Question 1

Which of the following is not a motive for the embezzlement of cash by employees?

Accepted Answer

A)   Cash is the common unit of measurement
B)   Ownership of cash is difficult to prove
C)   Cash has universal appeal
D)   Small quantities of high-denomination currency can represent significant valueE) All of the above
F) C) and D)

Question 2

Which of the following is not a common internal control procedure over cash payments?

Accepted Answer

A)   A receipt should be provided to each cash customer
B)   Checks should be properly authorized with approval signatures
C)   All checks should be prenumbered
D)   Voided checks should be defaced and retainedE) A) and B)
F) None of the above

Question 3

Which of the following is not a common internal control procedure that would be implemented with regards to cash receipts?

Accepted Answer

A)   Preparing a record of all cash collections immediately upon receipt
B)   Providing copies of written receipts to customers
C)   Depositing cash receipts in a bank on a timely basis
D)   Marking supporting documents Paid when checks are signedE) B) and D)
F) A) and B) D

Question 4

In the reconciliation of the June bank statement,a deposit made on June 30 did not appear on the June bank statement.How is this deposit in transit shown on the bank reconciliation?

Accepted Answer

A)   Subtracted from the unadjusted book balance.
B)   Added to the unadjusted book balance.
C)   Subtracted from the unadjusted bank balance.
D)   Added to the unadjusted bank balance.E) B) and C)
F) C) and D) D

Question 5

Most audits result in unqualified audit opinions.

Accepted Answer

A) True 
 B)False  True

Question 6

At the time petty cash funds are disbursed,there is no effect on the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Preparing a bank reconciliation is a control activity.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not one of the nine features of an internal control system?

Accepted Answer

A)   Establishment of clear lines of authority
B)   Having employees covered by a fidelity bond
C)   Requiring regular vacations for certain employees
D)   Customer service comment cardsE) A) and B)
F) A) and C)

Question 9

Which of the following is not an example of a common control activity?

Accepted Answer

A)   Required absences
B)   Collusion
C)   Procedures manual
D)   Use of prenumbered documentsE) A) and B)
F) A) and C)

Question 10

For financial reporting purposes,cash generally includes currency and other items that are payable on demand,such as checks,money orders,bank drafts,and certain savings accounts.

Accepted Answer

A) True 
 B)False

Question 11

Duke Company's unadjusted bank balance at March 31 is $2,300.The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $400.What is the true cash balance?

Accepted Answer

A)   $2,200
B)   $2,000
C)   $2,700
D)   $2,400E) A) and C)
F) None of the above

Question 12

Requiring segregation of duties in a business eliminates the need for the work of one employee to serve as a check on the work of other employees.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a typical document associated with a bank checking account?

Accepted Answer

A)   Signature card
B)   Bank statement
C)   Cash register tape
D)   Deposit ticketE) B) and D)
F) B) and C)

Question 14

A well-designed system of internal controls will eliminate all fraud.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements concerning internal controls is true?

Accepted Answer

A)   Internal administrative controls are designed to limit the amount of funds spent on investments.
B)   Strong internal controls provide reasonable assurance that the objectives of a company will be accomplished.
C)   Internal accounting controls are limited to the policies and procedures used to protect the company from embezzlement.
D)   The control procedure, segregation of duties, prohibits the employment of a husband and wife or other closely related parties within the same company.E) None of the above
F) A) and B)

Question 16

An error is considered material if it would trigger an IRS audit.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is an internal control procedure used to safeguard a company's assets?

Accepted Answer

A)   Depositing cash receipts in a bank on a timely basis
B)   Segregation of duties
C)   Preparing a bank reconciliation
D)   All of these answer choices are correctE) All of the above
F) B) and C)

Question 18

A bank reconciliation normally begins with the ending cash balance shown on the bank statement and reconciles it to the unadjusted cash account balance on the company's books.

Accepted Answer

A) True 
 B)False

Question 19

Typical adjustments to the unadjusted bank balance on a bank reconciliation include deposits in transit and outstanding checks.

Accepted Answer

A) True 
 B)False

Question 20

How will a certified check be shown on a company's bank reconciliation?

Accepted Answer

A)   As a deduction to the company's unadjusted book balance.
B)   As an increase to the bank's unadjusted bank balance.
C)   As a deduction to the bank's unadjusted bank balance.
D)   There is no adjustment when preparing the bank reconciliation.E) All of the above
F) None of the above

Exam 6: Internal Control and Accounting for Cash

Which of the following is not a motive for the embezzlement of cash by employees?

Correct AnswerverifiedShow Answer

Which of the following is not a common internal control procedure over cash payments?

Correct AnswerverifiedShow Answer

Which of the following is not a common internal control procedure that would be implemented with regards to cash receipts?

Correct AnswerverifiedD

In the reconciliation of the June bank statement,a deposit made on June 30 did not appear on the June bank statement.How is this deposit in transit shown on the bank reconciliation?

Correct AnswerverifiedD

Most audits result in unqualified audit opinions.

Correct AnswerverifiedTrue

At the time petty cash funds are disbursed,there is no effect on the financial statements.

Correct AnswerverifiedShow Answer

Preparing a bank reconciliation is a control activity.

Correct AnswerverifiedShow Answer

Which of the following is not one of the nine features of an internal control system?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a common control activity?

Correct AnswerverifiedShow Answer

For financial reporting purposes,cash generally includes currency and other items that are payable on demand,such as checks,money orders,bank drafts,and certain savings accounts.

Correct AnswerverifiedShow Answer

Duke Company's unadjusted bank balance at March 31 is $2,300.The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $400.What is the true cash balance?

Correct AnswerverifiedShow Answer

Requiring segregation of duties in a business eliminates the need for the work of one employee to serve as a check on the work of other employees.

Correct AnswerverifiedShow Answer

Which of the following is not a typical document associated with a bank checking account?

Correct AnswerverifiedShow Answer

A well-designed system of internal controls will eliminate all fraud.

Correct AnswerverifiedShow Answer

Which of the following statements concerning internal controls is true?

Correct AnswerverifiedShow Answer

An error is considered material if it would trigger an IRS audit.

Correct AnswerverifiedShow Answer

Which of the following is an internal control procedure used to safeguard a company's assets?

Correct AnswerverifiedShow Answer

A bank reconciliation normally begins with the ending cash balance shown on the bank statement and reconciles it to the unadjusted cash account balance on the company's books.

Correct AnswerverifiedShow Answer

Typical adjustments to the unadjusted bank balance on a bank reconciliation include deposits in transit and outstanding checks.

Correct AnswerverifiedShow Answer

How will a certified check be shown on a company's bank reconciliation?

Correct AnswerverifiedShow Answer

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