Question 1

Link's entry to record the NSF check will

Accepted Answer

A)   increase the Accounts Receivable account.
B)   decrease the Cash account.
C)   not affect the total amount of assets.
D)   all of these.E) A) and C)
F) A) and B)

Question 2

Indicate whether each of the following statements about a bank statement is true or false.
-The confidentiality rules of the AICPA's code of ethics for CPAs do not prohibit auditors from testifying in a court of law

Accepted Answer

A) True 
 B)False

Question 3

Indicate whether each of the following statements about a bank statement is true or false.
-A qualified opinion means that the financial statements are in compliance with GAAP, but the auditors have reservations about something in the financial statements

Accepted Answer

A) True 
 B)False

Question 4

Indicate whether each of the following statements about separation of duties is true or false.
-When a business achieves a clear separation of duties, the work of one employee acts as a check on the work of other employees

Accepted Answer

A) True 
 B)False

Question 5

At June 30, 2014, the bank reconciliation of Swale Company reveals deposits in transit of $2,000.

Accepted Answer

The answer of At June 30, 2014, the bank reconciliation...

Question 6

At June 30, 2014, the bank reconciliation of Stein Company reveals outstanding checks of $820.

Accepted Answer

The answer of At June 30, 2014, the bank reconciliation...

Question 7

Indicate whether each of the following statements regarding internal controls is true or false.
-All spoiled and voided checks should be defaced and retained

Accepted Answer

A) True 
 B)False

Question 8

The most negative opinion that an auditor can express is the

Accepted Answer

A)   Unqualified opinion
B)   Qualified opinion
C)   Adverse opinion
D)   DisclaimerE) None of the above
F) C) and D)

Question 9

Which of the following is not a feature of an internal control system?

Accepted Answer

A)   Separation of duties so that fraud or theft requires collusion
B)   Establishing clear lines of authority and responsibility
C)   Using unnumbered receipts and purchase orders
D)   Implementing physical controls such as locking cash in a safeE) C) and D)
F) B) and C)

Question 10

Krieger Company's bank statement included an NSF check written by one of its customers. What effect will the entry to recognize the NSF check have on the company's financial statements?

Accepted Answer

A)   Choice A
B)   Choice B
C)   Choice C
D)   Choice DE) A) and C)
F) All of the above

Question 11

Indicate whether each of the following statements about a bank statement is true or false.
-The bank statement is prepared from the bank customer's point of view

Accepted Answer

A) True 
 B)False

Question 12

Indicate whether each of the following statements about cash payments is true or false.
-Reviewing supporting documents before signing a check can prevent employee theft and also reveal errors that employees may have made

Accepted Answer

A) True 
 B)False

Question 13

When a customer's NSF check is returned to a business, the business should record an uncollectible account loss.

Accepted Answer

A) True 
 B)False

Question 14

A financial statement audit is

Accepted Answer

A)   a detailed examination of a company's financial statements
B)   tests the reliability of the accounting system used to produce the financial statements
C)   conducted by an independent auditor
D)   all of the aboveE) A) and B)
F) B) and C)

Question 15

Which of the following statements concerning internal controls is true?

Accepted Answer

A)   Internal administrative controls are designed to limit the amount of funds spent on investments.
B)   The control procedure, separation of duties, prohibits the employment of a husband and wife or other closely related parties within the same company.
C)   Internal accounting controls are limited to the policies and procedures used to protect the company from embezzlement.
D)   A strong internal control system provides reasonable assurance that the objectives of a company will be accomplished.E) C) and D)
F) All of the above

Question 16

Indicate whether each of the following statements about cash payments is true or false.
-A spoiled check should be marked void and then discarded or shredded

Accepted Answer

A) True 
 B)False

Question 17

Indicate whether each of the following statements about separation of duties is true or false.
-Having a clear separation of duties will reduce employees' temptation to commit theft or fraud

Accepted Answer

A) True 
 B)False

Question 18

Wren Company accepted a check from Jay Company as payment for services rendered. Wren's bank statement revealed that the Jay check was an NSF check. What effect will the entry to record the NSF check have on the accounting equation of Wren Company?

Accepted Answer

A)   Choice A
B)   Choice B
C)   Choice C
D)   Choice DE) A) and B)
F) A) and C)

Question 19

An effective system of internal control is designed to detect the following except for:

Accepted Answer

A)   collusion
B)   fraud
C)   theft
D)   irregularitiesE) A) and B)
F) A) and C)

Question 20

Indicate whether each of the following statements is true or false.
-Outstanding checks do not appear on the bank statement

Accepted Answer

A) True 
 B)False

Exam 4: Internal Controls, Accounting for Cash, and Ethics

When a customer's NSF check is returned to a business, the business should record an uncollectible account loss.

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about a bank statement is true or false. -A qualified opinion means that the financial statements are in compliance with GAAP, but the auditors have reservations about something in the financial statements

Correct AnswerverifiedShow Answer

At June 30, 2014, the bank reconciliation of Stein Company reveals outstanding checks of $820.

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements regarding internal controls is true or false. -All spoiled and voided checks should be defaced and retained

Correct AnswerverifiedShow Answer

Link's entry to record the NSF check will

Correct AnswerverifiedShow Answer

Wren Company accepted a check from Jay Company as payment for services rendered. Wren's bank statement revealed that the Jay check was an NSF check. What effect will the entry to record the NSF check have on the accounting equation of Wren Company?

Correct AnswerverifiedShow Answer

Which of the following statements concerning internal controls is true?

Correct AnswerverifiedShow Answer

Which of the following is not a feature of an internal control system?

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about separation of duties is true or false. -Having a clear separation of duties will reduce employees' temptation to commit theft or fraud

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about separation of duties is true or false. -When a business achieves a clear separation of duties, the work of one employee acts as a check on the work of other employees

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about cash payments is true or false. -Reviewing supporting documents before signing a check can prevent employee theft and also reveal errors that employees may have made

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about a bank statement is true or false. -The bank statement is prepared from the bank customer's point of view

Correct AnswerverifiedShow Answer

The most negative opinion that an auditor can express is the

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about a bank statement is true or false. -The confidentiality rules of the AICPA's code of ethics for CPAs do not prohibit auditors from testifying in a court of law

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements is true or false. -Outstanding checks do not appear on the bank statement

Correct AnswerverifiedShow Answer

A financial statement audit is

Correct AnswerverifiedShow Answer

At June 30, 2014, the bank reconciliation of Swale Company reveals deposits in transit of $2,000.

Correct AnswerverifiedShow Answer

Krieger Company's bank statement included an NSF check written by one of its customers. What effect will the entry to recognize the NSF check have on the company's financial statements?

Correct AnswerverifiedShow Answer

An effective system of internal control is designed to detect the following except for:

Correct AnswerverifiedShow Answer

Indicate whether each of the following statements about cash payments is true or false. -A spoiled check should be marked void and then discarded or shredded

Correct AnswerverifiedShow Answer

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