Question 1

The key to the classification of an amount as cash is that it be readily available to pay debts.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not a requirement of a company's external auditors under Sarbanes-Oxley?

Accepted Answer

A)   They must give an opinion that management's assessment that the internal control system over financial reporting is fairly stated.
B)   They must give an opinion that the company maintained an effective internal control system over financial reporting.
C)   They must design and implement an effective information system design.
D)   They cannot perform any brokerage services for the company.E) None of the above
F) A) and B)

Question 3

Which one of the following is considered one of the six most important categories of internal control procedures?

Accepted Answer

A)   Computerized accounting systems
B)   The board of directors
C)   Proper authorizations
D)   Verification by government agenciesE) C) and D)
F) B) and C)

Question 4

Deposits made by a company but not yet reflected in a bank statement are called

Accepted Answer

A)   Debit memoranda
B)   Deposits in transit
C)   Credit memoranda
D)   None of the aboveE) A) and B)
F) A) and C)

Question 5

Use the following data to answer the question presented below for Raines Corp.'s preparation of a bank reconciliation on October 31, 2016: ?   Bank statement balance $30,700 Raines’ book balance (before adjustments)  ? Outstanding checks 4,200 NSF checks 400 Service charges 300 Deposits in transit 3,100 Interest earned on checking account 100\begin{array} { l r } 	ext { Bank statement balance } & \$ 30,700 \	ext { Raines&#x27; book balance (before adjustments)  } & ? \	ext { Outstanding checks } & 4,200 \	ext { NSF checks } & 400 \	ext { Service charges } & 300 \	ext { Deposits in transit } & 3,100 \	ext { Interest earned on checking account } & 100\end{array} Bank statement balance  Raines’ book balance (before adjustments)   Outstanding checks  NSF checks  Service charges  Deposits in transit  Interest earned on checking account ​$30,700?4,2004003003,100100​  ?
What is the net amount of the increase or decrease in Raines' cash balance which must be recorded as a result of the adjustments identified by the bank reconciliation?

Accepted Answer

A)   $100 decrease
B)   $300 decrease
C)   $400 decrease
D)   $600 decrease E) All of the above
F) A) and B)

Question 6

Sarbanes-Oxley requires that the audit committee be composed of

Accepted Answer

A)   At least 50% of key officers who are on the board of directors
B)   A majority of all of the members of the board of directors
C)   The outside members of the board of directors and the external auditor
D)   Entirely outside members of the board of directorsE) B) and C)
F) All of the above

Question 7

If receipts from cash sales of $7,500 were recorded incorrectly as $5,700 in the company's books, then this item would be included on the bank reconciliation as a(n)

Accepted Answer

A)   deduction from the balance per company's records
B)   addition to the balance per bank statement
C)   deduction from the balance per bank statement
D)   addition to the balance per company's recordsE) A) and D)
F) B) and C)

Question 8

Match the action with the category of internal control procedures
-Design and use of business documents

Accepted Answer

A)  One department should check on another
B)  Internal audit staff ensure all is working as intended
C)  Accounting and cash collection is properly separated
D)  Blank checks are locked at all times when not in use
E)  Origination of initial entry into accounting systemF) Specific authority is given by management for the performance of activities.G) B) and F)
H) A) and E)

Question 9

Checks received from customers are considered to be cash in the company's books.

Accepted Answer

A) True 
 B)False

Question 10

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. The clerk in the accounting department records both purchases and payments of invoices.

Accepted Answer

A)   Adheres to sound internal control procedures
B)   Violates sound internal control procedures
C)   Neither strengthens nor violates internal controlD) A) and B)
E) A) and C)

Question 11

In the reconciliation of a bank statement, "deposits in transit" should be:
A) added to the unadjusted book balance
B) subtracted from the unadjusted bank balance
C) added to the unadjusted bank balance
D) subtracted from the unadjusted bank balance

Accepted Answer

The answer of In the reconciliation of a bank statement,...

Question 12

Administrative controls

Accepted Answer

A)   are concerned with efficient operations and adherence to managerial policies.
B)   are concerned with the reliability of the financial statements.
C)   are the responsibility of the company's auditors.
D)   are concerned primarily with safeguarding assets.E) A) and D)
F) A) and B)

Question 13

The following set of items describes activities completed by a company in collecting cash for merchandise sales.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. An employee in the accounting department records cash receipts from customers and prepares a bank deposit slip.

Accepted Answer

A)   Adheres to sound internal control procedures
B)   Violates sound internal control procedures
C)   Neither strengthens nor violates internal controlD) A) and C)
E) B) and C)

Question 14

If the balance on the bank statement does not equal the balance in the cash account, then it can be assumed that:

Accepted Answer

A)   The company has no errors in its records concerning the cash account.
B)   The bank has made errors in preparing the statement.
C)   The company has made errors in is records concerning the cash account.
D)   There will be items reconciling the difference.E) A) and B)
F) A) and C)

Question 15

Checks presented for payment and paid by the bank are known as

Accepted Answer

A)   Canceled checks
B)   Certified checks
C)   NSF checks
D)   Outstanding checksE) A) and B)
F) C) and D)

Question 16

Having only one person authorized to both prepare and sign checks is a violation of what internal control procedure?

