CH4 accounting quiz

If a bookkeeper mistakenly recorded a $73 deposit as $37​, the error would be shown on the bank reconciliation as a A. $36 addition to the book balance. B. $37 deduction from the book balance. C. $36 deduction from the book balance. D. $37 addition to the book balance.

A. $36 addition to the book balance. Worked Solution Amount to correct​ error: ​($73 ​- $37​) ​= $36

The ending bank statement balance at November 30 is $7,550. The bank statement shows a service charge of $75​, electronic funds receipts of​ $500, and a NSF check for​ $350. Deposits in transit total $2,050 and outstanding checks are $1,835. The balance per books at November 30 is $7,690. What is the adjusted bank balance at November​ 30? A. $7,765 B. $7,625 C. $7,905 D. $7,550

A. $7,765

Requiring that an employee with no access to cash do the accounting is an example of which characteristic of internal​ control? A. Separation of duties B. Monitoring of controls C. Assignment of responsibility D. Competent and reliable personnel

A. Separation of duties

In a bank​ reconciliation, interest revenue earned on your bank balance is A. added to the book balance. B. deducted from the bank balance. C. added to the bank balance. D. deducted from the book balance.

A. added to the book balance.

Three key duties that must always be separated under a good system of internal controls​ are: A. asset​ handling, record keeping and transaction approval. B. asset​ handling, recordkeeping and safeguarding of assets. C. record​ keeping, transaction analysis and transaction approval. D. asset​ handling, hiring and safeguarding of assets.

A. asset​ handling, record keeping and transaction approval.

Each of the following represents an internal control procedure except​ for: A. clear lines of authority and communication. B. separation of duties. C. compliance monitoring. D. limited access to both assets and records.

A. clear lines of authority and communication.

The two most common types of fraud impacting the financial statements​ are: A. fraudulent financial reporting and misappropriation of assets. B. cooking the books and fraudulent financial reporting. C. misappropriation of assets and embezzlement. D. fraudulent financial reporting and e−commerce fraud.

A. fraudulent financial reporting and misappropriation of assets.

Each of the following documents is a control for a bank account except A. geographic location of ATMs. B. bank statement. C. bank reconciliation. D. signature card.

A. geographic location of ATMs.

The three main components of the fraud triangle​ are: A. ​motive, opportunity and rationalization. B. ​opportunity, motive and lack of ethics. C. ​rationalization, opportunity and greed. D. none of the above.

A. ​motive, opportunity and rationalization.

A journal entry would need to be made for which of the following adjustments on a bank​ reconciliation? A. Outstanding checks B. Bank service charges C. Bank error to be corrected by the bank D. Deposits in transit

B. Bank service charges

which of the following items is NOT true about fraud? A. It is designed to persuade another party to act in a way that causes injury or damage to that party. B. Its damages must exceed a threshold of​ $150,000. C. It can cause injury or damage to another party. D. It is an intentional misrepresentation of facts.

B. Its damages must exceed a threshold of​ $150,000

Which of the following is an example of poor internal control in an​ organization? A. The accounting department compares goods received with the related purchase order. B. The mailroom clerk records daily cash receipts in the journal. C. The company rotates employees through various jobs. D. Employees must take vacations.

B. The mailroom clerk records daily cash receipts in the journal.

Fictitious accounting entries are recorded that cause revenue to be overstated by​ $5 million for the​ year; the accounting manager was trying to make the​ company's income look better on the​ company's upcoming loan application. This type of fraud​ is: A. asset misappropriation. B. fraudulent financial reporting. C. IFRS misalignment. D. GAAP disordering.

B. fraudulent financial reporting.

The bookkeeper for Mixer Company wrote a check for $150 to pay for furnace maintenance. The check was incorrectly recorded in the general journal as $15. The entry to correct this error would​ be: A. decrease Cash by $150. B. increase Repairs and Maintenance Expense by $135. C. increase Cash by $135. D. increase Repairs and Maintenance Expense by $150.

