Question 1

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Accepted Answer

A) True 
 B)False

Question 2

A company established a $400 petty cash.On October 15,there was $16 remaining in the petty cash fund on that date and there were petty cash receipts for travel expense,$39,delivery expense,$138,and office expenses,$214.The petty cash fund was replenished and increased to $1,000 in total.
Required:
Prepare the journal entry,if any,required,to record the replenishment of the petty cash fund and the increase in its amount on October 15.

Accepted Answer

The answer of A company established a $400 petty cash.On...

Question 3

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Accepted Answer

A)   Debit Accounts Receivable and credit Cash in the amount of $776
B)   Debit Cash and credit Accounts Receivable in the amount of $776
C)   Debit NSF Check Expense and credit Accounts Receivable in the amount of $776
D)   No journal entry is necessary.E) A) and D)
F) A) and B)

Question 4

When you identify outstanding checks in performing a bank reconciliation,you must:

Accepted Answer

A)   deduct the amount of the outstanding checks from the balance per books.
B)   deduct the amount of the outstanding checks from the balance per bank.
C)   add the amount of the outstanding checks to the balance per books.
D)   add the amount of the outstanding checks to the balance per bank.E) A) and C)
F) C) and D)

Question 5

Employee fraud is often grouped into three categories,including corruption,asset misappropriation,and embezzlement.

Accepted Answer

A) True 
 B)False

Question 6

When preparing this month's bank reconciliation,you find that you failed to record a $95 deposit for a payment you received from a customer.You immediately prepare a journal entry to record the deposit.Which of the following describes the actions to be taken when preparing next month's bank reconciliation?

Accepted Answer

A)   You must decrease the balance per bank by $95
B)   You must increase the balance per bank by $95
C)   You must increase the balance per books by $95
D)   No further action is necessary.E) All of the above
F) B) and D)

Question 7

What is the primary goal of internal controls for cash payments?

Accepted Answer

A)   To ensure the lowest prices possible are paid
B)   To make payments as quickly as possible
C)   To ensure that payments are made only for properly authorized transactions
D)   To independently verify cash paymentsE) C) and D)
F) A) and C)

Question 8

On October 31,2015,the bank statement shows that your company has $12,956.73 in its checking account.You are aware of three outstanding checks for a total of $2,112.19.During October,2015,the bank rejected two deposited checks from customers totaling $654.19 because of insufficient funds and charged you $12.00 in service fees.You had not yet received notice about the bad checks,but you were aware of and have recorded the $12.00 of service fees.Prior to adjustment on October 31,2015,your Cash account would have a balance of:

Accepted Answer

A)   $14,402.73.
B)   $15,711.11.
C)   $11,498.73.
D)   $10,202.35.E) B) and C)
F) A) and B)

Question 9

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Accepted Answer

A)   interest earned.
B)   deposits in transit.
C)   service charge.
D)   a customer's check returned NSF.E) A) and C)
F) A) and B)

Question 10

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Accepted Answer

A)   Enron Act
B)   Federal Accounting Standards Board Act
C)   Sarbanes-Oxley Act
D)   Securities and Exchange ActE) A) and C)
F) A) and B)

Question 11

Each cash drawer is assigned to only one employee in a supermarket.This is an example of the internal control principle of:

Accepted Answer

A)   establishing responsibility.
B)   segregating duties.
C)   independently verifying.
D)   bonding employees.E) B) and D)
F) B) and C)

Question 12

Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

A check that you have written has cleared the bank when:

Accepted Answer

A)   funds have been withdrawn from your bank account to cover the check
B)   the bank notifies you that you have insufficient funds to cover the check (NSF) 
C)   the supplier to whom you gave the check records the payment received
D)   the supplier to whom you gave the check deposits it in his bank accountE) A) and B)
F) A) and C)

Question 14

In a bank reconciliation,an outstanding check is:

Accepted Answer

A)   deducted from the bank balance
B)   added to the book balance
C)   deducted from the book balance
D)   added to the bank balanceE) A) and B)
F) A) and D)

Question 15

A bank reconciliation item that a company's bank may not know about would be:

Accepted Answer

A)   Electronic fund transfers
B)   Deposits in transit
C)   NSF checks
D)   Service chargesE) B) and D)
F) A) and C)

Question 16

A weak system of internal ______ provides the ______ to commit fraud.

