Accounting Unit 6

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below. Multiple select question. Cash receipts are promptly deposited in a bank. Cash payments are made by check. Handling cash is separate from recordkeeping of cash. Excess cash should be left in the bank to maintain liquidity. Bills should be paid immediately.

Cash receipts are promptly deposited in a bank. Cash payments are made by check. Handling cash is separate from recordkeeping of cash.

The cash in a cash register equaled $100, but the record of cash receipts/sales equaled $102. Determine which of the following entries is correct to record cash sales and the shortage. Multiple choice question. Debit Cash $100; debit Cash Over and Short $2; and credit Sales $102. Debit Cash $102; credit Cash Over and Short $2; and credit Sales $100. Debit Cash $100; credit Cash Over and Short $2; and credit Sales $102. Debit Cash $102 and credit Sales $102.

Debit Cash $100; debit Cash Over and Short $2; and credit Sales $102.

Which of the following are principles of internal control? Multiple select question. Establish responsibilities. Divide responsibility for related transactions. Reduce vendor payables. Maintain adequate records. Increase revenues. Perform regular and independent reviews.

Establish responsibilities. Divide responsibility for related transactions. Maintain adequate records. Perform regular and independent reviews.

Identify the principles of internal control by selecting the correct answers below. Multiple select question. Maintain adequate records. Perform regular and independent reviews. Separate recordkeeping from custody of assets. Insure assets. Record assets at cost. Apply technological controls. Match revenues with expenses in the same accounting period. Establish responsibilities.

Maintain adequate records. Perform regular and independent reviews. Separate recordkeeping from custody of assets. Insure assets. Apply technological controls. Establish responsibilities.

Identify which of the items below are goals of good cash management. Multiple select question. Plan cash receipts to meet cash payments when due. Keep a maximum level of cash available to pay for emergencies that develop Keep a minimum level of cash necessary to operate. Pay all bills immediately when received.

Plan cash receipts to meet cash payments when due. Keep a minimum level of cash necessary to operate.

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.) Multiple select question. Technology has reduced the number of processing errors. Technology can be designed to require the use of password before access to the system is granted. Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft. Technology increases job creation and fewer job consolidations. Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry.

Technology has reduced the number of processing errors. Technology can be designed to require the use of password before access to the system is granted. Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft. Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry.

All of the following describe blockchain: Multiple select question. blockchain is continuously and simultaneously updated and verified blockchain makes it more difficult for the ledger to be modified without a detailed record of changes blockchain is a less secure type of accounting ledger blockchain cannot verify and facilitate Bitcoin transactions

blockchain is continuously and simultaneously updated and verified blockchain makes it more difficult for the ledger to be modified without a detailed record of changes

A good internal control to protect cash is to make cash payments using Multiple choice question. petty cash checks or cash checks cash

checks

Define what liquidity means by completing the following sentence. Liquidity refers to a company's ability to pay for its ____ liabilities.

current, short-term, or short term

Auditors focus more on testing the ______ of a company's blockchain processes and technology than on verifying the ______ of its output. records/changes accuracy/effectiveness effectiveness/risks effectiveness/accuracy

effectiveness/accuracy

Human (error/fraud) ____ is related to misjudgment or confusion. Human (error/fraud) ____ involves intent to defeat internal controls for personal gain.

error; fraud

Which of the following are correct regarding why management uses internal controls? Multiple select question. protect assets. reduce vendor payables. uphold company policies. increase revenues. ensure reliable accounting. promote efficient operations.

protect assets. uphold company policies. ensure reliable accounting. promote efficient operations.

The triple threat of fraud involves: Multiple select question. mistakes rationalization pressure opportunity error

rationalization pressure opportunity

Each of the following are types of technological impacts related to internal control: (Check all that apply.) Multiple select question. establish responsibilities separation of duties reduced processing errors new evidence of processing maintaining adequate records more extensive testing of records

separation of duties reduced processing errors new evidence of processing more extensive testing of records

What is the purpose of internal controls? as a basis of employee performance reviews to guarantee that loss is eliminated to reduce outstanding customer balances to protect assets and ensure reliable accounting

to protect assets and ensure reliable accounting