Question 1

On a bank reconciliation,$75 interest earned on a checking account would

Accepted Answer

A)  appear as a deduction of $75 from the balance per books.
B)  appear as an addition of $75 to the balance per bank.
C)  appear as an addition of $75 to the balance per books.
D)  not appear as an adjustment on the bank reconciliationE) A) and B)
F) A) and C)

Question 2

The Sarbanes-Oxley Act has succeeded in

Accepted Answer

A)  heightening awareness and diligence with respect to internal control.
B)  increasing transparency in privately owned companies.
C)  stopping fraud from occurring.
D)  all of these.E) A) and D)
F) None of the above

Question 3

Under an effective system of internal control,errors occur only as a result of fraud or dishonesty.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would be added to the balance per books on a bank reconciliation?

Accepted Answer

A)  Notes collected by the bank
B)  Deposits in transit
C)  Service charges
D)  Outstanding checksE) B) and C)
F) None of the above

Question 5

In a small business,active involvement by the owner can be a practical substitute for the separation of some duties.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are examples of internal control activities except

Accepted Answer

A)  adequate supervision.
B)  rotation of key personnel.
C)  customer satisfaction surveys.
D)  insistence that employees take earned vacations.E) B) and D)
F) A) and B)

Question 7

A company's merchandise inventory includes all of the following,except

Accepted Answer

A)  goods in possession,but which cannot be sold.
B)  goods on shelves.
C)  damaged goods that can be sold at a reduced price.
D)  goods in storerooms.E) All of the above
F) A) and B)

Question 8

The use of prenumbered documents is important to a good system of internal control.

Accepted Answer

A) True 
 B)False

Question 9

When a petty cash fund is replenished,the entry requires a debit to Petty Cash.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The receiving department must compare goods received with goods purchased,as indicated on the purchase order.

Accepted Answer

A) True 
 B)False

Question 12

Each of the following is a feature of internal control except

Accepted Answer

A)  management planning.
B)  periodic independent verification.
C)  limited access to assets.
D)  authorization of transactions.E) None of the above
F) B) and C)

Question 13

On a balance sheet,what items normally are included in Cash?

Accepted Answer

The items normally included in Cash are ...

Question 14

Management is responsible for establishing a satisfactory system of internal control.

Accepted Answer

A) True 
 B)False

Question 15

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from the individual's bank account.

Accepted Answer

A) True 
 B)False

Question 16

In a purchase system,the most appropriate department to control goods upon arrival at the company is the

Accepted Answer

A)  accounting department.
B)  receiving department.
C)  treasury department.
D)  requesting department.E) B) and C)
F) C) and D)

Question 17

Which of the following would be added to the balance per bank?

Accepted Answer

A)  Outstanding checks
B)  Bank service charges
C)  Collection of a note receivable by the bank
D)  Deposits in transitE) None of the above
F) C) and D)

Question 18

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

Accepted Answer

A) True 
 B)False  False

Question 19

As the controller of a large company,you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished.You probably will want to

Accepted Answer

A)  increase the amount of the fund.
B)  decrease the amount of the fund.
C)  find a new custodian for the fund.
D)  offer the custodian your congratulations.E) None of the above
F) B) and D) C

Question 20

The amount in the petty cash fund plus the sum of the petty cash vouchers should at all times equal the amount shown in the Petty Cash account.

Accepted Answer

A) True 
 B)False  True

Exam 8: Cash and Internal Control

On a bank reconciliation,$75 interest earned on a checking account would

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act has succeeded in

Correct AnswerverifiedShow Answer

Under an effective system of internal control,errors occur only as a result of fraud or dishonesty.

Correct AnswerverifiedShow Answer

Which of the following would be added to the balance per books on a bank reconciliation?

Correct AnswerverifiedShow Answer

In a small business,active involvement by the owner can be a practical substitute for the separation of some duties.

Correct AnswerverifiedShow Answer

All of the following are examples of internal control activities except

Correct AnswerverifiedShow Answer

A company's merchandise inventory includes all of the following,except

Correct AnswerverifiedShow Answer

The use of prenumbered documents is important to a good system of internal control.

Correct AnswerverifiedShow Answer

When a petty cash fund is replenished,the entry requires a debit to Petty Cash.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The receiving department must compare goods received with goods purchased,as indicated on the purchase order.

Correct AnswerverifiedShow Answer

Each of the following is a feature of internal control except

Correct AnswerverifiedShow Answer

On a balance sheet,what items normally are included in Cash?

Correct AnswerverifiedThe items normally included in Cash are ...View AnswerShow Answer

Management is responsible for establishing a satisfactory system of internal control.

Correct AnswerverifiedShow Answer

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from the individual's bank account.

Correct AnswerverifiedShow Answer

In a purchase system,the most appropriate department to control goods upon arrival at the company is the

Correct AnswerverifiedShow Answer

Which of the following would be added to the balance per bank?

Correct AnswerverifiedShow Answer

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

Correct AnswerverifiedFalse

As the controller of a large company,you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished.You probably will want to

Correct AnswerverifiedC

The amount in the petty cash fund plus the sum of the petty cash vouchers should at all times equal the amount shown in the Petty Cash account.

Correct AnswerverifiedTrue

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The items normally included in Cash are ...
View Answer

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False

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C

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True