Accounting 2010 chapter 4

Each of the following is an example of a control procedure, except
A. separation of duties
B. Limited access to assets
C. A sound marketing plan
D. Sound personnel procedures

C. A sound marketing plan

Which of the following is an example of poor internal control?

The mailroom clerk records daily cash receipts in the journal

Which of the following reconciling items does not require a journal entry?

Deposit in transit

A cash budget helps control cash by

Helping to determine whether additional cash is available for investments or new financing is needed

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

All of the following are internal control procedures control procedures except
A. assuagement of responsibilities
B. Internal and external audits
C. Adequate records
D. Sarbanes-Oxley reforms

D. Sarbanes-Oxley reforms

Requiring that an employee with no access to cash do the accounting is an example of which characteristic of internal control?

Separation of duties

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

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

In a bank reconciliation, an outstanding check is

Deducted from the bank balance

In a bank reconciliation, an EFT cash payment is

Deducted from the book balance

In a bank reconciliation, interest revenue earned on your bank is

Added to the book balance

Before paying an invoice for goods received an account, the controller or treasurer should ensure that

– The company is paying for the goods it actually received – The company has not already paid this invoice – The company is paying for the goods it ordered

Which of the following assets are not included in "cash equivalents" in a typical balance sheet?
A. U.S government securities
B. Foreign government securities
C. Certain very low risk equity securities
D. Time deposits
E. All of the above might be included in "cash equivalents."

E. All of the above might be included in "cash equivalents"

Internal control cannot always safeguard against this problem

Collusion

This is very often mentioned as the cornerstone of a good system of internal control

Separation of duties

Pay employees enough to require them to do a good job

Competent personnel

This procedures limits access to sensitive data

Encryption and Firewalls

This type of insurance policy covers losses due to employee theft

Fidelity bond

Trusting your employees can lead you to overlook this procedures

Supervision

This is the most basic purpose of internal control

Safeguarding assets

Bank statement shows interest earned of $50

Add to book balance

The bank statement showed the bank had credited Trisha’s account for a $500 deposit made by Tryon Company

Deduct from the bank balance

A check for $753 written by Trisha during the current month was erroneously recorded as a $375 payment

Deduct from book balance

Bank statement included a check from customer that was marked NSF

Deduct from book balance

A $600 deposit made on the last day of the current month did not appear on this month’s bank statement

Add to bank balance

If a bookkeeper mistakenly recorded a $36 deposit as $63, the error would be shown on the bank reconciliation as?

$27 deduction from the book balance

If a bank reconciliation included a deposit in transit of $790, the entry to record this reconciling item wold be a

No entry is required