Accepted Answer

A)   Proper authorizations
B)   Independent review and appraisal
C)   Independent verifications
D)   Segregation of dutiesE) C) and D)
F) None of the above

Question 17

Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?

Accepted Answer

A)   Segregation of duties
B)   Safeguarding of assets and records
C)   Independent verifications
D)   Proper authorizationsE) B) and D)
F) A) and D)

Question 18

__________________ is a report required by section 404 of the Sarbanes-Oxley Act.

Accepted Answer

An interna...

Question 19

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Accepted Answer

A)   an expense on the income statement
B)   income on the income statement
C)   an asset on the balance sheet
D)   a liability on the balance sheetE) B) and C)
F) B) and D)

Question 20

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. Checks are signed by designated officers in the finance department.

Accepted Answer

A)   Adheres to sound internal control procedures
B)   Violates sound internal control procedures
C)   Neither strengthens nor violates internal controlD) A) and B)
E) A) and C)

Exam 6: Cash and Internal Control

If receipts from cash sales of $7,500 were recorded incorrectly as $5,700 in the company's books, then this item would be included on the bank reconciliation as a(n)

Correct Answer
verified

Checks received from customers are considered to be cash in the company's books.

Correct Answer
verified

In the reconciliation of a bank statement, "deposits in transit" should be: A) added to the unadjusted book balance B) subtracted from the unadjusted bank balance C) added to the unadjusted bank balance D) subtracted from the unadjusted bank balance

Correct Answer
verified

Administrative controls

Correct Answer
verified

__________________ is a report required by section 404 of the Sarbanes-Oxley Act.

Correct Answer
verified
An interna...
View Answer

Sarbanes-Oxley requires that the audit committee be composed of

Correct Answer
verified

Which of the following is not a requirement of a company's external auditors under Sarbanes-Oxley?

Correct Answer
verified

If the balance on the bank statement does not equal the balance in the cash account, then it can be assumed that:

Correct Answer
verified

Which one of the following is considered one of the six most important categories of internal control procedures?

Correct Answer
verified

Having only one person authorized to both prepare and sign checks is a violation of what internal control procedure?

Correct Answer
verified

Correct Answer
verified

Checks presented for payment and paid by the bank are known as

Correct Answer
verified

Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?

Correct Answer
verified

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. Checks are signed by designated officers in the finance department.

Correct Answer
verified

The key to the classification of an amount as cash is that it be readily available to pay debts.

Correct Answer
verified

Correct Answer
verified

Deposits made by a company but not yet reflected in a bank statement are called

Correct Answer
verified

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Correct Answer
verified

Correct Answer
verified

Match the action with the category of internal control procedures -Design and use of business documents

Correct Answer
verified

Exam 6: Cash and Internal Control

If receipts from cash sales of $7,500 were recorded incorrectly as $5,700 in the company's books, then this item would be included on the bank reconciliation as a(n)

Correct AnswerverifiedShow Answer

Checks received from customers are considered to be cash in the company's books.

Correct AnswerverifiedShow Answer

In the reconciliation of a bank statement, "deposits in transit" should be: A) added to the unadjusted book balance B) subtracted from the unadjusted bank balance C) added to the unadjusted bank balance D) subtracted from the unadjusted bank balance

Correct AnswerverifiedShow Answer

Administrative controls

Correct AnswerverifiedShow Answer

__________________ is a report required by section 404 of the Sarbanes-Oxley Act.

Correct AnswerverifiedAn interna...View AnswerShow Answer

Sarbanes-Oxley requires that the audit committee be composed of

Correct AnswerverifiedShow Answer

Which of the following is not a requirement of a company's external auditors under Sarbanes-Oxley?

Correct AnswerverifiedShow Answer

If the balance on the bank statement does not equal the balance in the cash account, then it can be assumed that:

Correct AnswerverifiedShow Answer

Which one of the following is considered one of the six most important categories of internal control procedures?

Correct AnswerverifiedShow Answer

Having only one person authorized to both prepare and sign checks is a violation of what internal control procedure?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Checks presented for payment and paid by the bank are known as

Correct AnswerverifiedShow Answer

Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?

Correct AnswerverifiedShow Answer

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. Checks are signed by designated officers in the finance department.

Correct AnswerverifiedShow Answer

The key to the classification of an amount as cash is that it be readily available to pay debts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Deposits made by a company but not yet reflected in a bank statement are called

Correct AnswerverifiedShow Answer

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match the action with the category of internal control procedures -Design and use of business documents

Correct AnswerverifiedShow Answer

Correct Answer
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An interna...
View Answer

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