Question 1

____ Pay dividends to stockholders.

Accepted Answer

A)  Cash inflow from operating activities
B)  Cash outflow from financing activities
C)  Cash outflow from operating activities
D)  Cash inflow from investing activities
E)  Cash inflow from financing activitiesF) Cash outflow from investing activitiesG) D) and E)
H) B) and F)

Question 2

When a company pays for services received using a credit card, it should credit Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 3

A company establishes a $400 petty cash fund on August 3 to pay for minor cash expenditures. The fund is replenished at the end of each month. At the end of August, the fund contains $40 in cash and the following receipts: $$\begin{array} { l r } 
\text { Delivery fees } & \$ 100 \
\text { Plumbing maintenance } & 70 \
\text { Postage } & 40 \
\text { Flowers for the office } & 50
\end{array}$$ Record the establishment of the petty cash fund on August 3, the expenditures of the fund, and replenishment on August 31.

Accepted Answer

The answer of A company establishes a $400 petty cash...

Question 4

____ Pay salaries to employees.

Accepted Answer

A)  Cash inflow from operating activities
B)  Cash outflow from financing activities
C)  Cash outflow from operating activities
D)  Cash inflow from investing activities
E)  Cash inflow from financing activitiesF) Cash outflow from investing activitiesG) A) and B)
H) A) and C)

Question 5

Which of the following is NOT a reason why a bank reconciliation is necessary?

Accepted Answer

A)   The company has transactions that the bank has not recorded.
B)   Petty cash has a low balance.
C)   The bank has transactions that the company has not recorded.
D)   Reconciliations provide a control over cash.E) All of the above
F) None of the above

Question 6

Which of the following would NOT represent good controls over cash disbursements?

Accepted Answer

A)   Periodically check amounts shown in the debit card and credit card statements against purchase receipts.
B)   The employee verifying the accuracy of the debit card and credit card statements should not also be the employee responsible for actual purchases.
C)   Set maximum purchase limits on debit cards and credit cards.
D)   Employees responsible for making cash disbursements should also be in charge of cash receipts.E) B) and C)
F) C) and D)

Question 7

What is the link between the balance sheet and the statement of cash flows? Describe the operating, investing, and financing sections of the statement of cash flows.

Accepted Answer

The balance sheet reports the final bala...

Question 8

The components of internal control do not directly include:

Accepted Answer

A)   Risk assessment.
B)   Inflation adjustment.
C)   Monitoring.
D)   Control activities.E) A) and D)
F) B) and C)

Question 9

The statement of cash flows reports cash flows from the activities of:

Accepted Answer

A)   Operating, purchasing, and investing.
B)   Borrowing, paying, and investing.
C)   Financing, investing, and operating.
D)   Using, investing, and financing.E) B) and C)
F) A) and D)

Question 10

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term by placing the letter designating the term in the space provided.
Terms:
-____ Transfer of data from lower managers to top executives for accurate financial reporting.

Accepted Answer

A)  Monitoring
B)  Oversight board
C)  Control activities
D)  Corporate executive accountability
E)  Nonaudit servicesF) Control environmentG) Internal controlH) Information and communicationI) Auditor rotationJ) Risk assessmentK) C) and G)
L) I) and J)

Question 11

Separation of duties occurs when two or more people act in coordination to circumvent internal controls.

Accepted Answer

A) True 
 B)False

Question 12

Providing services to customers on account is considered a(n) :

Accepted Answer

A)   Operating cash flow.
B)   Investing cash flow.
C)   Financing cash flow.
D)   Not a cash flow.E) C) and D)
F) None of the above

Question 13

Payment of dividends to stockholders is considered a(n) :

Accepted Answer

A)   Operating cash flow.
B)   Investing cash flow.
C)   Financing cash flow.
D)   Not a cash flow.E) A) and B)
F) None of the above

Question 14

Cash flows from investing activities do not include:

Accepted Answer

A)   Borrowing.
B)   The purchase of equipment.
C)   The sale of land.
D)   The purchase of a building.E) All of the above
F) C) and D)

Question 15

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term by placing the letter designating the term in the space provided.
Terms:
-____ Routine activities that are meant to continually observe internal control activities.

