Accounting Chapter 4 Quick Check

A journal entry would need to be made for which of the following adjustments on a bank reconciliation? a. bank service charges b. outstanding checks c. deposits in transit d. bank error to be corrected by the bank

a. bank service charges

Having a corporate code of ethics that prohibits employees from accepting gifts from customers or vendors is an example of which component of internal control? a. control environment b. risk assessment c. control procedures d. information system

a. control environment

The bookkeeper for Maxwell Co. wrote a check for $300 to pay for furnace maintenance. The check was incorrectly recorded in the general journal as $30. The entry to correct this error would be: a. increase repairs and Maintenance expense by $270 b. increase repairs and Maintenance expense by $300 c. increase cash by $270 d. decrease cash by $300

a. increase repairs and Maintenance expense by $270

Which law or regulation requires that public companies must maintain strong internal control systems? a. Dodd-Frank act b. Sarbanes-Oxley act c. Securities and Exchange act of 1933 d. Treadway Commission

b. Sarbanes-Oxley act

Fictitious accounting entries are recorded that cause revenue to be overstated by $5m for the year; the accounting manager was trying to make the company's income look better on the company's upcoming loan application. This type of fraud is: a. asset misappropriation b. fraudulent financial reporting c. GAAP disordering d. IFRS misalignment

b. fraudulent financial reporting

Each of the following documents is a control for a bank account except: a. signature card b. geographic location of ATMs c. bank statement d. bank reconciliation

b. geographic location of ATMs

Which of the following items is not true about fraud? a. It can cause injury or damage to another party. b. It is an intentional misrepresentation of facts. c. Its damages must exceed a threshold of $150k. d. It is designed to persuade another party to act in a way that causes injury or damage to that party.

c. Its damages must exceed a threshold of $150k.

A weak internal control system is which element in the fraud triangle? a. motive b. attitude c. opportunity d. rationalization

c. opportunity

As part of a strong internal control system, which of the following accounting duties needs to be separated from cash handling? a. record keeping b. filing c. transaction approval d. Both a and c need to be separated from cash handling.

d. Both a and c need to be separated from cash handling.

Why does cash require some specific internal controls? a. Most transactions ultimately affect cash. b. Cash is relatively easy to steal. c. Cash is easy to convert to other forms of wealth. d. all of the above

d. all of the above

All of the following items are included on the balance sheet as cash and cash equivalents except: a. certificates of deposit b. time deposits c. 4-week U.S. Treasury bills d. all of the above ARE included

d. all of the above ARE included

Each of the following represents an internal control procedure except for: a. separation of duties b. limited access to both assets and records c. compliance monitoring d. clear lines of authority and communication

d. clear lines of authority and communication