Question 1

A credit memorandum received with a bank statement means the bank account has
been increased.

Accepted Answer

A) True 
 B)False

Question 2

The amount of the outstanding checks is included on the bank reconciliation as a(n)

Accepted Answer

A)  deduction from the balance per depositor's records.
B)  addition to the balance per bank statement.
C)  deduction from the balance per bank statement.
D)  addition to the balance per depositor's records.E) All of the above
F) B) and C)

Question 3

On the bank's accounting records,customers' accounts are normally shown as

Accepted Answer

A)  revenue.
B)  a liability.
C)  an asset.
D)  expenses.E) A) and C)
F) All of the above

Question 4

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 5

Using the following information,list the items that will require adjustments to the accounts of Salem Co.Also,indicate which accounts will increase or decrease due to the adjustment.

Accepted Answer

The answer of Using the following information,list the items that...

Question 6

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would be included on the bank reconciliation as a(n)

Accepted Answer

A)  deduction from the balance per depositor's records.
B)  addition to the balance per bank statement.
C)  deduction from the balance per bank statement.
D)  addition to the balance per depositor's records.E) None of the above
F) A) and C)

Question 7

A bank reconciliation should be prepared periodically because

Accepted Answer

A)  the depositor's records and the bank's records are in agreement.
B)  the bank has not recorded all of its transactions.
C)  any differences between the depositor's records and the bank's records should be determined,and any errors made by either party should be discovered and corrected.
D)  the bank must make sure that its records are correct.E) All of the above
F) C) and D)

Question 8

For each of the following procedures,indicate whether it is a strength or a weakness.Also,for each weakness,explain why it is a weakness and how it can be corrected.

Accepted Answer

The answer of For each of the following procedures,indicate whether...

Question 9

The bank reconciliation is an important part of the system of internal controls.

Accepted Answer

A) True 
 B)False

Question 10

The internal control environment is enhanced by the hiring and retention of competent,honest employees.

Accepted Answer

A) True 
 B)False

Question 11

A firm's internal control environment is influenced by

Accepted Answer

A)  management's operating style.
B)  organizational structure.
C)  personnel policies.
D)  all of these.E) B) and C)
F) C) and D)

Question 12

All organizations face risks,and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

Accepted Answer

A) True 
 B)False

Question 13

A voucher system is an example of an internal control procedure over cash receipts.

Accepted Answer

A) True 
 B)False

Question 14

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

Accepted Answer

A) True 
 B)False

Question 15

Explain why one person should NOT be permitted to purchase,receive,and pay for supplies.

Accepted Answer

Supplies may be stolen by the employee o...

Question 16

Which of the following elements of internal control focuses upon locating weaknesses and improving control effectiveness?

Accepted Answer

A)  The control environment
B)  Risk assessment
C)  Control procedures
D)  MonitoringE) A) and D)
F) A) and C)

Question 17

A check drawn by a depositor for $915 in payment of a liability was recorded as $195.What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Decrease Accounts Payable;decrease Cash
B)  Increase Cash;decrease Accounts Receivable
C)  Increase Cash;increase Accounts Payable
D)  Increase Accounts Receivable;decrease CashE) B) and C)
F) A) and B)

Question 18

The amount of deposits in transit is included on the bank statement as a(n)

Accepted Answer

A)  deduction from the balance per the depositor's books.
B)  deduction from the balance per bank statement.
C)  addition to the balance per bank statement.
D)  addition to the balance per depositor books.E) A) and D)
F) B) and D)

Question 19

In preparing a bank reconciliation,the amount of outstanding checks is deducted from the balance per depositor's records.

Accepted Answer

A) True 
 B)False

Question 20

A minimum cash balance maintained in a bank account is called a line of credit.

Accepted Answer

A) True 
 B)False

Exam 5: Sarbanes-Oxley,internal Control,and Cash

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

Correct AnswerverifiedShow Answer

Using the following information,list the items that will require adjustments to the accounts of Salem Co.Also,indicate which accounts will increase or decrease due to the adjustment.

Correct AnswerverifiedShow Answer

The amount of deposits in transit is included on the bank statement as a(n)

Correct AnswerverifiedShow Answer

Explain why one person should NOT be permitted to purchase,receive,and pay for supplies.

Correct AnswerverifiedSupplies may be stolen by the employee o...View AnswerShow Answer

A bank reconciliation should be prepared periodically because

Correct AnswerverifiedShow Answer

A check drawn by a depositor for $915 in payment of a liability was recorded as $195.What adjustment is required in the depositor's accounts?

Correct AnswerverifiedShow Answer

The internal control environment is enhanced by the hiring and retention of competent,honest employees.

Correct AnswerverifiedShow Answer

For each of the following procedures,indicate whether it is a strength or a weakness.Also,for each weakness,explain why it is a weakness and how it can be corrected.

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would be included on the bank reconciliation as a(n)

Correct AnswerverifiedShow Answer

On the bank's accounting records,customers' accounts are normally shown as

Correct AnswerverifiedShow Answer

A credit memorandum received with a bank statement means the bank account has been increased.

Correct AnswerverifiedShow Answer

The amount of the outstanding checks is included on the bank reconciliation as a(n)

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation,the amount of outstanding checks is deducted from the balance per depositor's records.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Correct AnswerverifiedShow Answer

A minimum cash balance maintained in a bank account is called a line of credit.

Correct AnswerverifiedShow Answer

The bank reconciliation is an important part of the system of internal controls.

Correct AnswerverifiedShow Answer

A voucher system is an example of an internal control procedure over cash receipts.

Correct AnswerverifiedShow Answer

A firm's internal control environment is influenced by

Correct AnswerverifiedShow Answer

All organizations face risks,and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

Correct AnswerverifiedShow Answer

Which of the following elements of internal control focuses upon locating weaknesses and improving control effectiveness?

Correct AnswerverifiedShow Answer

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Supplies may be stolen by the employee o...
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