Question 1

An exception to disbursements being made by check is acceptable when cash is paid

Accepted Answer

A)  to an owner.
B)  to employees as wages.
C)  from petty cash.
D)  to employees as loans.

Question 2

Physical controls to safeguard assets do not include

Accepted Answer

A)  cashier department supervisors.
B)  vaults.
C)  safety deposit boxes.
D)  locked warehouses.

Question 3

Collier Company has implemented a just-in-time system which relies on suppliers to deliver goods for resale as needed.This implementation is most consistent with which of the following basic principles of cash management?

Accepted Answer

A)  Increasing the speed of receivables collection.
B)  Planning the timing of major expenditures.
C)  Keeping inventory levels low.
D)  Delaying the payment of liabilities.

Question 4

A very small company would have the most difficulty in implementing which of the following internal control activities?

Accepted Answer

A)  Separation of duties.
B)  Limited access to assets.
C)  Periodic independent verification.
D)  Sound personnel procedures.

Question 5

Which statement regarding negative cash balances is true?

Accepted Answer

A)  The amount is offset against other current assets because users need to know net current assets.
B)  The amount is shown as a current liability because a company cannot have a cash balance below zero.
C)  The company must obtain a loan to bring the cash balance to zero before financial statements are prepared.
D)  The negative cash balance is included as a current asset and discussed in a footnote to the financial statements.

Question 6

Ron Jones has been a trusted employee for over 10 years.He is responsible for ordering merchandise inventory receiving the inventory items and authorizing the payment for these items.Which internal control principle if any is being violated?

Accepted Answer

A)  None Ron has proven to be trustworthy and has enough experience to do a good job.
B)  Documentation procedures.
C)  Establishment of responsibilities.
D)  Segregation of duties.

Question 7

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Accepted Answer

A)  independent outside auditors must attest to the level of internal control.
B)  companies must develop sound internal controls over financial reporting.
C)  companies must continually assess the functionality of internal controls.
D)  independent outside auditors must eliminate redundant internal controls.

Question 8

All of the following are examples of internal control procedures except

Accepted Answer

A)  using prenumbered documents.
B)  reconciling the bank statement.
C)  customer satisfaction surveys.
D)  insistence that employees take vacations.

Question 9

Which one of the following sections would not appear on a cash budget?

Accepted Answer

A)  Cash receipts.
B)  Financing.
C)  Investing.
D)  Cash disbursements.

Question 10

A cash budget contributes to more effective cash management.

Accepted Answer

A) True 
 B)False

Question 11

If a monthly cash budget is prepared properly there will never be a cash deficiency at the end of any month.

Accepted Answer

A) True 
 B)False

Question 12

Lackey Company wrote checks totaling $38430 during October (its first month of operations)  and $41964 during November.$36540 of these checks cleared the bank in October and $40995 cleared the bank in November.What was the amount of outstanding checks on November 30?

Accepted Answer

A)  $2859.
B)  $519.
C)  $1374.
D)  $4455.

Question 13

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjustment:

Accepted Answer

A)  Increase Accounts Receivable Decrease Cash
B)  Increase Cash Decrease Accounts Receivable
C)  Increase Miscellaneous Expense Decrease Accounts Receivable
D)  No adjustment is necessary.

Question 14

A bank reconciliation should be prepared

Accepted Answer

A)  whenever the bank refuses to lend the company money.
B)  when an employee is suspected of fraud.
C)  to explain any difference between the depositor's balance per books with the balance per bank.
D)  by the person who is authorized to sign checks.

Question 15

A check written by the company for $167 is incorrectly recorded by a company as $176.On the bank reconciliation the $9 error should be

Accepted Answer

A)  added to the balance per books.
B)  deducted from the balance per books.
C)  added to the balance per bank.
D)  deducted from the balance per bank.

Question 16

The responsibility for ordering receiving and paying for merchandise should be assigned to different individuals.

Accepted Answer

A) True 
 B)False

Question 17

Russel Company assembled the following information in completing its March bank reconciliation:   Balance per bank $19,100 Outstanding checks $3,875 Deposits in transit $6,250 NSF check $400 Bank service charges $125 Cash balance per books $22,000\begin{array} { l r } 	ext { Balance per bank } & \$ 19,100 \	ext { Outstanding checks } & \$ 3,875 \	ext { Deposits in transit } & \$ 6,250 \	ext { NSF check } & \$ 400 \	ext { Bank service charges } & \$ 125 \	ext { Cash balance per books } & \$ 22,000\end{array} Balance per bank  Outstanding checks  Deposits in transit  NSF check  Bank service charges  Cash balance per books ​$19,100$3,875$6,250$400$125$22,000​  As a result of this reconciliation Russel will

Accepted Answer

A)  reduce its cash account by $2375.
B)  reduce its cash account by $125.
C)  increase its cash account by $275.
D)  reduce its cash account by $525.

