Question 1

The amount of cash available for deposit at the bank is determined from the:

Accepted Answer

A)   income statement.
B)   bank reconciliation.
C)   cash count sheet .
D)   unadjusted trial balance.E) B) and D)
F) A) and C)

Question 2

Which of the following items on a bank reconciliation would require a journal entry?

Accepted Answer

A)   An error by the bank
B)   Outstanding checks
C)   A bank service charge
D)   A deposit in transitE) A) and B)
F) C) and D)

Question 3

Which of the following was not a change introduced by the Sarbanes-Oxley Act?

Accepted Answer

A)   Limits on executive compensation for most companies
B)   Stiffer fines and maximum jail sentences for willful misrepresentation of financial results
C)   An external audit of the effectiveness of internal controls
D)   Anonymous tip lines and legal protection to whistle-blowersE) A) and B)
F) A) and C)

Question 4

The bank credited your account for a deposit made by another bank customer.This bank error should be a(n) ______ on a bank reconciliation.

Accepted Answer

A)   addition to the bank balance
B)   deduction from the bank balance
C)   addition to the book balance
D)   deduction from the book balanceE) A) and B)
F) All of the above

Question 5

The following information was available to the accountant of Horton Company when preparing the monthly bank reconciliation:

The amount of cash that should appear on the balance sheet following completion of the reconciliation and adjustment of the accounting records is:

Accepted Answer

A)   $660.
B)   $640.
C)   $620.
D)   $305.E) B) and C)
F) A) and B)

Question 6

An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual is a (n) :

Accepted Answer

A)   internal audit.
B)  bank reconciliation.
C)  bank audit.
D)  trial reconciliation.E) C) and D)
F) All of the above

Question 7

In a bank reconciliation,interest revenue earned on your bank account is:

Accepted Answer

A)   added to the book balance
B)   deducted from the book balance
C)   added to the bank balance
D)   deducted from the bank balanceE) None of the above
F) A) and C)

Question 8

Which of the following is added to the bank balance on a bank reconciliation?

Accepted Answer

A)   Deposits in transit
B)   Outstanding checks
C)   EFT received from customers
D)   Bank service chargeE) A) and C)
F) All of the above

Question 9

Assigning sequential numbers to cash sales,so that the accounting staff can ensure that every sale has been recorded is required by the internal control principle of:

Accepted Answer

A)   documenting procedures.
B)   segregating duties.
C)   establishing responsibilities.
D)   restricting access.E) C) and D)
F) B) and C)

Question 10

Which of the following items appearing on a bank reconciliation require a journal entry to bring the Cash account up-to-date?

Accepted Answer

A)   Deposit in transit
B)   Check from customers returned as NSF
C)   Outstanding check
D)   An error made by the bank in recording a depositE) A) and B)
F) A) and C)

Question 11

A check is said to have cleared the bank when:

Accepted Answer

A)   it is returned NSF.
B)   it bounces.
C)   the bank withdraws the amount of the check from the check writer's account.
D)   it is presented to a financial institution for deposit or cash.E) A) and C)
F) A) and B)

Question 12

A deposit in transit on last month's bank reconciliation is shown as a deposit on the bank statement this month.As a result,in preparing this period's reconciliation,the amount of this deposit should:

Accepted Answer

A)   be added to the book balance of cash.
B)   be deducted from the book balance of cash.
C)   be added to the bank balance of cash.?
D)   not be included as a reconciling item.E) A) and C)
F) None of the above

Question 13

The cash count sheet determines all of the following except the:

Accepted Answer

A)   cash shortage or overage, if any.
B)   amount of cash available for deposit in the bank
C)   amount of cash to be reported on the balance sheet.
D)   amount of cash received.E) C) and D)
F) None of the above

Question 14

When the cash count sheets for the day equal $10,100 and the cash register reports $10,200,the journal entry to record the sales will include a:

Accepted Answer

A)   credit to Cash Shortage
B)   debit to Cash Shortage
C)   credit to Cash Overage
D)   debit to Cash OverageE) B) and C)
F) B) and D)

Question 15

Outstanding checks refer to checks that have been:

Accepted Answer

A)   written,recorded,sent to payees,and received and paid by the bank.
B)   written and not yet recorded in the company books.
C)   written,recorded,sent to the payees,but not yet paid by the bank.
D)   paid by the bank.E) B) and C)
F) All of the above

Question 16

The components of an internal control system include control environment,risk assessment,control activities,information and communication,and rationalization.

Accepted Answer

A) True 
 B)False

Question 17

Which one of the statements appearing below is correct regarding bank reconciliations?

Accepted Answer

A)   A bank reconciliation is an external report prepared to report the cash balance to investors and creditors.
B)   After preparing a bank reconciliation, no journal entries need to be made for outstanding checks or deposits in transit.
C)   If a company's records show a different cash balance from that shown on the company's bank statement, either the company or the bank has made an error.
D)   The up-to-date ending cash balance on the bank statement side should not equal the up-to-date ending cash balance on the book side.E) All of the above
F) A) and B)

Question 18

A process for approving and documenting all purchases and payments on account is referred to as a:

Accepted Answer

A)   voucher system.
B)   imprest system.
C)   reconciliation procedure.
D)   cash receipts process.E) None of the above
F) B) and C)

Question 19

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s?

Accepted Answer

A)   Federal Accounting Standards Board Act
B)   Securities and Exchange Act
C)   Sarbanes-Oxley Act
D)   Clayton ActE) A) and C)
F) C) and D)

Question 20

Deposits in transit are ______ on a bank reconciliation.

Accepted Answer

A)   added to the book balance
B)   deducted from the bank balance
C)   added to the bank balance
D)   deducted from the book balanceE) A) and B)
F) C) and D)

Exam 5: Fraud, Internal Control, and Cash

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s?

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Which of the following was not a change introduced by the Sarbanes-Oxley Act?

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A process for approving and documenting all purchases and payments on account is referred to as a:

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The following information was available to the accountant of Horton Company when preparing the monthly bank reconciliation: The amount of cash that should appear on the balance sheet following completion of the reconciliation and adjustment of the accounting records is:

Correct AnswerverifiedShow Answer

In a bank reconciliation,interest revenue earned on your bank account is:

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Which of the following items appearing on a bank reconciliation require a journal entry to bring the Cash account up-to-date?

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Outstanding checks refer to checks that have been:

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A deposit in transit on last month's bank reconciliation is shown as a deposit on the bank statement this month.As a result,in preparing this period's reconciliation,the amount of this deposit should:

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When the cash count sheets for the day equal $10,100 and the cash register reports $10,200,the journal entry to record the sales will include a:

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The cash count sheet determines all of the following except the:

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Which of the following is added to the bank balance on a bank reconciliation?

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Deposits in transit are ______ on a bank reconciliation.

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A check is said to have cleared the bank when:

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Which one of the statements appearing below is correct regarding bank reconciliations?

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The components of an internal control system include control environment,risk assessment,control activities,information and communication,and rationalization.

Correct AnswerverifiedShow Answer

Assigning sequential numbers to cash sales,so that the accounting staff can ensure that every sale has been recorded is required by the internal control principle of:

Correct AnswerverifiedShow Answer

Which of the following items on a bank reconciliation would require a journal entry?

Correct AnswerverifiedShow Answer

An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual is a (n) :

Correct AnswerverifiedShow Answer

The bank credited your account for a deposit made by another bank customer.This bank error should be a(n) ______ on a bank reconciliation.

Correct AnswerverifiedShow Answer

The amount of cash available for deposit at the bank is determined from the:

Correct AnswerverifiedShow Answer

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