Question 1

For a strong internal control system over cash,it is important to have the duties related to cash receipts and cash payments divided among different employees.

Accepted Answer

A) True 
 B)False

Question 2

The amount of deposits in transit is included on the bank statement as a(n) :

Accepted Answer

A)  deduction from the cash balance per books.
B)  deduction from the cash balance per bank.
C)  addition to the cash balance per bank.
D)  addition to the cash balance per books.E) A) and C)
F) None of the above

Question 3

Separating the responsibilities for purchasing,receiving,and paying for equipment is an example of the control procedure: separating operations,custody of assets,and accounting.

Accepted Answer

A) True 
 B)False

Question 4

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would require an adjusting entry including a:

Accepted Answer

A)  debit to Accounts Receivable.
B)  debit to Cash.
C)  debit to Accounts Payable.
D)  credit to Accounts Payable.E) A) and D)
F) C) and D)

Question 5

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500.The $1,800 difference would be included on the bank reconciliation as a(n) :

Accepted Answer

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

Question 6

When a company reports negative net cash flows from operations .

Accepted Answer

A)  ratio of equity to annual cash expenses helps in assessing the survival of the company
B)  ratio of equity to monthly cash expenses helps in assessing the survival of the company
C)  ratio of cash to monthly cash expenses helps in assessing the survival of the company
D)  ratio of accounts payable to annual financing expenses helps in assessing the survival of the companyE) None of the above
F) C) and D)

Question 7

A check drawn by a depositor for $915 in payment of a liability was recorded in the depositor's book as $195.What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Decrease Accounts Payable; decrease Cash
B)  Increase Cash; decrease Accounts Receivable
C)  Increase Cash; increase Accounts Payable
D)  Increase Accounts Receivable; decrease CashE) A) and B)
F) C) and D)

Question 8

The data needed to adjust a depositor's books are shown in the "adjustments to the depositor's records" section of a bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 9

Adding a review of operations by an internal audit staff weakens internal control.

Accepted Answer

A) True 
 B)False

Question 10

a)	Where are cash equivalents disclosed in the financial statements?
(b)	List three examples of cash equivalents.

Accepted Answer

(a)Cash account on the balance...

Question 11

What adjustment is required in the depositor's accounts to record outstanding checks?

Accepted Answer

A)  None
B)  Increase Cash; decrease Accounts Receivable
C)  Increase Cash; increase Accounts Payable
D)  Increase Accounts Receivable; decrease CashE) C) and D)
F) A) and D)

Question 12

Which of the following is true of EFT?

Accepted Answer

A)  It cost more than receiving cash payments through the mail.
B)  It can process certain cash transactions at less cost than by using the mail.
C)  It is easy to document purchase and sale transactions.
D)  It means Effective Funds Transfer.E) C) and D)
F) A) and B)

Question 13

A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180.The $630 difference would be included on the bank reconciliation as a(n) :

Accepted Answer

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

Question 14

Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700.What adjustment is required in the bank's accounts?

Accepted Answer

A)  Decrease Sales; decrease Cash
B)  Increase Cash; decrease Accounts Receivable
C)  Increase Cash; increase Sales
D)  No adjustment neededE) B) and D)
F) A) and C)

Question 15

Money market funds,commercial paper,and U.S.Treasury Bills are examples of cash equivalents.

Accepted Answer

A) True 
 B)False

Question 16

In preparing a bank reconciliation,the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)  Service charges
B)  Outstanding checks
C)  Deposits in transit
D)  Notes collected by the bankE) C) and D)
F) B) and C)

Question 18

Employee fraud is the intentional act of deceiving an employer for personal gain.

Accepted Answer

A) True 
 B)False

Question 19

The bank reconciles its statement to the depositor's records.

Accepted Answer

A) True 
 B)False

Question 20

There are only two internal control objectives: to ensure accurate financial reports,and to ensure compliance with applicable laws.

Accepted Answer

A) True 
 B)False

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

What adjustment is required in the depositor's accounts to record outstanding checks?

Correct AnswerverifiedShow Answer

When a company reports negative net cash flows from operations .

Correct AnswerverifiedShow Answer

Employee fraud is the intentional act of deceiving an employer for personal gain.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Adding a review of operations by an internal audit staff weakens internal control.

Correct AnswerverifiedShow Answer

For a strong internal control system over cash,it is important to have the duties related to cash receipts and cash payments divided among different employees.

Correct AnswerverifiedShow Answer

Money market funds,commercial paper,and U.S.Treasury Bills are examples of cash equivalents.

Correct AnswerverifiedShow Answer

Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700.What adjustment is required in the bank's accounts?

Correct AnswerverifiedShow Answer

There are only two internal control objectives: to ensure accurate financial reports,and to ensure compliance with applicable laws.

Correct AnswerverifiedShow Answer

The bank reconciles its statement to the depositor's records.

Correct AnswerverifiedShow Answer

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500.The $1,800 difference would be included on the bank reconciliation as a(n) :

Correct AnswerverifiedShow Answer

a) Where are cash equivalents disclosed in the financial statements? (b) List three examples of cash equivalents.

Correct Answerverified(a)Cash account on the balance...View AnswerShow Answer

Which of the following is true of EFT?

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would require an adjusting entry including a:

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation,the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

Correct AnswerverifiedShow Answer

A check drawn by a depositor for $915 in payment of a liability was recorded in the depositor's book as $195.What adjustment is required in the depositor's accounts?

Correct AnswerverifiedShow Answer

Separating the responsibilities for purchasing,receiving,and paying for equipment is an example of the control procedure: separating operations,custody of assets,and accounting.

Correct AnswerverifiedShow Answer

The amount of deposits in transit is included on the bank statement as a(n) :

Correct AnswerverifiedShow Answer

The data needed to adjust a depositor's books are shown in the "adjustments to the depositor's records" section of a bank reconciliation.

Correct AnswerverifiedShow Answer

A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180.The $630 difference would be included on the bank reconciliation as a(n) :

Correct AnswerverifiedShow Answer

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(a)Cash account on the balance...
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