Question 1

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) None of the above
F) All of the above

Question 2

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation?

Accepted Answer

A)  It would be deducted from the book balance.
B)  It would be added to the bank balance.
C)  It would be deducted from the bank balance.
D)  It would be added to the book balance.E) A) and B)
F) B) and D)

Question 3

In a bank reconciliation,an outstanding check is:

Accepted Answer

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

Question 4

The Sarbanes-Oxley Act (SOX)requires external auditors to test the company's internal control system.

Accepted Answer

A) True 
 B)False

Question 5

On October 31,2018,the bank statement shows that your company has $12,956.73 in its checking account.You are aware of three outstanding checks that total $2,112.19.During October,2018,the bank rejected two deposited checks from customers totaling $654.19 because of insufficient funds and charged you $12.00 in service fees.You had not yet received notice about the bad checks,but you were aware of and have recorded the $12.00 of service fees.Prior to adjustment on October 31,2018,your Cash account would have a balance of:

Accepted Answer

A)  $14,402.73.
B)  $15,711.11.
C)  $11,498.73.
D)  $10,202.35.E) None of the above
F) A) and B)

Question 6

Which of the following is not related to the segregation of duties for cash received in person?

Accepted Answer

A)  Cashiers are responsible for the collection of cash and issuing a receipt at the point of sale.
B)  A supervisor is responsible for collecting the cash at the end of each cashier's shift and depositing it in the bank.
C)  Members of the accounting department are responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system.
D)  Members of the accounting department count the cash collected and deposit it in the bank.E) All of the above
F) B) and C)

Question 7

The objectives of a company's system of internal control include which of the following?

Accepted Answer

A)  Providing innovative products.
B)  Retaining position as market leader.
C)  Adhering to laws and regulations.
D)  Ensuring the company's stock price provides a reasonable return to investors.E) A) and B)
F) B) and D)

Question 8

On a bank statement,deposits are listed as credits and cleared checks are listed as debits.

Accepted Answer

A) True 
 B)False

Question 9

A good voucher system includes procedures and approvals designed to control cash payments.

Accepted Answer

A) True 
 B)False

Question 10

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 D)
F) A) and C)

Question 11

Which of the following statements incorrectly describes an imprest system?

Accepted Answer

A)  An imprest system is an internal control procedure relating to cash payments.
B)  An imprest system helps eliminate the risk that the bank might overpay or underpay an employee.
C)  The use of an imprest system eliminates the need for bank reconciliations.
D)  If the transfers from the payroll account to the employees' checking accounts occur without error,the imprest payroll bank account will equal zero after all employees have been paid.E) B) and D)
F) A) and D)

Question 12

Which of the following would overstate a company's net income?

Accepted Answer

A)  Counting shipments of customers' orders as revenue before payment has been received.
B)  Shipping goods to customers without receiving orders from those customers,and recording the transactions as revenue.
C)  Accruing liabilities for marketing expenses before they are incurred.
D)  Making an accrual adjusting entry for interest earned on a bond investment.E) A) and C)
F) A) and B)

Question 13

Comparing the cash in the register with the cash count sheet is required by the internal control principle of:

Accepted Answer

A)  independently verifying.
B)  establishing responsibilities.
C)  segregation of duties.
D)  documenting procedures.E) None of the above
F) All of the above

Question 14

When preparing this month's bank reconciliation,you find that you failed to record a $1,240 deposit for a payment you received from a customer.You immediately prepare a journal entry to record the deposit.Which of the following describes the actions to be taken when preparing next month's bank reconciliation?

