Question 1

At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger.Which of the following is the best explanation of this type of internal control principle over cash receipts?

Accepted Answer

A)  Physical controls.
B)  Documentation procedures.
C)  Segregation of duties.
D)  Mechanical controls.

Question 2

Which of the following would not be included in the definition of cash?

Accepted Answer

A)  Money on deposit in a bank.
B)  Coins.
C)  NSF checks.
D)  Petty cash.

Question 3

Control over cash disbursements is improved if major expenditures are paid by check.

Accepted Answer

A) True 
 B)False

Question 4

The reconciliation of the cash register tape with the cash in the register is an example of

Accepted Answer

A)  other internal controls.
B)  independent internal verification.
C)  establishment of responsibility.
D)  segregation of duties.

Question 5

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

Accepted Answer

A)  An accounting policies manual.
B)  Tracing any debit memorandums from the bank to the company's records.
C)  The use of prenumbered checks.
D)  A review of the cash budget.

Question 6

Bonding means insuring a company against theft by employees.

Accepted Answer

A) True 
 B)False

Question 7

In budgeting cash, cash disbursements include payments to employees and suppliers as well as for depreciation.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would not be reported on the balance sheet as a cash equivalent?

Accepted Answer

A)  Money market fund.
B)  Commercial paper.
C)  Treasury bill.
D)  Restricted cash.

Question 9

Which one of the following sections would not appear on a cash budget?

Accepted Answer

A)  Cash receipts.
B)  Financing.
C)  Investing.
D)  Cash disbursements.

Question 10

A check written by the company for $167 is incorrectly recorded by a company as $176.On the bank reconciliation, the $9 error should be

Accepted Answer

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

Question 11

A debit memorandum would not be issued by the bank for

Accepted Answer

A)  a bank service charge.
B)  the issuance of traveler's checks.
C)  the wiring of funds.
D)  the collection of notes receivable.

Question 12

Joe is a warehouse custodian and 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.

Question 13

Physical controls to safeguard assets do not include

Accepted Answer

A)  cashier department supervisors.
B)  vaults.
C)  safety deposit boxes.
D)  locked warehouses.

Question 14

Bonding involves all of the following except

Accepted Answer

A)  The company obtains insurance protection against misappropriation of assets by a dishonest employee.
B)  The insurance company screens employees before they are added to the policy.
C)  The company informs employees that the insurance company will vigorously prosecute all offenders.
D)  Employees do not commit inappropriate acts because of the threat of prosecution and their loyalty to the employer.

Question 15

The separation of duties feature of internal control can be negated when several employees are involved in a scheme.

Accepted Answer

A) True 
 B)False

Question 16

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Accepted Answer

A)  a fraud committee.
B)  collusion.
C)  a division of duties.
D)  bonding of employees.

Question 17

Related purchasing activities include

Accepted Answer

A)  ordering, receiving, paying.
B)  ordering, selling, paying.
C)  ordering, shipping, billing.
D)  selling, shipping, paying.

Question 18

For which of the following errors would the appropriate amount be subtracted from the balance per books on a bank reconciliation?

Accepted Answer

A)  Check written for $63, but recorded by the company as $36.
B)  Deposit of $600 recorded by the bank as $60.
C)  A returned $300 check recorded by the bank as $30.
D)  Check written for $57, but recorded by the company as $75.

Question 19

Which of the following is not an internal control procedure for cash?

Accepted Answer

A)  Payments should be made with cash.
B)  There should be limited access to cash.
C)  The amount of cash on hand should be kept to a minimum.
D)  Cash should be deposited daily.

Question 20

Which of the following is not one of the main factors that contribute to fraudulent activity?

Accepted Answer

A)  Opportunity.
B)  Incompatible duties.
C)  Financial pressure.
D)  Rationalization.

Exam 7: Fraud, Internal Control, and Cash

Physical controls to safeguard assets do not include

Correct AnswerverifiedShow Answer

Bonding involves all of the following except

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Which of the following would not be reported on the balance sheet as a cash equivalent?

Correct AnswerverifiedShow Answer

Related purchasing activities include

Correct AnswerverifiedShow Answer

Which of the following would not be included in the definition of cash?

Correct AnswerverifiedShow Answer

The separation of duties feature of internal control can be negated when several employees are involved in a scheme.

Correct AnswerverifiedShow Answer

The reconciliation of the cash register tape with the cash in the register is an example of

Correct AnswerverifiedShow Answer

Which of the following is not one of the main factors that contribute to fraudulent activity?

Correct AnswerverifiedShow Answer

In budgeting cash, cash disbursements include payments to employees and suppliers as well as for depreciation.

Correct AnswerverifiedShow Answer

Which of the following is not an internal control procedure for cash?

Correct AnswerverifiedShow Answer

For which of the following errors would the appropriate amount be subtracted from the balance per books on a bank reconciliation?

Correct AnswerverifiedShow Answer

Bonding means insuring a company against theft by employees.

Correct AnswerverifiedShow Answer

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

Correct AnswerverifiedShow Answer

A debit memorandum would not be issued by the bank for

Correct AnswerverifiedShow Answer

A check written by the company for $167 is incorrectly recorded by a company as $176.On the bank reconciliation, the $9 error should be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following sections would not appear on a cash budget?

Correct AnswerverifiedShow Answer

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Correct AnswerverifiedShow Answer

At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger.Which of the following is the best explanation of this type of internal control principle over cash receipts?

Correct AnswerverifiedShow Answer

Control over cash disbursements is improved if major expenditures are paid by check.

Correct AnswerverifiedShow Answer

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