Accepted Answer

A)  Monitoring
B)  Oversight board
C)  Control activities
D)  Corporate executive accountability
E)  Nonaudit servicesF) Control environmentG) Internal controlH) Information and communicationI) Auditor rotationJ) Risk assessmentK) A) and J)
L) A) and I)

Question 16

Cash may not include:

Accepted Answer

A)   Foreign currency.
B)   Money orders.
C)   Accounts receivable.
D)   Undeposited customer checks.E) All of the above
F) C) and D)

Question 17

Occupational fraud:

Accepted Answer

A)   Is the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources.
B)   Occurs in only a few organizations and generally involves minor amounts.
C)   Will be prevented when companies employ an auditor.
D)   Is committed only by lower-level employees.E) A) and B)
F) B) and D)

Question 18

____ Purchase equipment.

Accepted Answer

A)  Cash inflow from operating activities
B)  Cash outflow from financing activities
C)  Cash outflow from operating activities
D)  Cash inflow from investing activities
E)  Cash inflow from financing activitiesF) Cash outflow from investing activitiesG) A) and D)
H) C) and E)

Question 19

Terastar Corp. reports the following amounts for 2012 and 2013.  What is the trend in free cash flows relative to net income?

Accepted Answer

A)   Both are increasing.
B)   Net income is trending upward and free cash flows are trending downward.
C)   Both are decreasing.
D)   Net income is trending downward and free cash flows are trending upward.E) A) and C)
F) A) and B)

Question 20

The internal control component of information and communication relates to the effectiveness of accurately measuring and communicating business transactions.

Accepted Answer

A) True 
 B)False

Exam 4: Cash and Internal Controls

____ Pay salaries to employees.

Correct Answer
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Cash may not include:

Correct Answer
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Correct Answer
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Which of the following is NOT a reason why a bank reconciliation is necessary?

Correct Answer
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Correct Answer
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Which of the following would NOT represent good controls over cash disbursements?

Correct Answer
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Payment of dividends to stockholders is considered a(n) :

Correct Answer
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____ Purchase equipment.

Correct Answer
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Separation of duties occurs when two or more people act in coordination to circumvent internal controls.

Correct Answer
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Providing services to customers on account is considered a(n) :

Correct Answer
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Cash flows from investing activities do not include:

Correct Answer
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The components of internal control do not directly include:

Correct Answer
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Correct Answer
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Occupational fraud:

Correct Answer
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The internal control component of information and communication relates to the effectiveness of accurately measuring and communicating business transactions.

Correct Answer
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What is the link between the balance sheet and the statement of cash flows? Describe the operating, investing, and financing sections of the statement of cash flows.

Correct Answer
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The balance sheet reports the final bala...
View Answer

The statement of cash flows reports cash flows from the activities of:

Correct Answer
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____ Pay dividends to stockholders.

Correct Answer
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Terastar Corp. reports the following amounts for 2012 and 2013. What is the trend in free cash flows relative to net income?

Correct Answer
verified

When a company pays for services received using a credit card, it should credit Accounts Payable.

Correct Answer
verified

Exam 4: Cash and Internal Controls

____ Pay salaries to employees.

Correct AnswerverifiedShow Answer

Cash may not include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is NOT a reason why a bank reconciliation is necessary?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would NOT represent good controls over cash disbursements?

Correct AnswerverifiedShow Answer

Payment of dividends to stockholders is considered a(n) :

Correct AnswerverifiedShow Answer

____ Purchase equipment.

Correct AnswerverifiedShow Answer

Separation of duties occurs when two or more people act in coordination to circumvent internal controls.

Correct AnswerverifiedShow Answer

Providing services to customers on account is considered a(n) :

Correct AnswerverifiedShow Answer

Cash flows from investing activities do not include:

Correct AnswerverifiedShow Answer

The components of internal control do not directly include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Occupational fraud:

Correct AnswerverifiedShow Answer

The internal control component of information and communication relates to the effectiveness of accurately measuring and communicating business transactions.

Correct AnswerverifiedShow Answer

What is the link between the balance sheet and the statement of cash flows? Describe the operating, investing, and financing sections of the statement of cash flows.

Correct AnswerverifiedThe balance sheet reports the final bala...View AnswerShow Answer

The statement of cash flows reports cash flows from the activities of:

Correct AnswerverifiedShow Answer

____ Pay dividends to stockholders.

Correct AnswerverifiedShow Answer

Terastar Corp. reports the following amounts for 2012 and 2013. What is the trend in free cash flows relative to net income?

Correct AnswerverifiedShow Answer

When a company pays for services received using a credit card, it should credit Accounts Payable.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The balance sheet reports the final bala...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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