B. increase Repairs and Maintenance Expense by $135. Worked Solution Increase in Repairs and Maintenance Expense​ = $150 ​- $15 ​= $135

Which law or regulation requires that public companies must maintain strong internal control​ systems? A. Securities and Exchange Act of 1933 B. ​Sarbanes-Oxley Act C. Treadway Commission D. ​Dodd-Frank Act

B. ​Sarbanes-Oxley Act

Having a corporate code of ethics that prohibits employees from accepting gifts from customers or vendors is an example of which component of internal​ control? A. Information system B. Control procedures C. Control environment D. Risk assessment

C. Control environment

In a bank​ reconciliation, interest revenue earned on your bank balance is A. deducted from the book balance. B. added to the bank balance. C. added to the book balance. D. deducted from the bank balance.

C. added to the book balance.

A bank statement included a NSF check from customer Kim Fields for​ $2,100. The journal entry to record this reconciling item​ should: A. debit Cash and credit Accounts Receivable for​ $2,100. B. debit NSF and credit Cash for​ $2,100. C. debit Accounts Receivable and credit Cash for​ $2,100. D. debit Cash and credit NSF for​ $2,100.

C. debit Accounts Receivable and credit Cash for​ $2,100.

zAll of the following are internal control procedures except A. internal and external audits. B. adequate records. C. ​Sarbanes-Oxley reforms. D. assignment of responsibilities.

C. ​Sarbanes-Oxley reforms.

The Sarbanes−Oxley Act of​ 2002: A. requires public companies to issue in writing that financial reports are accurate and that internal controls are adequate. B. has stiff penalties and prison time for violators of financial statement fraud. C. allows public companies to avoid a review of internal controls. D. A and B

D. A and B

Why does cash require some specific internal​ controls? A. Cash is relatively easy to steal. B. Most transactions ultimately affect cash. C. Cash is easy to convert to other forms of wealth. D. All of the above.

D. All of the above.

As part of a strong internal control​ system, which of the following accounting duties need to be separated from cash​ handling? A. Record keeping B. Filing C. Transaction approval D. Both A and C need to be separated from cash handling.

D. Both A and C need to be separated from cash handling.

If a bank reconciliation included a deposit in transit of​ $790, the entry to record this reconciling item would include a A. debit to Cash for​ $790. B. credit to Prepaid insurance for​ $790. C. credit to Cash for​ $790. D. No entry is required.

D. No entry is required.

If a bank reconciliation included a deposit in transit of​ $790, the entry to record this reconciling item would include a A. debit to Cash for​ $790. B. credit to Cash for​ $790. C. credit to Prepaid insurance for​ $790. D. No entry is required.

D. No entry is required.

Requiring that an employee with no access to cash do the accounting is an example of which characteristic of internal​ control? A. Assignment of responsibility B. Monitoring of controls C. Competent and reliable personnel D. Separation of duties

D. Separation of duties

Before paying an invoice for goods received on​ account, the controller or treasurer should ensure that A. the company is paying for the goods it ordered. B. the company is paying for the goods it actually received. C. the company has not already paid this invoice. D. all of the above.

D. all of the above.

In a bank​ reconciliation, an outstanding check is A. added to the book balance. B. added to the bank balance. C. deducted from the book balance. D. deducted from the bank balance.

D. deducted from the bank balance.

In a bank​ reconciliation, an EFT cash payment is A. deducted from the bank balance. B. added to the book balance. C. added to the bank balance. D. deducted from the book balance.

D. deducted from the book balance.

When preparing a bank​ reconciliation: A. book errors are subtracted from the bank balance. B. outstanding checks are subtracted from the book balance. C. service charges are subtracted from the bank balance. D. deposits in transit are added to the bank balance.

D. deposits in transit are added to the bank balance.

All of the following are controls for cash received over the counter except A. a printed receipt must be given to the customer. B. the cash drawer should open only when the sales clerk enters an amount on the keys. C. the customer should be able to see the amounts entered into the cash register. D. the sales clerk must have access to the cash register tape.

D. the sales clerk must have access to the cash register tape.

All of the following are objectives of internal control except A. to ensure accurate and reliable accounting records. B. to comply with legal requirements. C. to safeguard assets. D. to maximize net income.

D. to maximize net income.

a weak internal control system is which element in the fraud triangle? a. motive b. attitude c. rationalization d. opportunity

d. opportunity