Question 1

The bank statement reports the activity in the customer's account and is issued on an annual basis.

Accepted Answer

A) True 
 B)False

Question 2

List the five components of internal control.

Accepted Answer

The answer of List the five components of internal control....

Question 3

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Accepted Answer

The answer of Why is it necessary to journalize transactions...

Question 4

Which of the following is NOT an internal control over the petty cash fund?

Accepted Answer

A) Petty cash tickets are sequentially numbered. 
B) A specific amount of cash is designated to be kept in the petty cash fund. 
C) Petty cash tickets serve as the authorization voucher and explanation. 
D) Two custodians should be assigned responsibility for the petty cash fund.

Question 5

Which of the following is a requirement of the Sarbanes-Oxley Act?

Accepted Answer

A) An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report. 
B) The Public Company Accounting Oversight Board must conduct audits of public companies. 
C) The accounting firm that audits a public client must also provide consulting services for the same client. 
D) The Public Company Accounting Oversight Board must create new accounting standards.

Question 6

The Sarbanes-Oxley Act requires all private companies in the United States to maintain an internal control system.

Accepted Answer

A) True 
 B)False

Question 7

A signature card is a card that shows each authorized person's signature for a bank account.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following items must be examined by the controller or treasurer before signing a check?

Accepted Answer

A) the ledger 
B) the purchase order 
C) the confirmation report 
D) the journal entry

Question 9

Sales through credit cards and debit cards are journalized in the same way as sales on account.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an issue that must be addressed in the internal controls for e-commerce?

Accepted Answer

A) burglar alarms 
B) tone at the top 
C) phishing expeditions 
D) need for outside auditors

Question 11

To ensure that there is no collusion between the manager and sales clerks,the accounting department employees deposit the cash in the bank and use the deposit slip to prepare the journal entry for cash receipts and sales revenue.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is TRUE of the Sarbanes-Oxley Act?

Accepted Answer

A) Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients. 
B) Those who commit securities fraud must be sentenced to 10 years in prison. 
C) All private and foreign companies must issue an internal control report evaluated by an outside auditor. 
D) The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Question 13

A way to account for petty cash by maintaining a constant balance in the petty cash account and which at any time requires that cash plus petty cash tickets must total the amount allocated to the petty cash fund,is known as the ________.

Accepted Answer

A) control system 
B) voucher system 
C) balanced system 
D) imprest system

Question 14

Define internal control.

Accepted Answer

The answer of Define internal control....

Question 15

Lane Outfitters Company,a retailer,accepts payment through credit cards.During August,credit card sales amounted to $12,000.The processor charges a 3% fee.Assuming that the credit card processor uses the gross method,prepare the journal entries,on the books of Lane Outfitters,for the credit card sales and the payment of fees.(Ignore cost of goods sold. )Omit explanation.

Accepted Answer

The answer of Lane Outfitters Company,a retailer,accepts payment through credit...

Question 16

Before sending the check for payment of goods,the controller should examine the payment pack.List the documents that are included in the payment pack and describe the information provided by each document.

Accepted Answer

The answer of Before sending the check for payment of...

Question 17

Which of the following is an attribute of the internal control component-monitoring of controls?

Accepted Answer

A) Internal auditors monitor company controls to safeguard assets,and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B) Monitoring of controls is the "tone at the top" of the business. 
C) Monitoring of controls is designed to ensure that the business's goals are achieved. 
D) Monitoring of controls deals with identification and assessment of business risks.

Question 18

When a lock-box system is used,customers send their checks to a post office box that belongs to a bank.

Accepted Answer

A) True 
 B)False

Question 19

No journal entries are required for the reconciling items on the bank side because ________.

Accepted Answer

A) those transactions have already been recorded in the company's journal 
B) the adjusted balances on both sides are the same amounts 
C) the amounts are immaterial 
D) those transactions are already included in the bank balance

Question 20

Which of the following is the basic internal control procedure with respect to cash receipts?

Accepted Answer

A) depositing all cash receipts in the bank shortly after the cash is received 
B) requiring customers to pay with debit or credit cards 
C) requiring the accountants to make the bank deposits 
D) preventing collusion

Exam 8: Internal Control and Cash

The bank statement reports the activity in the customer's account and is issued on an annual basis.

List the five components of internal control.

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Which of the following is NOT an internal control over the petty cash fund?

Which of the following is a requirement of the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act requires all private companies in the United States to maintain an internal control system.

A signature card is a card that shows each authorized person's signature for a bank account.

Which of the following items must be examined by the controller or treasurer before signing a check?

Sales through credit cards and debit cards are journalized in the same way as sales on account.

Which of the following is an issue that must be addressed in the internal controls for e-commerce?

To ensure that there is no collusion between the manager and sales clerks,the accounting department employees deposit the cash in the bank and use the deposit slip to prepare the journal entry for cash receipts and sales revenue.

Which of the following statements is TRUE of the Sarbanes-Oxley Act?

A way to account for petty cash by maintaining a constant balance in the petty cash account and which at any time requires that cash plus petty cash tickets must total the amount allocated to the petty cash fund,is known as the ________.

Define internal control.

Before sending the check for payment of goods,the controller should examine the payment pack.List the documents that are included in the payment pack and describe the information provided by each document.

Which of the following is an attribute of the internal control component-monitoring of controls?

When a lock-box system is used,customers send their checks to a post office box that belongs to a bank.

No journal entries are required for the reconciling items on the bank side because ________.

Which of the following is the basic internal control procedure with respect to cash receipts?