ACCT 2010 Chapter 4

False

If a company has an internal audit function, it does not need to have external auditors.

False

If a company hires honest employees and its top management acts with integrity, no internal control procedures will be necessary.

True

If the bank credits a customer's account, then that customer's cash balance increases.

True

Internal control over financial reporting is concerned with ensuring the reliability of the financial statements.

False

No special internal control procedures are necessary with a petty cash fund because the amount is so small.

True

Petty Cash is NOT considered to be a cash equivalent.

False

The accountant must make adjusting journal entries for all items in the bank section of the bank reconciliation.

True

The accountant must make adjusting journal entries for all items in the book section of the bank reconciliation.

False

The key to being classified as a cash equivalent is that the amount must be available to pay debts within a year's time or less.

False

When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit.