Question 1

Internal controls are important because they:

Accepted Answer

A)  deter fraud and prevent misleading financial statements.
B)  eliminate fraud.
C)  ensure that the company maintains a compensating balance.
D)  guarantee accurate financial statements.

Question 2

The bank reconciliation:

Accepted Answer

A)  should be prepared by an employee who records cash transactions.
B)  is part of the internal control system.
C)  is for information purposes only.
D)  is sent to the bank for verification.

Question 3

The Sarbanes-Oxley Act of 2002 applies to all publicly held companies.

Accepted Answer

A) True 
 B)False

Question 4

The bank statement for Exible Co.indicates a balance of $10,252.50 on June 30,2015.The cash account for the company had a balance of $4,787.10.Prepare a bank reconciliation on the basis of the following reconciling items:

Accepted Answer

Exible Co. Bank Reconciliation June 30,2...

Question 5

The amount of the "adjusted balance" appearing on a bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date after all adjusting entries have been entered.

Accepted Answer

A) True 
 B)False

Question 6

A minimum cash balance required by a bank is called:

Accepted Answer

A)  cash in bank.
B)  compensating balance.
C)  average balance.
D)  adjusted balance.

Question 7

,which constitute one of the most important elements of internal control,include separating operations,custody of assets,and accounting.

Accepted Answer

A)  Risk assessment
B)  Control Procedures
C)  Control environment
D)  Monitoring

Question 8

The ratio of cash to monthly cash expenses is computed as .

Accepted Answer

A)  monthly cash expenses divided by cash
B)  current assets divided by monthly cash expenses
C)  cash divided by cash equivalents
D)  cash and cash equivalents divided by monthly cash expenses

Question 9

What is a special-purpose cash fund? What is its purpose? Give two examples.

Accepted Answer

A special-purpose cash fund is...

Question 10

The internal control environment is enhanced by the hiring and retention of competent,honest employees.

Accepted Answer

A) True 
 B)False

Question 11

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer.What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Increase Notes Receivable; decrease Cash
B)  Increase Cash; increase Miscellaneous Income
C)  Increase Cash; decrease Notes Receivable
D)  Increase Accounts Receivable; decrease Cash

Question 12

Describe the features of a voucher system and list typical supporting documents for a voucher.

Accepted Answer

A voucher system is used to control cash...

Question 13

Which of the following reflects a weak internal control system?

Accepted Answer

A)  All employees are well supervised.
B)  A single employee is responsible for comparing a receiving report to an invoice.
C)  All employees must take their vacations.
D)  A single employee is responsible for the collecting and recording of cash.

Question 14

Accompanying the bank statement was a debit memorandum for bank service charges.What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Increase Miscellaneous Expense; decrease Cash
B)  Increase Cash; increase Other Income
C)  Increase Cash; increase Accounts Payable
D)  Decrease Accounts Payable; decrease Cash

Question 15

Cash equivalents include:

Accepted Answer

A)  checks.
B)  coins and currency.
C)  money market funds and commercial paper.
D)  stocks and short-term bonds.

Question 16

The bank informs the depositor of bank service charges by including a credit memorandum with an monthly bank statement.

Accepted Answer

A) True 
 B)False

Question 17

An element of internal control is:

Accepted Answer

A)  generally accepted accounting principles.
B)  control procedures.
C)  special-purpose fund.
D)  electronic funds transfer.

Question 18

The amount of the outstanding checks is included on the bank reconciliation as a(n) :

Accepted Answer

A)  deduction from the cash balance per books.
B)  addition to the cash balance per bank.
C)  deduction from the cash balance per bank.
D)  addition to the cash balance per books.

Question 19

Why would a bank require a company to maintain a compensating balance?

Accepted Answer

Usually it is part o...

Question 20

A credit memorandum from the bank :

Accepted Answer

A)  decreases a bank customer's account.
B)  is used to show a bank service charge.
C)  shows that a company has deposited a customer's NSF check.
D)  shows the bank has collected a note receivable for the customer.

Exam 5: Sarbanes-Oxley, internal Control, and Cash

Cash equivalents include:

Correct AnswerverifiedShow Answer

The bank reconciliation:

Correct AnswerverifiedShow Answer

Internal controls are important because they:

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer.What adjustment is required in the depositor's accounts?

Correct AnswerverifiedShow Answer

The bank statement for Exible Co.indicates a balance of $10,252.50 on June 30,2015.The cash account for the company had a balance of $4,787.10.Prepare a bank reconciliation on the basis of the following reconciling items:

Correct AnswerverifiedExible Co. Bank Reconciliation June 30,2...View AnswerShow Answer

A credit memorandum from the bank :

Correct AnswerverifiedShow Answer

Why would a bank require a company to maintain a compensating balance?

Correct AnswerverifiedUsually it is part o...View AnswerShow Answer

The Sarbanes-Oxley Act of 2002 applies to all publicly held companies.

Correct AnswerverifiedShow Answer

,which constitute one of the most important elements of internal control,include separating operations,custody of assets,and accounting.

Correct AnswerverifiedShow Answer

The bank informs the depositor of bank service charges by including a credit memorandum with an monthly bank statement.

Correct AnswerverifiedShow Answer

Describe the features of a voucher system and list typical supporting documents for a voucher.

Correct AnswerverifiedA voucher system is used to control cash...View AnswerShow Answer

The amount of the outstanding checks is included on the bank reconciliation as a(n) :

Correct AnswerverifiedShow Answer

An element of internal control is:

Correct AnswerverifiedShow Answer

Which of the following reflects a weak internal control system?

Correct AnswerverifiedShow Answer

A minimum cash balance required by a bank is called:

Correct AnswerverifiedShow Answer

The ratio of cash to monthly cash expenses is computed as .

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for bank service charges.What adjustment is required in the depositor's accounts?

Correct AnswerverifiedShow Answer

The amount of the "adjusted balance" appearing on a bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date after all adjusting entries have been entered.

Correct AnswerverifiedShow Answer

What is a special-purpose cash fund? What is its purpose? Give two examples.

Correct AnswerverifiedA special-purpose cash fund is...View AnswerShow Answer

The internal control environment is enhanced by the hiring and retention of competent,honest employees.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Exible Co. Bank Reconciliation June 30,2...
View Answer

Correct Answer
verified

Correct Answer
verified
Usually it is part o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A voucher system is used to control cash...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A special-purpose cash fund is...
View Answer

Correct Answer
verified