Question 1

A traditional definition of internal control specifically includes all of the following features except

Accepted Answer

A)  adherence to prescribed managerial policies.
B)  promotion of operational efficiency.
C)  reliability of accounting data.
D)  insistence that employees not take earned vacations.E) A) and B)
F) A) and C)

Question 2

James Company had checks outstanding totaling $32,400 on its June bank reconciliation.In July, James Company issued checks totaling $233,400.The July bank statement shows that $157,800 in checks cleared the bank in July.A check from one of James Company's customers in the amount of $1,800 was also returned marked "NSF." The amount of outstanding checks on James Company's July bank reconciliation should be

Accepted Answer

A)  $75,600.
B)  $108,000.
C)  $106,200.
D)  $43,200.E) B) and D)
F) All of the above

Question 3

In large companies, the independent internal verification procedure is often assigned to

Accepted Answer

A)  computer operators.
B)  management.
C)  internal auditors.
D)  outside CPAs.E) C) and D)
F) B) and C) C

Question 4

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  add $54 to the book's balance.
B)  subtract $54 from the book's balance.
C)  deduct $54 from the bank's balance.
D)  deduct $628 from the book's balance.E) A) and C)
F) B) and C)

Question 5

In a small business, the lack of certain separations of duties can best be overcome by

Accepted Answer

A)  bonding the employees.
B)  getting the owner actively involved.
C)  hiring only honest employees.
D)  holding one person responsible for a given set of transactions.E) None of the above
F) A) and B)

Question 6

The control principle related to not having the same person authorize and pay for goods is known as

Accepted Answer

A)  establishment of responsibility.
B)  independent internal verification.
C)  separation of duties.
D)  rotation of duties.E) All of the above
F) None of the above C

Question 7

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

Accepted Answer

A) True 
 B)False  False

Question 8

Which of the following would be deducted from the balance per books on a bank reconciliation?

Accepted Answer

A)  Outstanding checks.
B)  Deposits in transit.
C)  Notes collected by the bank.
D)  Service charges.E) A) and C)
F) All of the above

Question 9

Maximum benefit from independent internal verification is obtained when

Accepted Answer

A)  it is made on a pre-announced basis.
B)  it is done by the employee possessing custody of the asset.
C)  discrepancies are reported to management.
D)  it is done at the time of the audit.E) B) and C)
F) A) and C)

Question 10

A check written by the company for $275 is incorrectly recorded by a company as $257.On the bank reconciliation, the $18 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.E) A) and D)
F) All of the above

Question 11

Which one of the following would not cause a bank to debit a depositor's account?

Accepted Answer

A)  Bank service charge.
B)  Collection of a note receivable.
C)  Wiring of funds to other locations.
D)  Checks marked NSF.E) B) and C)
F) None of the above

Question 12

Internal control measures

Accepted Answer

A)  only apply to publicly traded companies.
B)  are in place to safeguard assets.
C)  can eliminate all irregularities in the accounting process.
D)  All of these answer choices are correct.E) A) and B)
F) A) and C)

Question 13

Blank checks

Accepted Answer

A)  should be safeguarded.
B)  should be pre-signed.
C)  do not need to be safeguarded since they must be signed to be valid.
D)  should not be pre-numbered.E) B) and D)
F) None of the above

Question 14

Internal control is defined, in part, as a plan that safeguards

Accepted Answer

A)  all balance sheet accounts.
B)  assets.
C)  liabilities.
D)  capital stock.E) A) and B)
F) A) and C)

Question 15

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the cash account.

Accepted Answer

A) True 
 B)False

Question 16

An employee authorized to sign checks should not record

Accepted Answer

A)  owner cash contributions.
B)  mail receipts.
C)  cash disbursement transactions.
D)  sales transactions.E) A) and B)
F) A) and C)

Question 17

Under an effective system of internal control, errors occur only because of fraud or dishonesty.

Accepted Answer

A) True 
 B)False

Question 18

Which one of the following items would never appear on a cash budget?

