Financial Accounting - Chapter 4 - Self Study Questions

Which of the following adjusts the bank's balance of cash in a bank reconciliation?

Checks outstanding.

Which of the following is considered cash for financial reporting purposes?

Checks received from customers.

What is the concept behind separation of duties in establishing internal control?

Employee fraud is less likely to occur when access to assets and access to accounting records are separated.

Fraudulent reporting by management could include:

Fictitious revenues from a fake customer, Improper asset valuation, & Mismatching revenues and expenses.

Which of the following could cause a company to have a high ratio of cash to noncash assets?

Highly volatile operations, Low dividend payments, & Significant foreign operations

The Sarbanes-Oxley Act (SOX) mandates which of the following?

Increased regulations related to auditor-client relations, Increased regulations related to internal control, & Increased regulations related to corporate executive accountability.

Which of the following adjusts the company's balance of cash in a bank reconciliation?

Interest earned

Operating cash flows would include which of the following?

Payment for employee salaries

The purpose of a petty cash fund is to:

Provide cash on hand for minor expenditures.

Which of the following generally would not be considered good internal control of cash receipts?

Requiring the employee receiving the cash from the customer to also deposit the cash into the company's bank account.