Strayer Acc557 Week 6 Quiz

ACC 557 Week 6 QuizACC 557 Week 6 Quiz – Strayer NEWAll possible questions with answers

TRUE-FALSE STATEMENTS

  1. Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate.

&nbsp,Ans: LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. A highly automated computerized system of accounting eliminates the need for internal control.

&nbsp,Ans: LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Technology, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The safeguarding of assets is an objective of a company’s system of internal control.

&nbsp,Ans: LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Management is responsible for establishing a system of internal control.

&nbsp,Ans: LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Internal control is most effective when several people are responsible for a given task.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

&nbsp,Ans: LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

&nbsp,Ans: LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

&nbsp,Ans: LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Only large companies need to be concerned with a system of internal control.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Firms use physical controls primarily to safeguard their assets.

&nbsp,Ans: LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. A segregation of duties among employees eliminates the possibility of collusion.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. For efficiency of operations and better control over cash, a company should maintain only one bank account.

&nbsp,Ans: LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Cash registers are an important internal control device used in controlling over-the-counter receipts.

&nbsp,Ans: LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Checks received in the mail should be immediately stamped “NSF” to prevent unauthorized cashing of the check.

&nbsp,Ans: LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Control over cash disbursements is improved if major expenditures are paid by check.

&nbsp,Ans: LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. In a voucher system, vouchers are prepared in the accounts receivable department.

&nbsp,Ans: LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Electronic funds transfer (EFT) is a disbursement system that uses telephone or computer to transfer cash from one location to another.

&nbsp,Ans: LO: 4, Bloom: AP, Difficulty: Easy, Min: 1, AACSB: Technology, AICPA BB: Resource Management, AICPA FN: None, AICPA PC: Project Management, IMA: Business Economics&nbsp,

  1. A voucher system is used by many large companies as a means of controlling cash receipts.

&nbsp,Ans: LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The petty cash fund eliminates the need for a bank checking account.

&nbsp,Ans: LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Business Economics&nbsp,

  1. Cash register overages are deposited in the petty cash fund and cash shortages are made-up from the petty cash fund.

&nbsp,Ans: LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Business Economics&nbsp,

  1. A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

&nbsp,Ans: LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: None, AICPA PC: None, IMA: Business Economics

  1. If a company deposits all its receipts in the bank and pays all its bills by check, then the monthly bank statement balance will always agree with the company’s record of its checking account balance.

&nbsp,Ans: LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics&nbsp,

  1. Checks from customers who pay their accounts promptly are called outstanding checks.

&nbsp,Ans: LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: None, AICPA PC: Communications, IMA: Business Economics&nbsp,

  1. All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

&nbsp,Ans: LO: 7, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA&nbsp,

  1. A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

&nbsp,Ans: LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics&nbsp,

  1. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash.

&nbsp,Ans: LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics&nbsp,

  1. Cash which is restricted for a specific use should be separately reported.

&nbsp,Ans: LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting&nbsp,

  1. A company always reports restricted cash as a noncurrent asset.

&nbsp,Ans: LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting&nbsp,

  1. A company with a net negative balance in its bank account should report this balance among current liabilities.

&nbsp,Ans: LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting&nbsp,

  1. Companies report cash in both the balance sheet and the statement of cash flows.

&nbsp,Ans: LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting&nbsp,

  1. Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

&nbsp,Ans: LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. In general, documents should be prenumbered and all documents should be accounted for.

&nbsp,Ans: LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: Project Management, IMA: Internal Controls&nbsp,

  1. Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

&nbsp,Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Personnel who handle cash receipts should have the option of taking a vacation or not.

&nbsp,Ans: LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The duties of approving an item for payment and paying the item should be done by different departments or individuals.

&nbsp,Ans: LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

&nbsp,Ans: LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. A debit memorandum could show the collection of a note receivable by the bank.

&nbsp,Ans: LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics&nbsp,

  1. To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by an employee who has no other responsibilities pertaining to cash.

&nbsp,Ans: LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,&nbsp,&nbsp,

MULTIPLE CHOICE QUESTIONS

  1. Which one of the following is not an objective of a system of internal controls?
  2. Safeguard company assets
  3. Overstate liabilities in order to be conservative
  4. Enhance the accuracy and reliability of accounting records
  5. Reduce the risks of errors

&nbsp,Ans: LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. Internal controls are concerned with
  2. only manual systems of accounting.
  3. the extent of government regulations.
  4. safeguarding assets.
  5. preparing income tax returns.

&nbsp,Ans: LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls&nbsp,

  1. All of the following requirements about internal controls were enacted under the Sarbanes- Oxley Act except,
  2. independent outside auditors must attest to the level of internal control.
  3. companies must develop sound internal controls over financial reporting.
  4. companies must continually assess the functionality of internal controls.
  5. independent outside auditors must eliminate redundant internal controls.
  6. Originally posted 2018-07-14 00:53:17. Republished by Blog Post Promoter