Accepted Answer

A)  Office salaries expense.
B)  Interest expense.
C)  Depreciation expense.
D)  Travel expense.E) B) and D)
F) All of the above

Question 19

A $250 petty cash fund has cash of $25 and receipts of $200.The journal entry to replenish the account would include a credit to

Accepted Answer

A)  Cash for $225.
B)  Petty Cash for $225.
C)  Cash Over and Short for $25.
D)  Cash for $200.E) A) and D)
F) B) and C)

Question 20

All of the following are items that would most likely be paid from a petty cash fund except

Accepted Answer

A)  postage due.
B)  taxi fares.
C)  administrative wages.
D)  freight-out.E) A) and D)
F) All of the above

Exam 7: Fraud, Internal Control, and Cash

A traditional definition of internal control specifically includes all of the following features except

Correct Answer
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Correct Answer
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In large companies, the independent internal verification procedure is often assigned to

Correct Answer
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C

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to

Correct Answer
verified

In a small business, the lack of certain separations of duties can best be overcome by

Correct Answer
verified

The control principle related to not having the same person authorize and pay for goods is known as

Correct Answer
verified
C

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

Correct Answer
verified
False

Which of the following would be deducted from the balance per books on a bank reconciliation?

Correct Answer
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Maximum benefit from independent internal verification is obtained when

Correct Answer
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A check written by the company for $275 is incorrectly recorded by a company as $257.On the bank reconciliation, the $18 error should be

Correct Answer
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Which one of the following would not cause a bank to debit a depositor's account?

Correct Answer
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Internal control measures

Correct Answer
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Blank checks

Correct Answer
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Internal control is defined, in part, as a plan that safeguards

Correct Answer
verified

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the cash account.

Correct Answer
verified

An employee authorized to sign checks should not record

Correct Answer
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Under an effective system of internal control, errors occur only because of fraud or dishonesty.

Correct Answer
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Which one of the following items would never appear on a cash budget?

Correct Answer
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A $250 petty cash fund has cash of $25 and receipts of $200.The journal entry to replenish the account would include a credit to

Correct Answer
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All of the following are items that would most likely be paid from a petty cash fund except

Correct Answer
verified

Exam 7: Fraud, Internal Control, and Cash

A traditional definition of internal control specifically includes all of the following features except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In large companies, the independent internal verification procedure is often assigned to

Correct AnswerverifiedC

If a check correctly written and paid by the bank for $628 is incorrectly recorded on the company's books for $682, the appropriate treatment on the bank reconciliation would be to

Correct AnswerverifiedShow Answer

In a small business, the lack of certain separations of duties can best be overcome by

Correct AnswerverifiedShow Answer

The control principle related to not having the same person authorize and pay for goods is known as

Correct AnswerverifiedC

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

Correct AnswerverifiedFalse

Which of the following would be deducted from the balance per books on a bank reconciliation?

Correct AnswerverifiedShow Answer

Maximum benefit from independent internal verification is obtained when

Correct AnswerverifiedShow Answer

A check written by the company for $275 is incorrectly recorded by a company as $257.On the bank reconciliation, the $18 error should be

Correct AnswerverifiedShow Answer

Which one of the following would not cause a bank to debit a depositor's account?

Correct AnswerverifiedShow Answer

Internal control measures

Correct AnswerverifiedShow Answer

Blank checks

Correct AnswerverifiedShow Answer

Internal control is defined, in part, as a plan that safeguards

Correct AnswerverifiedShow Answer

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the cash account.

Correct AnswerverifiedShow Answer

An employee authorized to sign checks should not record

Correct AnswerverifiedShow Answer

Under an effective system of internal control, errors occur only because of fraud or dishonesty.

Correct AnswerverifiedShow Answer

Which one of the following items would never appear on a cash budget?

Correct AnswerverifiedShow Answer

A $250 petty cash fund has cash of $25 and receipts of $200.The journal entry to replenish the account would include a credit to

Correct AnswerverifiedShow Answer

All of the following are items that would most likely be paid from a petty cash fund except

Correct AnswerverifiedShow Answer

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C

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C

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False

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