ACC210 Chapter 4

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

For each scenario being described, indicate the most likely control activity being described: The company physically counts its inventory at the end of each year and compares the physical count to its accounting records.

Reconciliations

Example of detective control activity

Reconciliations, Audits, Performance reviews

Formal policies to evaluate internal and external threats to achieving company objectives.

Risk Assessment

For each scenario being described, indicate the most likely control activity being described: The company's inventory buyer places orders but a different person pays for the orders.

Separation of Duties

Which financial statement summarizes a company's cash receipts and cash disbursements for a period of time?

Statement of Cash Flows

On its bank reconciliation for the month of December, Pack Corp. noted it had a NSF check from a customer for $100. Question: In Pack Corp.'s month-end journal entry to record this reconciling item, which of the following is (are) true?

The "Accounts Receivable" account should be debited $100.

On its bank reconciliation for the month of December, Pack Corp. noted that it had made an accounting error. It recorded a cash purchase of equipment as $540 instead of the actual amount of $500. Question: In Pack Corp.'s month-end journal entry to record this reconciling item, which of the following is true?

The "Equipment" account should be credited for $40.

Below is a list of various procedures a local retailer has regarding its cash receipts. Which control has the greatest chance of leading to errors or fraud?

The company discourages its employees from accepting credit or debit cards from customers.

Below is a list of various procedures a local retailer has regarding its cash disbursements. Which procedure has the greatest chance of leading to errors or fraud?

The company uses its petty cash only for large cash disbursements.

One of the major provisions of the Sarbanes-Oxley Act (SOX) requires a company's corporate executives to personally certify the company's financial statements and its disclosures.

True

One of the major provisions of the Sarbanes-Oxley Act (SOX) requires a company's management to document and assess the effectiveness of its internal control procedures.

True

The Sarbanes-Oxley Act applies to all companies required to file their financial statements with the SEC.

True

An electronic fund transfer (EFT) occurs when:

a bank automatically transfers a company's cash to another company's bank account.

For each of the following transactions, indicate whether the cash flow is an operating, investing, or financing activity for purposes of preparing a statement of cash flows. In addition, be specific with respect to whether the activity leads to an inflow of cash or an outflow of cash from the company's perspective. a.) A company sells land previously used in its business for cash. b.) A company pays back the principal on a bank loan evidenced by a promissory note. c.) A company makes a cash purchase of land to be used in its business. d.) A company pays for three-month's worth of rent in advance. e.) A company collects cash from a sale of inventory. f.) A company borrows money from a bank by signing a note payable.

a) Investing activity - Inflow of cash b) Financing activity - outflow of cash c) Investing activity - outflow of cash d) Operating activity - outflow of cash e) Operating activity - Inflow of cash f) Financing activity - Inflow of cash

Companies should have internal control procedures in place to:

safeguard the company's assets. AND improve the accuracy and reliability of the company's accounting information.

Which company asset is most often involved with fraudulent activities?

Cash

Indicate which of the following statements is TRUE with respect to internal controls.

Collusion refers to the act of two or more individual circumventing internal control procedures. Historically, employee tips have been the most common means of detecting employee fraud.

Match each of the following descriptions with the component of internal control being described. Procedures for maintaining separation of duties.

Control Activities

Overall attitude of the company with respect to internal controls.

Control Environment

For financial reporting purposing, which of the following items should be included in the "Cash and Cash Equivalents" total on the balance sheet?

Currency and coins AND Checking account balances AND Short-term investments with a maturity date less than three months from the date of purchase. AND Savings account balances AND Checks received from customers but not yet deposited as of the balance sheet date

The Sarbanes-Oxley Act requires that companies must:

Document internal controls and assess their effectiveness each year

For each scenario being described, indicate the most likely control activity being described: A customers credit card information is encrypted so that only authorized personnel can access it.

E-commerce Control

For each scenario being described, indicate the most likely control activity being described: When an employee is first hired, he or she is given clear instructions regarding the company's internal control procedures as well as how to report any irregular activities the employee discovers.

Employee Management

One of the major provisions of the Sarbanes-Oxley Act (SOX) requires a company's creditors to test and examine a company's internal controls in detail.

False

The ethical tone set by a company's top management rarely has any effect on a company's internal control environment.

False

Transfer of data from lower managers to top executives for accurate financial reporting,

Information and communication

Routine activities that are meant to continually observe internal control activities.

Monitoring

Which element of the fraud triangle does a company have the greatest influence and ability to eliminate?

Opportunity

For each scenario being described, indicate the most likely control activity being described: Warehouse employees are required to have their personal items (ex. handbags and bookbags) scanned by a machine before they can leave the warehouse.

Physical Controls

Which type of control activities are designed to detect errors or fraud which have already occurred?

detective controls


Set pelajaran terkait

7 CNS Structures (caudal to rostral) (SMPCMDC)

View Set

EASA Part 66 : Material Question10

View Set

Chapter 29: Developing the Role of Manager Yoder-Wise: Leading and Managing in Nursing, 7th Edition, Chapter 30: The Strategic Planning Process, Chapter 28: Developing the Role of Leader Yoder-Wise: Leading and Managing in Nursing, 7th Edition, Chapt...

View Set

Nurs 2470 evolve exam 1 test prep

View Set

Cap. 5: (5) Arquitectura morisca

View Set

AP Human Geography: Unit 7 Agriculture

View Set