Question 1

A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

Accepted Answer

A)   credit Cash Over and Short for $3.
B)   credit Miscellaneous Revenue for $3.
C)   debit Cash Over and Short for $3.
D)   debit Miscellaneous Expense for $3.E) A) and D)
F) All of the above

Question 2

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Accepted Answer

A) True 
 B)False

Question 3

Physical controls to safeguard assets do not include

Accepted Answer

A)   cashier department supervisors.
B)   vaults.
C)   employee identification badges.
D)   security guards.E) None of the above
F) B) and D)

Question 4

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

Accepted Answer

A) True 
 B)False

Question 5

Firms use physical controls primarily to safeguard their assets.

Accepted Answer

A) True 
 B)False

Question 6

Jolene is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

Accepted Answer

A)   documentation procedures are violated.
B)   independent internal verification is violated.
C)   segregation of duties is violated.
D)   establishment of responsibility is violated.E) A) and C)
F) C) and D)

Question 7

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

Accepted Answer

A) True 
 B)False

Question 8

In the month of May, Kijak Company Inc. wrote checks in the amount of $84,000. In June, checks in the amount of $114,000 were written. In May, $75,000 of these checks were presented to the bank for payment, and $99,000 in June. What is the amount of outstanding checks at the end of May?

Accepted Answer

A)   $9,000
B)   $15,000
C)   $24,000
D)   $30,000E) B) and C)
F) A) and D)

Question 9

The custodian of a company asset should

Accepted Answer

A)   have access to the accounting records for that asset.
B)   be someone outside the company.
C)   not have access to the accounting records for that asset.
D)   be an accountant.E) None of the above
F) A) and B)

Question 10

Cash is defined by IFRS as

Accepted Answer

A)   cash on hand.
B)   demand deposits.
C)   cash on hand and demand deposits.
D)   cash on hand, demand deposits, and highly liquid investments.IFRSE) All of the above
F) C) and D)

Question 11

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

Accepted Answer

A)   establishment of responsibility is violated.
B)   independent internal verification is violated.
C)   documentation procedures is violated.
D)   segregation of duties is violated.E) B) and C)
F) A) and D)

Question 12

The principles of internal control activities are used

Accepted Answer

A)   in the U.S. but not globally.
B)   internationally but not in the U.S.
C)   in the U.S. and Canada but not globally.
D)   globally.IFRSE) A) and C)
F) A) and B)

Question 13

Replenishing the petty cash fund requires

Accepted Answer

A)   a debit to Cash.
B)   a credit to Petty Cash.
C)   a debit to various expense accounts.
D)   no accounting entry.E) A) and D)
F) All of the above

Question 14

Fitzgerald Company wrote checks totaling $34,160 during October and $37,300 during November. $32,480 of these checks cleared the bank in October, and $36,440 cleared the bank in November. What was the amount of outstanding checks on November 30?

Accepted Answer

A)   $2,860
B)   $1,680
C)   $2,540
D)   $3,140E) B) and D)
F) A) and D)

Question 15

Cash equivalents are defined by IFRS as

Accepted Answer

A)   cash on hand.
B)   demand deposits.
C)   cash on hand and demand deposits.
D)   short-term, highly liquid investments that are readily convertible into known amounts of cash.IFRSE) A) and C)
F) None of the above

Question 16

The principles of internal control include all of the following except

Accepted Answer

A)   establishment of responsibility.
B)   combining of duties.
C)   physical, mechanical, and electronic controls.
D)   independent internal verification.E) B) and D)
F) B) and C)

Question 17

The most important element of the fraud triangle is

Accepted Answer

A)   financial pressure.
B)   incompatible duties.
C)   opportunity.
D)   rationalization.E) None of the above
F) All of the above

Question 18

In preparing a bank reconciliation, outstanding checks are

Accepted Answer

A)   added to the balance per bank.
B)   deducted from the balance per books.
C)   added to the balance per books.
D)   deducted from the balance per bank.E) A) and B)
F) B) and C)

Question 19

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

Accepted Answer

A) True 
 B)False

Question 20

An adjusting entry is not required for

Accepted Answer

A)   outstanding checks.
B)   collection of a note by the bank.
C)   NSF checks.
D)   bank service charges.E) None of the above
F) All of the above

Exam 7: Fraud, Internal Control, and Cash

If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company's record of its checking account balance.

Correct AnswerverifiedShow Answer

A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

Correct AnswerverifiedShow Answer

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

Correct AnswerverifiedShow Answer

The most important element of the fraud triangle is

Correct AnswerverifiedShow Answer

In the month of May, Kijak Company Inc. wrote checks in the amount of $84,000. In June, checks in the amount of $114,000 were written. In May, $75,000 of these checks were presented to the bank for payment, and $99,000 in June. What is the amount of outstanding checks at the end of May?

Correct AnswerverifiedShow Answer

Cash equivalents are defined by IFRS as

Correct AnswerverifiedShow Answer

Replenishing the petty cash fund requires

Correct AnswerverifiedShow Answer

Firms use physical controls primarily to safeguard their assets.

Correct AnswerverifiedShow Answer

Physical controls to safeguard assets do not include

Correct AnswerverifiedShow Answer

The custodian of a company asset should

Correct AnswerverifiedShow Answer

Cash is defined by IFRS as

Correct AnswerverifiedShow Answer

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

Correct AnswerverifiedShow Answer

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Correct AnswerverifiedShow Answer

An adjusting entry is not required for

Correct AnswerverifiedShow Answer

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

Correct AnswerverifiedShow Answer

The principles of internal control activities are used

Correct AnswerverifiedShow Answer

The principles of internal control include all of the following except

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation, outstanding checks are

Correct AnswerverifiedShow Answer

Jolene is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

Correct AnswerverifiedShow Answer

Fitzgerald Company wrote checks totaling $34,160 during October and $37,300 during November. $32,480 of these checks cleared the bank in October, and $36,440 cleared the bank in November. What was the amount of outstanding checks on November 30?

Correct AnswerverifiedShow Answer

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