement, the vice president discovered that the bookkeeper had recorded a check written for $353 as $533 in the cash disbursements journal. For the bank reconciliation, the $180 error should be:

Good internal accounting control over cash includes depositing all cash receipts in the bank each day.

Which of the following is not an element of the fraud triangle?

Outstanding checks are checks a company has written and recorded as cash disbursements that have not yet been presented to the bank for payment.

Requiring employees to take vacations is an example of a good internal accounting control feature.

In establishing an effective internal control structure, management should:

Journal entries are required for all adjustments to the "cash balance per bank statement" in a bank reconciliation,

The Cash amount properly shown on the year-end balance sheet is the

The Sarbanes-Oxley Act (SOX) mandates that all publicly traded US corporations must:

Internal auditing is a company function that:

The COSO framework is designed to help companies structure and evaluate their internal controls. Which of the following is not an internal control component under COSO?