Question 18

All of the following bank reconciliation items would result in an adjustment on the company's books except

Accepted Answer

A)  interest earned.
B)  deposits in transit.
C)  fee for collection of note by bank.
D)  NSF check of customer.

Question 19

An effective system of internal control centralizes functions in a single capable individual.

Accepted Answer

A) True 
 B)False

Question 20

Internal auditors are independent contractors who evaluate the effectiveness of a company's internal control systems.

Accepted Answer

A) True 
 B)False

Exam 5: Fraud, Internal Control, and Cash

An effective system of internal control centralizes functions in a single capable individual.

Correct Answer
verified

Collier Company has implemented a just-in-time system which relies on suppliers to deliver goods for resale as needed.This implementation is most consistent with which of the following basic principles of cash management?

Correct Answer
verified

The responsibility for ordering receiving and paying for merchandise should be assigned to different individuals.

Correct Answer
verified

Physical controls to safeguard assets do not include

Correct Answer
verified

All of the following bank reconciliation items would result in an adjustment on the company's books except

Correct Answer
verified

Lackey Company wrote checks totaling $38430 during October (its first month of operations) and $41964 during November.$36540 of these checks cleared the bank in October and $40995 cleared the bank in November.What was the amount of outstanding checks on November 30?

Correct Answer
verified

An exception to disbursements being made by check is acceptable when cash is paid

Correct Answer
verified

If a monthly cash budget is prepared properly there will never be a cash deficiency at the end of any month.

Correct Answer
verified

Which statement regarding negative cash balances is true?

Correct Answer
verified

A very small company would have the most difficulty in implementing which of the following internal control activities?

Correct Answer
verified

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjustment:

Correct Answer
verified

All of the following are examples of internal control procedures except

Correct Answer
verified

Internal auditors are independent contractors who evaluate the effectiveness of a company's internal control systems.

Correct Answer
verified

A bank reconciliation should be prepared

Correct Answer
verified

A check written by the company for $167 is incorrectly recorded by a company as $176.On the bank reconciliation the $9 error should be

Correct Answer
verified

A cash budget contributes to more effective cash management.

Correct Answer
verified

Which one of the following sections would not appear on a cash budget?

Correct Answer
verified

Correct Answer
verified

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Correct Answer
verified

Ron Jones has been a trusted employee for over 10 years.He is responsible for ordering merchandise inventory receiving the inventory items and authorizing the payment for these items.Which internal control principle if any is being violated?

Correct Answer
verified

Exam 5: Fraud, Internal Control, and Cash

An effective system of internal control centralizes functions in a single capable individual.

Correct AnswerverifiedShow Answer

Collier Company has implemented a just-in-time system which relies on suppliers to deliver goods for resale as needed.This implementation is most consistent with which of the following basic principles of cash management?

Correct AnswerverifiedShow Answer

The responsibility for ordering receiving and paying for merchandise should be assigned to different individuals.

Correct AnswerverifiedShow Answer

Physical controls to safeguard assets do not include

Correct AnswerverifiedShow Answer

All of the following bank reconciliation items would result in an adjustment on the company's books except

Correct AnswerverifiedShow Answer

Lackey Company wrote checks totaling $38430 during October (its first month of operations) and $41964 during November.$36540 of these checks cleared the bank in October and $40995 cleared the bank in November.What was the amount of outstanding checks on November 30?

Correct AnswerverifiedShow Answer

An exception to disbursements being made by check is acceptable when cash is paid

Correct AnswerverifiedShow Answer

If a monthly cash budget is prepared properly there will never be a cash deficiency at the end of any month.

Correct AnswerverifiedShow Answer

Which statement regarding negative cash balances is true?

Correct AnswerverifiedShow Answer

A very small company would have the most difficulty in implementing which of the following internal control activities?

Correct AnswerverifiedShow Answer

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjustment:

Correct AnswerverifiedShow Answer

All of the following are examples of internal control procedures except

Correct AnswerverifiedShow Answer

Internal auditors are independent contractors who evaluate the effectiveness of a company's internal control systems.

Correct AnswerverifiedShow Answer

A bank reconciliation should be prepared

Correct AnswerverifiedShow Answer

A check written by the company for $167 is incorrectly recorded by a company as $176.On the bank reconciliation the $9 error should be

Correct AnswerverifiedShow Answer

A cash budget contributes to more effective cash management.

Correct AnswerverifiedShow Answer

Which one of the following sections would not appear on a cash budget?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Correct AnswerverifiedShow Answer

Ron Jones has been a trusted employee for over 10 years.He is responsible for ordering merchandise inventory receiving the inventory items and authorizing the payment for these items.Which internal control principle if any is being violated?

Correct AnswerverifiedShow Answer

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