Question 1

One of the benefits of using cheques is the payment record it provides.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is prepared by the purchasing department and sent to a vendor that sells the needed merchandise?

Accepted Answer

A)   an invoice
B)   purchase order
C)   disbursement packet
D)   purchase requestE) A) and B)
F) None of the above

Question 3

Training people thoroughly is an element of which characteristic of internal control?

Accepted Answer

A)   separation of duties
B)   competent, reliable, and ethical personnel
C)   assignment of responsibilities
D)   proper authorizationE) B) and D)
F) All of the above

Question 4

Cash is the item that is budgeted most often.

Accepted Answer

A) True 
 B)False

Question 5

In a bank reconciliation, interest revenue earned on a chequing account would be deducted from the book balance.

Accepted Answer

A) True 
 B)False

Question 6

The fraud triangle includes: motive, opportunity and rationalization.

Accepted Answer

A) True 
 B)False

Question 7

Assuming estimated cash receipts of $150,500, estimated cash payments of $135,300, and a expected ending cash balance of $32,700, then:

Accepted Answer

A)   the beginning Cash balance is $15,200
B)   the beginning Cash balance is $17,500
C)   the beginning Cash balance is $47,900
D)   the beginning Cash balance is $50,200E) A) and B)
F) None of the above

Question 8

If a bank reconciliation included $600 of outstanding cheques, the journal entry to record this reconciling item would include:

Accepted Answer

A)   a credit to Cash of $600
B)   a debit to Cash of $600
C)   a credit to Accounts Payable of $600
D)   no entry is requiredE) C) and D)
F) A) and B)

Question 9

If the balance on the bank statement does not equal the balance in the company's Cash account, then you can conclude that:

Accepted Answer

A)   the company accountant made an error in the accounting process
B)   the bank made an error
C)   both the company accountant and the bank made errors
D)   there are some reconciling items that, when identified, will explain the differences between the balancesE) All of the above
F) A) and C)

Question 10

To maintain effective internal control, the majority of all payments in an organization should be made using cash.

Accepted Answer

A) True 
 B)False

Question 11

When preparing a bank reconciliation, which of the following items would be subtracted from the bank balance on the bank statement?

Accepted Answer

A)   deposits in transit
B)   bank service charges
C)   EFT cash payments
D)   outstanding chequesE) None of the above
F) A) and C)

Question 12

Bank charges are deducted from the ending bank balance in the general ledger when preparing the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 13

All of the following steps should be performed by the accounting department prior to the approval of a disbursement except:

Accepted Answer

A)   the invoice should be compared with a copy of the purchase order and purchase request
B)   the mathematical accuracy of the invoice should be proved
C)   the invoice should be compared with the receiving report
D)   the cheque should be processed and signed with an authorized signatureE) A) and D)
F) B) and C)

Question 14

All of the following are purposes of internal control except:

Accepted Answer

A)   to safeguard assets
B)   to ensure accurate and reliable accounting records
C)   to encourage adherence to company policies
D)   to promote operational inefficiencyE) B) and D)
F) A) and B)

Question 15

Assuming a beginning cash balance of $2,000, estimated cash receipts of $105,900, and a expected ending cash balance of $2,500, then:

Accepted Answer

A)   the estimated cash payments are $105,400
B)   the estimated cash payments are $106,400
C)   the estimated cash payments are $107,900
D)   the estimated cash payments are $108,400E) A) and C)
F) A) and B)

Question 16

Identify and briefly describe the process of preparing a cash budget and how this information can be used for planning purposes.

Accepted Answer

1. Start with the entity's cash balance ...

Question 17

For effective internal control in an organization, the treasurer should have custody of the cash, and the controller should account for the cash.

Accepted Answer

A) True 
 B)False

Question 18

To control payments for purchases of invoices, the following would not be presented as supporting documents for approval:

Accepted Answer

A)   purchase order
B)   invoice
C)   receiving slip
D)   cancelled chequeE) None of the above
F) A) and D)

Question 19

On the balance sheet numerous bank accounts and time deposits can be combined and identified on one line as cash and cash equivalents.

Accepted Answer

A) True 
 B)False

Question 20

If a bank statement included an EFT payment of $670 for insurance, the journal entry to record this reconciling item would include a:

Accepted Answer

A)   debit to Cash for $670
B)   debit to Accounts Payable for $670
C)   credit to Cash for $670
D)   credit to Prepaid Insurance for $670E) None of the above
F) C) and D)

Exam 4: Internal Control and Cash

Training people thoroughly is an element of which characteristic of internal control?

Correct AnswerverifiedShow Answer

Bank charges are deducted from the ending bank balance in the general ledger when preparing the bank reconciliation.

Correct AnswerverifiedShow Answer

Assuming a beginning cash balance of $2,000, estimated cash receipts of $105,900, and a expected ending cash balance of $2,500, then:

Correct AnswerverifiedShow Answer

In a bank reconciliation, interest revenue earned on a chequing account would be deducted from the book balance.

Correct AnswerverifiedShow Answer

Identify and briefly describe the process of preparing a cash budget and how this information can be used for planning purposes.

Correct Answerverified1. Start with the entity's cash balance ...View AnswerShow Answer

To control payments for purchases of invoices, the following would not be presented as supporting documents for approval:

Correct AnswerverifiedShow Answer

For effective internal control in an organization, the treasurer should have custody of the cash, and the controller should account for the cash.

Correct AnswerverifiedShow Answer

If a bank reconciliation included $600 of outstanding cheques, the journal entry to record this reconciling item would include:

Correct AnswerverifiedShow Answer

One of the benefits of using cheques is the payment record it provides.

Correct AnswerverifiedShow Answer

On the balance sheet numerous bank accounts and time deposits can be combined and identified on one line as cash and cash equivalents.

Correct AnswerverifiedShow Answer

If a bank statement included an EFT payment of $670 for insurance, the journal entry to record this reconciling item would include a:

Correct AnswerverifiedShow Answer

All of the following are purposes of internal control except:

Correct AnswerverifiedShow Answer

All of the following steps should be performed by the accounting department prior to the approval of a disbursement except:

Correct AnswerverifiedShow Answer

The fraud triangle includes: motive, opportunity and rationalization.

Correct AnswerverifiedShow Answer

Assuming estimated cash receipts of $150,500, estimated cash payments of $135,300, and a expected ending cash balance of $32,700, then:

Correct AnswerverifiedShow Answer

Cash is the item that is budgeted most often.

Correct AnswerverifiedShow Answer

If the balance on the bank statement does not equal the balance in the company's Cash account, then you can conclude that:

Correct AnswerverifiedShow Answer

Which of the following is prepared by the purchasing department and sent to a vendor that sells the needed merchandise?

Correct AnswerverifiedShow Answer

To maintain effective internal control, the majority of all payments in an organization should be made using cash.

Correct AnswerverifiedShow Answer

When preparing a bank reconciliation, which of the following items would be subtracted from the bank balance on the bank statement?

Correct AnswerverifiedShow Answer

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1. Start with the entity's cash balance ...
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