Accepted Answer

A)  You must decrease the balance per bank by $1,240.
B)  You must increase the balance per bank by $1,240.
C)  You must increase the balance per books by $1,240.
D)  No further action is necessary.E) A) and B)
F) B) and C)

Question 15

Restricted cash is reported:

Accepted Answer

A)  separately as an asset on the balance sheet.
B)  together with cash and cash equivalents on the balance sheet.
C)  separately under stockholders' equity on the balance sheet.
D)  together with cash and cash equivalents on the income statement.E) A) and B)
F) A) and C)

Question 16

The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are requirements of the Sarbanes-Oxley Act (SOX) except:

Accepted Answer

A)  evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies.
B)  evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies.
C)  establishment of an audit committee of independent directors to ensure the company's accounting,internal control,and audit functions are effective.
D)  adoption of a code of ethics covering all employees.E) None of the above
F) B) and C)

Question 18

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) All of the above
F) B) and D)

Question 19

If a bank reconciliation included a deposit in transit of $1,240,the company's journal entry for this reconciling item would include:

Accepted Answer

A)  nothing,because the deposit has already been recorded.
B)  a debit to Cash of $1,240.
C)  a credit to Cash of $1,240.
D)  a credit to Accounts Receivable for $1,240.E) All of the above
F) A) and D)

Question 20

Assume a voucher system is in use.When the bill for goods or services is obtained,which control principle(s) must be met when the related control procedures are designed?

Accepted Answer

A)  Establish responsibility
B)  Segregate duties
C)  Segregate duties and restrict access
D)  Document procedures and independently verifyE) B) and D)
F) C) and D)

Exam 5: Fraud,Internal Control,and Cash

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation?

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements incorrectly describes an imprest system?

Correct Answer
verified

Correct Answer
verified

All of the following are requirements of the Sarbanes-Oxley Act (SOX) except:

Correct Answer
verified

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

Correct Answer
verified

On a bank statement,deposits are listed as credits and cleared checks are listed as debits.

Correct Answer
verified

Restricted cash is reported:

Correct Answer
verified

In a bank reconciliation,an outstanding check is:

Correct Answer
verified

Which of the following is not related to the segregation of duties for cash received in person?

Correct Answer
verified

The objectives of a company's system of internal control include which of the following?

Correct Answer
verified

A good voucher system includes procedures and approvals designed to control cash payments.

Correct Answer
verified

The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

Correct Answer
verified

The Sarbanes-Oxley Act (SOX)requires external auditors to test the company's internal control system.

Correct Answer
verified

If a bank reconciliation included a deposit in transit of $1,240,the company's journal entry for this reconciling item would include:

Correct Answer
verified

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

Correct Answer
verified

Assume a voucher system is in use.When the bill for goods or services is obtained,which control principle(s) must be met when the related control procedures are designed?

Correct Answer
verified

Correct Answer
verified

Comparing the cash in the register with the cash count sheet is required by the internal control principle of:

Correct Answer
verified

Which of the following would overstate a company's net income?

Correct Answer
verified

Exam 5: Fraud,Internal Control,and Cash

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements incorrectly describes an imprest system?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All of the following are requirements of the Sarbanes-Oxley Act (SOX) except:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On a bank statement,deposits are listed as credits and cleared checks are listed as debits.

Correct AnswerverifiedShow Answer

Restricted cash is reported:

Correct AnswerverifiedShow Answer

In a bank reconciliation,an outstanding check is:

Correct AnswerverifiedShow Answer

Which of the following is not related to the segregation of duties for cash received in person?

Correct AnswerverifiedShow Answer

The objectives of a company's system of internal control include which of the following?

Correct AnswerverifiedShow Answer

A good voucher system includes procedures and approvals designed to control cash payments.

Correct AnswerverifiedShow Answer

The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act (SOX)requires external auditors to test the company's internal control system.

Correct AnswerverifiedShow Answer

If a bank reconciliation included a deposit in transit of $1,240,the company's journal entry for this reconciling item would include:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume a voucher system is in use.When the bill for goods or services is obtained,which control principle(s) must be met when the related control procedures are designed?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Comparing the cash in the register with the cash count sheet is required by the internal control principle of:

Correct AnswerverifiedShow Answer

Which of the following would overstate a company's net income?

Correct AnswerverifiedShow Answer

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