Accounting Quiz Chapter 6

Segregation and rotation of duties is most effective in

preventing collusion

Which one of the following statements best describes the term "outstanding check?"

A check written by the company but not yet presented to the bank for payment.

The accountant for Busch Corp. was preparing a bank reconciliation as of February 28, 2016. The following items were identified: Busch's book balance $15,000 Outstanding checks 2,500 Service charge 15 Customer's NSF check returned by the bank 100 What amount will Busch report as its adjusted cash balance at February 28, 2016?

14,885

Which one of the following items is not included in cash?

A bank certificate of deposit for one year

Which one of the following situations reflects a weak internal control system?

A single employee is responsible for collecting and recording of cash.

Which of the following represents the subset of board of directors that acts as a direct contact between stockholders and the independent accounting firm?

Audit Committee

Which of the following items would not be a reconciling item?

Canceled checks

Which one of the following could never be considered to be cash equivalents?

Common stock issued by a corporation

Which one of the following is a sound internal control procedure for cash disbursements?

Comparing purchase requisitions, purchase orders, receiving reports, and invoices.

Deposits made by a company but not yet reflected in a bank statement are called

Deposits in transit

Which one of the following items would be added to the balance per bank statement in a bank reconciliation?

Deposits in transit

Which of the following is not a requirement of Sarbanes-Oxley?

Must establish an internal control system that guarantees financial accuracy.

Checks returned by a bank because customers did not have sufficient funds in their account are called

NSF checks

Which one of the following procedures is not part of preparing a bank reconciliation of a checking account?

Preparing adjustments to reverse the transactions recorded for checks that are still outstanding

Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?

Proper authorizations

Which one of the following is considered one of the six most important categories of internal control procedures?

Proper authorizations

Effective cash management and control includes all of the following except

Purchase of stocks and bonds

Which of the following is not a generally recognized internal control procedure?

Reducing the cost of hiring seasonal employees

Having only one person authorized to both prepare and sign checks is a violation of what internal control procedure?

Segregation of duties

Which one of the following items would be subtracted from the balance per books in a bank reconciliation?

Service charges

An internal control system consists of all the following policies and procedures except:

Those necessary to ensure that cash on hand and on deposit in checking accounts is beyond the minimal amount for ongoing operations.

Which one of the following is not considered to be a cash equivalent?

U.S. Treasury bills with an original maturity of six months

How would deposits in transit be dealt with in a bank reconciliation?

added to bank statement balance

How would interest earned on a checking account be dealt with in a bank reconciliation?

added to company's book balance

A check drawn by a company for $360 in payment of a liability was recorded in the journal as $630. This item would be included on the bank reconciliation as a(n)

addition to the balance per the company's records

How would bank service charges be dealt with in a bank reconciliation?

deducted from company's book balance

The group within an organization that is responsible for monitoring and evaluating the internal control system is called:

the internal audit staff.