Accepted Answer

A)   controls; opportunity
B)   audits; rationalization
C)   financial statements; opportunity
D)   loan covenants; incentiveE) B) and C)
F) A) and D)

Question 17

Which of the following is not an internal control for checks received through the mail?

Accepted Answer

A)   The mail clerk sends the cash receipts list and the customers' remittance advices to the accounting department
B)   The mail clerk gives checks and money orders to the person who makes the bank deposit
C)   The accounting department verifies the bank deposit by comparing the cash receipts list with the deposit slip from the bank
D)   The accounting department counts the cash, prepares the deposit slip and deposits the cash in the bankE) B) and C)
F) A) and B)

Question 18

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

Accepted Answer

A)   loan covenant.
B)   credit rating.
C)   bond rating.
D)   call feature.E) None of the above
F) C) and D)

Question 19

The fraud triangle contains three elements that must exist for accounting fraud to occur.The elements are:

Accepted Answer

A)   fear, greed, and satisfaction.
B)   greed, larceny, and access.
C)   motive, opportunity, and means.
D)   incentive, opportunity, and rationalization.E) None of the above
F) A) and D)

Question 20

Acme,Inc.'s books show an ending cash balance of $10,000 before preparing the bank reconciliation.Given the bank reconciliation shows outstanding checks of $3,000,deposits in transit of $2,000,NSF check of $100,and interest earned on the bank account of $10,the company's up-to-date ending cash balance equals:

Accepted Answer

A)   $9,910
B)   $6,910
C)   $8,910
D)   $10,110E) A) and D)
F) A) and C)

Exam 5: Fraud, Internal Control, and Cash

Correct Answer
verified

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Correct Answer
verified

Correct Answer
verified

Which of the following is not an internal control for checks received through the mail?

Correct Answer
verified

A check that you have written has cleared the bank when:

Correct Answer
verified

Employee fraud is often grouped into three categories,including corruption,asset misappropriation,and embezzlement.

Correct Answer
verified

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Correct Answer
verified

In a bank reconciliation,an outstanding check is:

Correct Answer
verified

Correct Answer
verified

Each cash drawer is assigned to only one employee in a supermarket.This is an example of the internal control principle of:

Correct Answer
verified

When you identify outstanding checks in performing a bank reconciliation,you must:

Correct Answer
verified

Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

Correct Answer
verified

What is the primary goal of internal controls for cash payments?

Correct Answer
verified

The fraud triangle contains three elements that must exist for accounting fraud to occur.The elements are:

Correct Answer
verified

A weak system of internal provides the to commit fraud.

Correct Answer
verified

Correct Answer
verified

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Correct Answer
verified

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

Correct Answer
verified

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Correct Answer
verified

A bank reconciliation item that a company's bank may not know about would be:

Correct Answer
verified

Exam 5: Fraud, Internal Control, and Cash

Correct AnswerverifiedShow Answer

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not an internal control for checks received through the mail?

Correct AnswerverifiedShow Answer

A check that you have written has cleared the bank when:

Correct AnswerverifiedShow Answer

Employee fraud is often grouped into three categories,including corruption,asset misappropriation,and embezzlement.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Correct AnswerverifiedShow Answer

In a bank reconciliation,an outstanding check is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Each cash drawer is assigned to only one employee in a supermarket.This is an example of the internal control principle of:

Correct AnswerverifiedShow Answer

When you identify outstanding checks in performing a bank reconciliation,you must:

Correct AnswerverifiedShow Answer

Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

Correct AnswerverifiedShow Answer

What is the primary goal of internal controls for cash payments?

Correct AnswerverifiedShow Answer

The fraud triangle contains three elements that must exist for accounting fraud to occur.The elements are:

Correct AnswerverifiedShow Answer

A weak system of internal ______ provides the ______ to commit fraud.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Correct AnswerverifiedShow Answer

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

Correct AnswerverifiedShow Answer

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Correct AnswerverifiedShow Answer

A bank reconciliation item that a company's bank may not know about would be:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

A weak system of internal provides the to commit fraud.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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