Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
61)
Which of the following is not one of the policies and procedures that make up an internal control
system?
A)
Guarantee a return to investors.
B)
Promote efficient operations.
C)
Urge adherence to company policies.
D)
Protect assets.
E)
Ensure reliable accounting.
62)
Managers place a high priority on internal control systems because the systems assist managers in
all of the following except:
A)
Upholding company policies.
B)
Assuring that no loss will occur.
C)
Promoting efficient operations.
D)
Ensuring reliable accounting.
E)
Protecting assets.
63)
The principles of internal control include:
A)
Maintain minimal records.
B)
Bond all employees.
C)
Separate recordkeeping from custody of assets.
D)
Use only computerized systems.
E)
Require automated sales systems.
64)
Principles of internal control include all of the following except:
A)
Apply technological controls.
B)
Maintaining security by having one person track and record assets.
C)
Divide responsibilities for related transactions.
D)
Separate recordkeeping from custody of assets.
E)
Perform regular and independent reviews.
65)
A properly designed internal control system:
A)
Requires the use of non-computerized systems.
B)
Lowers the company's risk of loss.
C)
Eliminates the need for an audit.
D)
Insures profitable operations.
E)
Is not necessary if the company uses a computerized system.
66)
A company's internal control system:
A)
Eliminates the need for audits.
B)
Eliminates the need for managers' certification of controls.
C)
Monitors company and employee performance.
D)
Eliminates the company's risk of loss.
E)
Eliminates human error.
67)
Two clerks sharing the same cash register is a violation of which internal control principle?
A)
Maintain adequate records.
B)
Establish responsibilities.
C)
Apply technological controls.
D)
Bond key employees.
E)
Insure assets.
68)
Which internal control principle prescribes the use of pre-numbered printed checks?
A)
Technological controls.
B)
Divide responsibility for related transactions.
C)
Establish responsibilities.
D)
Perform regular and independent reviews.
E)
Maintain adequate records.
69)
The impact of technology on internal controls includes:
A)
Elimination of the need for regular audits.
B)
Reduced processing errors.
C)
Elimination of separation of duties.
D)
Elimination of fraud.
E)
Elimination of the need to bond employees.
70)
Internal control policies and procedures have limitations not including:
A)
Establishing responsibilities.
B)
Human error.
C)
Collusion.
D)
Cost-benefit principle.
E)
Human fraud.
71)
Internal control systems are:
A)
Developed by the Securities and Exchange Commission for public companies.
B)
Developed by the Small Business Administration for non-public companies.
C)
Required only if a company plans to engage in interstate commerce.
D)
Developed by the Internal Revenue Service for all U.S. companies.
E)
Required by Sarbanes-Oxley (SOX) to be documented and certified if the company's stock is
traded on an exchange (a public company).
72)
Cash, not including cash equivalents, includes:
A)
Customer checks, cashier checks, and money orders.
B)
Two-year certificates of deposit.
C)
Postage stamps.
D)
IOUs.
E)
Money market funds.
73)
Cash equivalents:
A)
Are recorded in petty cash.
B)
Include checking accounts.
C)
Include money orders.
D)
Are short-term, highly liquid investment assets.
E)
Include 6-month certificates of deposit.
74)
Cash equivalents:
A)
Are readily converted to a known cash amount.
B)
Include checking accounts.
C)
Have no immediate value.
D)
Include savings accounts.
E)
Include time deposits.
75)
Cash equivalents meet all of the following criteria except:
A)
Have a market value that is not sensitive to interest rate changes.
B)
More liquid than cash.
C)
Short-term investments purchased within 3 months of their maturity dates.
D)
Readily convertible to a known cash amount.
E)
Short-term U.S. treasury bills.
76)
The following information is available for Birch Company at December 31:
Money market fund balance
$2,790
Certificate of deposit maturing June 30 of next year
$10,000
Postdated checks from customers
$1,475
Cash in bank account
$21,430
NSF checks from customers returned by bank
$650
Cash in petty cash fund
$200
Inventory of postage stamps
$24
U.S. Treasury bill purchased on December 15 and maturing on February
28 of following year
$5,000
Based on this information, Birch Company should report Cash and Cash Equivalents on December
31 of:
A) $38,770 B) $29,420 C) $41,345 D) $31,345 E) $39,420
Cash in bank account
$8,540
Petty cash
250
Money market fund balance
$10,400
Checks from customers
$1,350
NSF checks from customers returned by bank
$805
Treasury bill maturing in 60 days
$10,000
Money orders
$290
$6,000
77)
The following information is available for Fenton Manufacturing Company at June 30:
Cash in bank account
$11,455
Inventory of postage stamps
$74
Money market fund balance
$10,400
Petty cash balance
$350
NSF checks from customers returned by bank
$867
Postdated checks received from customers
$791
Money orders
$290
A nine-month certificate of deposit maturing on December 31 of
current year
$6,000
Based on this information, Fenton Manufacturing Company should report Cash and Cash
Equivalents on June 30 of:
A) $12,095 B) $22,495 C) $28,495 D) $23,286 E) $29,286
78)
The following information is available for Montrose Company at December 31:
A nine-month certificate of deposit maturing on June 30 of
30
next year
$6,000
Based on this information, the amounts considered Cash and Cash Equivalents, respectively on
December 31 are:
A)
Cash $19,190; Cash equivalents $16,000
B)
Cash $8,540; Cash equivalents $22,290
C)
Cash $8,790; Cash equivalents $26,400
D)
Cash $10,430; Cash equivalents $20,400
E)
Cash $11,235; Cash equivalents $26,400
79)
Basic bank services do not include:
A)
Petty cash management.
B)
Bank accounts.
C)
Bank deposits.
D)
Electronic funds transfer.
E)
Checking.
80)
The three parties involved with a check are:
A)
The maker, the manager, and the payee.
B)
The writer, the cashier, and the bank.
C)
The bookkeeper, the payee, and the bank.
D)
The signer, the cashier, and the company.
E)
The maker, the payee, and the bank.
81)
A remittance advice is a(n):
A)
Explanation for a payment by check.
B)
Bank statement.
C)
Electronic funds transfer.
D)
Cancelled check.
E)
Internal voucher.
82)
A bank statement provided by the bank includes:
A)
A list of outstanding checks.
B)
A list of petty cash amounts.
C)
A listing of deposits in transit.
D)
A reconciliation to the depositor cash account.
E)
The beginning and the ending balance of the depositor's account.
83)
A bank does not issue a debit memorandum to notify the depositor of which of the following?
A)
An uncollectible check.
B)
A deposit to their account.
C)
A fee assessed to the depositor's account.
D)
Periodic payments arranged in advance, by a depositor.
E)
All withdrawals through an ATM.
84)
Preparing a bank reconciliation on a monthly basis is an example of:
A)
A technological control.
B)
Poor internal control.
C)
Separation of duties.
D)
Protecting assets by proving the accuracy of cash records.
E)
Establishing responsibility.
85)
The number of days' sales uncollected:
A)
Is calculated by dividing sales by accounts receivable.
B)
Measures a company's ability to pay its bills on time.
C)
Is used to evaluate the liquidity of receivables.
D)
Measures a company's debt to income.
E)
Is calculated by dividing accounts receivable by sales.
86)
The number of days' sales uncollected is used to:
A)
Measure the amount of cash sales during a period.
B)
Identify the likelihood of collecting sales on account.
C)
Estimate how much time is likely to pass before the current amount of accounts receivable is
received in cash.
D)
Measure how many days of sales remain until the end of the year.
E)
Determine the number of days that have passed without collecting on accounts receivable.
87)
The number of days' sales uncollected is calculated by:
A)
Dividing accounts receivable by net sales and multiplying by 365.
B)
Dividing accounts receivable by net sales.
C)
Multiplying net sales by accounts receivable and dividing by 365.
D)
Dividing net sales by accounts receivable.
E)
Dividing net sales by accounts receivable and multiplying by 365.
88)
All of the following are true of the number of days' sales uncollected ratio except:
A)
Can be used for comparisons to other companies in the same industry.
B)
Is most effective in evaluating the cash sales of a company.
C)
Can be used for comparisons between current and prior periods.
D)
Reflects the liquidity of receivables.
E)
Measures how much time is likely to pass before the current amount of accounts receivable is
received in cash.
89)
A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current
period. Its days' sales uncollected equals: (Use 365 days a year.)
A) 8.0 days. B) 7.4 days. C) 45.8 days. D) 58.9 days. E) 45.2 days.
90)
Freeman Co. had net sales of $4.2 million and ending accounts receivable of $0.8 million. Its days'
sales uncollected equals:
A) 11.5 days. B) 69.5 days. C) 19.2 days. D) 5.3 days. E) 292 days.
91)
The following information is taken from Reagan Company's December 31 balance sheet:
Cash and cash equivalents
$8,419
Accounts receivable
70,422
Merchandise inventories
60,362
Prepaid expenses
4,100
Accounts payable
$14,950
Notes payable
86,638
Other current liabilities
9,500
If net credit sales for the current year were $612,000, the firm's days' sales uncollected for the year
is: (Use 365 days a year.)
A)
60 days B) 85 days C) 154 days D) 42 days E) 70 days
92)
An income statement account that is used to record cash overages and cash shortages arising from
petty cash transactions or from errors in making change is titled:
A)
Bank Reconciliation.
B)
Cash Receivable.
C)
Cash Lost.
D)
Petty Cash.
E)
Cash Over and Short.
93)
A set of procedures and approvals for verifying, approving, and recording obligations for eventual
cash disbursement, and for issuing checks for payment only of verified, approved, and recorded
obligations is referred to as a(n):
A)
Cash disbursement system.
B)
Cash control system.
C)
Internal cash system.
D)
Petty cash system.
E)
Voucher system.
94)
Internal control procedures for cash receipts do not require that:
A)
Cash sales should be recorded on a cash register at the time of each sale.
B)
Custody over cash is kept separate from its recordkeeping.
C)
An employee with no access to cash receipts should compare the total cash recorded by the
register with the record of cash receipts reported by the cashier.
D)
All collections for sales are received immediately upon making the sales.
E)
Clerks having access to cash in a cash register should not have access to the register tape or
file.
95)
The Cash Over and Short account:
A)
Is used to record the income effects of errors in making change and/or processing petty cash
transactions.
B)
Can never have a debit balance.
C)
Can never have a credit balance.
D)
Is not necessary in a computerized accounting system.
E)
Is used when the cash account reports a credit balance.
