Question 1

Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the bank's records.

Accepted Answer

A) True 
 B)False

Question 2

A check for $456 was erroneously charged by the bank as $654.In order for the bank reconciliation to balance, you must subtract $198 from the bank statement balance.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following elements of internal control focuses on locating weaknesses and improving control effectiveness?

Accepted Answer

A)   Control environment
B)   Risk assessment
C)   Control procedures
D)   MonitoringE) A) and C)
F) A) and D)

Question 4

Separating the custody of assets from accounting for assets is a part of which element of internal control?

Accepted Answer

A)   Information and communication
B)   Monitoring
C)   Control environment
D)   Control proceduresE) C) and D)
F) A) and D)

Question 5

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

Accepted Answer

A) True 
 B)False

Question 6

The Sarbanes-Oxley Act of 2002 applies to all publicly held companies.

Accepted Answer

A) True 
 B)False

Question 7

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

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

A voucher system is an example of an internal control procedure over cash receipts.

Accepted Answer

A) True 
 B)False

Question 10

From the following particulars of Purple New Co., prepare the bank reconciliation statement as on May 31, 2016.
(a)The bank statement balance is $4,000.
(b)The cash account balance is $3,950.
(c)Outstanding checks amounted to $960.
(d)Deposits in transit are $900.
(e)The bank service charge is $75.
(f)Interest added to the checking account by the bank is $150.
(g)A check drawn for $65 was incorrectly charged by the bank as $150.

Accepted Answer

None...

Question 11

The bank statement for Marley Co.indicates a cash balance of $10,000.50 on June 30, 2016.The cash account in Marley's records had a balance of $4,677.10.Illustrate the adjustments to the accounts and their effect on Marley's financial statements, based on the following reconciling items:
(a)Cash sales of $342 had been erroneously recorded in the cash receipts journal as $324.
(b)Deposits in transit not recorded by bank, $700.
(c)Bank debit memorandum for service charges, $30.
(d)Bank credit memorandum for note collected by bank, $2,050, including $50 interest.
(e)Bank debit memorandum for $207.40 NSF (not sufficient funds) check from Alice Martin, a customer.
(f)Checks outstanding, $4,192.80.
?
? $\text { Assets = }  \quad \text { Liabilities + Stockholders' Equity } $
$$\begin{array} { | l | l | l | l | l | l | l | } 
\hline & \text { Cash } & \begin{array} { c } 
\text { Accounts } \
\text { Receivable }
\end{array} & \begin{array} { c } 
\text { Notes } \
\text { Receivable }
\end{array} & \begin{array} { c } 
\text { Accounts } \
\text { Payable }
\end{array} & \begin{array} { c } 
\text { Capital } \
\text { Stock }
\end{array} & \begin{array} { c } 
\text { Retained } \
\text { Earnings }
\end{array} \
\hline & & & & & & \
\hline & & & & & & \
\hline & & & & & & \
\hline & & & & & & \
\hline & & & & & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l| l| l | l | l ...

Question 12

_____, which constitute one of the most important elements of internal control, include separating responsibilities for related operations.

Accepted Answer

A)   Control procedures
B)   Risk assessment activities
C)   Risk monitoring procedures
D)   Information and communication activitiesE) A) and D)
F) B) and D)

Question 13

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) A) and B)
F) B) and D)

Question 14

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Accepted Answer

A)   Risk assessment
B)   Control procedures
C)   Monitoring
D)   Information and communicationE) All of the above
F) B) and D)

Question 15

Minimum cash balance maintained in the bank account is called line of credit.

Accepted Answer

A) True 
 B)False

Question 16

A bank reconciliation should be prepared periodically because:

Accepted Answer

A)   the depositor's records and the bank's records are in agreement.
B)   the bank has not recorded all of its transactions.
C)   any differences between the depositor's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected.
D)   the bank must make sure that its records are correct.E) A) and B)
F) A) and C)

Question 17

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 18

All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

Accepted Answer

A) True 
 B)False

Question 19

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor.This item would be included on the bank reconciliation as a(n) :

Accepted Answer

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

Question 20

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 D)
F) C) and D)

Exam 5: Internal Control and Cash

Minimum cash balance maintained in the bank account is called line of credit.

Correct Answer
verified

Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the bank's records.

Correct Answer
verified

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor.This item would be included on the bank reconciliation as a(n) :

Correct Answer
verified

Which of the following elements of internal control focuses on locating weaknesses and improving control effectiveness?

Correct Answer
verified

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 Answer
verified

A bank reconciliation should be prepared periodically because:

Correct Answer
verified

Correct Answer
verified

\[\begin{array} { | l | l| l| l | l | l ...
View Answer

A check for $456 was erroneously charged by the bank as $654.In order for the bank reconciliation to balance, you must subtract $198 from the bank statement balance.

Correct Answer
verified

_____, which constitute one of the most important elements of internal control, include separating responsibilities for related operations.

Correct Answer
verified

A voucher system is an example of an internal control procedure over cash receipts.

Correct Answer
verified

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 Answer
verified

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Correct Answer
verified

Separating the custody of assets from accounting for assets is a part of which element of internal control?

Correct Answer
verified

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Correct Answer
verified

The Sarbanes-Oxley Act of 2002 applies to all publicly held companies.

Correct Answer
verified

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

Correct Answer
verified

Correct Answer
verified
None...
View Answer

All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Internal Control and Cash

Minimum cash balance maintained in the bank account is called line of credit.

Correct AnswerverifiedShow Answer

Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the bank's records.

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor.This item would be included on the bank reconciliation as a(n) :

Correct AnswerverifiedShow Answer

Which of the following elements of internal control focuses on locating weaknesses and improving control effectiveness?

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

A bank reconciliation should be prepared periodically because:

Correct AnswerverifiedShow Answer

Correct Answerverified \[\begin{array} { | l | l| l| l | l | l ...View AnswerShow Answer

A check for $456 was erroneously charged by the bank as $654.In order for the bank reconciliation to balance, you must subtract $198 from the bank statement balance.

Correct AnswerverifiedShow Answer

_____, which constitute one of the most important elements of internal control, include separating responsibilities for related operations.

Correct AnswerverifiedShow Answer

A voucher system is an example of an internal control procedure over cash receipts.

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

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Correct AnswerverifiedShow Answer

Separating the custody of assets from accounting for assets is a part of which element of internal control?

Correct AnswerverifiedShow Answer

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 applies to all publicly held companies.

Correct AnswerverifiedShow Answer

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNone...View AnswerShow Answer

All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

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

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

\[\begin{array} { | l | l| l| l | l | l ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
None...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified