Question Details

CHAPTER 8 FRAUD, INTERNAL CONTROL, AND CASH

 COMPUTER S 230 CHAPTER 8 PART 9

141.	If a check correctly written and paid by the bank for $584 is incorrectly recorded on the company- books for $548, the appropriate treatment on the bank reconciliation would be to
a.	deduct $36 from the book- balance.
b.	add $36 to the book- balance.
c.	deduct $36 from the bank- balance.
d.	deduct $584 from the book- balance.


142.	In the month of May, Kijak Company Inc. wrote checks in the amount of $84,000. In June, checks in the amount of $114,000 were written. In May, $75,000 of these checks were presented to the bank for payment, and $99,000 in June. What is the amount of outstanding checks at the end of May?
a.	$9,000
b.	$15,000
c.	$24,000
d.	$30,000


143.	In the month of May, Kijak Company Inc. wrote checks in the amount of $56,000. In June, checks in the amount of $76,000 were written. In May, $50,000 of these checks were presented to the bank for payment, and $66,000 in June. What is the amount of outstanding checks at the end of June?
a.	$6,000
b.	$10,000
c.	$16,000
d.	$20,000


144.	Cash equivalents include each of the following except
a.	bank certificates of deposit.
b.	money market funds.
c.	petty cash.
d.	U.S. Treasury bills.


145.	Which of the following would not be reported on the balance sheet as a cash equivalent?
a.	Money market fund
b.	Sixty-day certificate of deposit
c.	Six-month Treasury bill
d.	Money market savings certificate

	
 
146.	Compensating balances are a restriction on the use of a company's cash and should be
a.	reported as a current asset.
b.	reported as a noncurrent asset.
c.	disclosed in the financial statements.
d.	reported as a reduction of cash.


	147.	The principles of internal control include all of the following except
a.	establishment of responsibility.
b.	combining of duties.
c.	physical, mechanical, and electronic controls.
d.	independent internal verification.


	148.	An example of poor internal control is
a.	The accountant should not have physical custody of the asset nor access to it.
b.	The custodian of an asset should not maintain or have access to the accounting records.
c.	One person should be responsible for handling related transactions.
d.	A salesperson makes the sale, and a different person ships the goods.


149.	Having different individuals receive cash, record cash receipts, and hold the cash is an example of
a.	establishment of responsibility.
b.	segregation of duties.
c.	documentation procedures.
d.	independent internal verification.


150.	Storing cash in a company safe is an application of which internal control principle?
a.	Segregation of duties
b.	Documentation procedures
c.	Physical controls
d.	Establishment of responsibility


151.	Using prenumbered checks and having an approved invoice for each check is an example of
a.	establishment of responsibility.
b.	segregation of duties.
c.	documentation procedures.
d.	independent internal verification.


 
	152.	An application of good internal control over cash disbursements is
a.	following payment, the approved invoice should be stamped PAID.
b.	blank checks should be stored in the treasurer's desk.
c.	each check should be compared with the approved invoice after the check is issued.
d.	check signers should record the cash disbursements.


	153.	When making a payment from the petty cash fund for postage stamps, the following journal entry is made.
a.	Supplies		XXXX
		Petty Cash			XXXX
b.	Postage Expense		XXXX
		Petty Cash			XXXX
c.	Miscellaneous Expense		XXXX
		Petty Cash			XXXX
d.	No entry is made.


154.	All of the following would involve a debit memorandum except
a.	a bank service charge.
b.	an NSF check.
c.	the cost of printing checks.
d.	interest earned.


	155.	A bank may issue a credit memorandum for
a.	a bank service charge.
b.	an NSF (not sufficient funds) check from a customer.
c.	the collection of a note receivable for the depositor by the bank.
d.	the cost of printing checks.


	156.	Journal entries are required by the depositor for all of the following except
a.	collection of a note receivable.
b.	bank errors.
c.	bank service charges.
d.	an NSF check.


	157.	Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of
a.	1 month or less when purchased.
b.	3 months or less when purchased.
c.	6 months or less when purchased.
d.	1 year or less when purchased.

 
	158.	The principles of internal control activities are used in the
a.	U.S. but not globally.
b.	internationally but not in the U.S.
c.	in the U.S. and Canada but not globally.
d.	globally.


	159.	Sarbanes Oxley applies to
a.	U.S companies but not international companies.
b.	international companies but not U.S. companies.
c.	U.S. and Canadian companies but not other international companies.
d.	U.S and international companies.


	160.	The fraud triangle applies to
a.	U.S companies but not international companies.
b.	international companies but not U.S. companies.
c.	U.S. and Canadian companies but not other international companies.
d.	U.S and international companies.



	161.	What percentage of companies worldwide have experienced fraud in a recent  two-year period?
a.	1%
b.	10%
c.	50%
d.	100%


	162.	Tangible frauds include
a.	asset misappropriation.
b.	false pretenses.
c.	counterfeiting.
d.	all of the above.


	163.	IFRS, compared to GAAP, tends to be more
a.	detailed.
b.	rules-based.
c.	principles-based.
d.	full of disclosures requirements.


	164.	GAAP, compared to IFRS, tends to be more
a.	simple in accounting requirements.
b.	rules-based.
c.	principles-based.
d.	simple in disclosures requirements.

	165.	GAAP's, accounting and internal control procedures related to cash and the definition of cash equivalents, as compared to IFRS are:
Accounting and internal control procedures	Definition of cash equivalents
a.	essentially similar	essentially similar
b.	essentially different	essentially similar
c.	essentially similar	essentially different
d.	essentially different	essentially different


	166.	Cash is defined by IFRS as
a.	cash on hand.
b.	demand deposits.
c.	cash on hand and demand deposits.
d.	cash on hand, demand deposits, and highly liquid investments.


	167.	Cash equivalents are defined by IFRS as
a.	cash on hand.
b.	demand deposits.
c.	cash on hand and demand deposits.
d.	short-term, highly liquid investments that are readily convertible into known amounts of cash.