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76 Multiple choice questions

  1. Debit Service Fee Expense for $6.
  2. Maximum purchase limits set on debit and credit cards.
    (Think about authorization for all purchases and use of credit and debit cards.)
  3. A credit to Cash (Recording the establishment of a petty cash account will include a debit to the Petty Cash account and a credit to Cash.)
  4. The actual performance of individuals or processes should be checked against their expected performance.
  5. Debit to Accounts Receivable.
  6. that the lead auditor in charge of auditing a particular company must rotate off that company within five years and allow a new audit partner to take the lead.
  7. reconciling the bank's cash balance, reconciling the company's cash balance, and adjusting the company's cash balance.
  8. recording transactions to establish the fund, recognize expenditures from the fund, and replenish the fund as the cash balance becomes sufficiently low.
  9. Small amount of cash kept on hand to pay for minor purchases
  10. The use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources
  11. A company's plans to (1) safeguard the company's assets and (2) improve the accuracy and reliability of accounting information
  12. Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly referred to as SOX.
  13. Outstanding Check (After a bank recieves the checks outstanding, the banks cash balance will decrease.)
  14. disbursing physical cash, writing checks and using credit cards and debit cards to make payments.
  15. True, From a store's perspective, think of similarities between debit cards and credit cards.
  16. The company should provide employees with appropriate guidance to ensure they have the knowledge necessary to carry out their job duties.
  17. In the first two steps, we should catch timing differences as well as errors made by either the company or the bank. In the third step, we update the company's accounting records for cash transactions that have occurred but have not yet been recorded.
  18. Acceptance of Credit Cards
  19. Cash receipts of the company that have not been added to the bank's record of the company's balance
  20. Timing Difference
  21. The ability of net income to help predict future performance of the company
  22. the reliability of the accounting information system itself. If the accountant's office has papers scattered everywhere, and you learn the company still does all its accounting by hand without a computer, wouldn't you, as an investor or lender, be a bit worried?
    Example:an anonymous tip hotline should be in place to encourage communication about unethical activities, such as an employee giving concession items free to her friends.
  23. cash against the company's checking account and putting that amount of withdrawn cash in the hands of an employee who becomes responsible for it.
  24. Currency, coins, balances in savings and checking accounts, items acceptable for deposit in these accounts (such as checks received from customers), and cash equivalents
  25. Employees responsible for making cash disbursements are not in charge of cash receipts. ( Preventive controls are designed to keep errors or fraud from occurring in the first place.)
  26. keep errors or fraud from occurring in the first place. These include separation of duties, physical controls over assets and accounting records, proper authorization to prevent improper use of the company's resources, and employee management.
  27. Collusion
  28. identifies and analyzes internal and external risk factors that could prevent a company's objectives from being achieved.
  29. Internal risks for the theatre include issues such as unsafe lighting, faulty video projectors, unsanitary bathrooms, and employee incompetence with regard to food preparation. Common examples of external risks include a vendor supplying lower-grade or unsafe popcorn, moviegoers' security in the parking lot, or perhaps the decline in customer demand from DVD rentals or On Demand at home.
  30. preventive and detective
  31. Accounting personnel routinely reconciles the company's cash records with those of its bank to identify discrepancies. (Bank reconciliation is an example of a detective control.)
  32. control environment, risk assessment, control activities, monitoring, and information and communication.
  33. Debit $20 to Service Fee Expense
  34. Checks the company has written that have not been subtracted from the bank's record of the company's balance
  35. Management should periodically determine whether the amounts of physical assets of the company match the accounting records.
  36. True
  37. False, Think about the requirement for appropriate documentation.
  38. whether the internal controls are adequate.
  39. formal procedures for reporting control deficiencies. Monitoring of internal controls needs to occur on an ongoing basis. For instance, a movie theater manager should compare daily cash from sales with the number of tickets issued, compare concession sales with units purchased, and make sure employees are paid only for actual hours worked.
  40. To prevent improper use of the company's resources, only certain employees are allowed to carry out certain business activities.
  41. True, We need to reduce the balance in the petty cash account to recognize expenditures.
  42. Two+ people acting in coordination to circumvent internal controls.
  43. False, The journal entry is similar to the one required to establish a petty cash fund.
  44. Operating cash flows plus investing cash flows during the period
  45. The company should maintain security over assets and accounting records.
  46. audit public companies whose chief executives worked for the audit firm and participated in that company's audit during the preceding year.
  47. sets the overall ethical tone of the company with respect to internal control.

  48. last one is credit cash 2458
  49. Accounts Payable
  50. audit committee of the Board of Directors of the company, not by company management.
  51. detect errors or fraud that already have occurred. These include reconciliations and performance reviews.
  52. Error
  53. policies and procedures that help ensure that management's directives are being carried out. These activities include authorizations, reconciliations, and separation of duties.
  54. If the cashier and the accountant in a firm decide to work together to steal cash, theft will be much more difficult to detect.
  55. Public Company Accounting Oversight Board (PCAOB),
  56. Matching the balance of cash in the bank account with the balance of cash in the company's own records. (If you have your own checking account, you know that the balance of cash in your checkbook often does not equal the balance of cash in your bank account.)
  57. 7 years or face a prison term for willful violation.
  58. certain non-audit services, such as consulting, for their clients.
  59. Cash
  60. has the authority to establish standards dealing with auditing, quality control, ethics, independence, and other activities relating to the preparation of audited financial reports.
  61. Short-term investments that have a maturity date no longer than 3 months from the date of purchase. Common examples of such investments are money market funds, Treasury bills, and certificates of deposit.
  62. Individuals who have physical responsibility for assets should not also have access to accounting records.
  63. These include items such as interest earned by the company, collections made by the bank on the company's behalf, service fees, and charges for NSF checks.
  64. False, Think of responsibilities of executives after the passing of the Sarbanes-Oxley Act.
  65. Authorizing transactions, recording transactions, and maintaining control of the related assets should be separated among employees.
  66. Checks drawn on nonsufficient funds, or "bad" checks from customers
  67. Debit Petty Cash, $350.
  68. Cash for 250 (Think of the asset account that the company would have increased earlier, when it recieved the check.)
  69. Internal Controls
  70. A week or Month
  71. the store records the $5,000 credit card transaction as $4,850 cash received and $150 service fee expense.
  72. Authorizing transactions, recording transactions, and maintaining control of the related assets should be separated among employees
  73. Make all disbursements, other than small ones, by check, debit card, or credit card.

    Authorize all expenditures before purchase and verify the accuracy of the purchase itself.

    Make sure checks are serially numbered and signed only by authorized employees. Require two signatures for larger checks.

    Periodically check amounts shown in the debit card and credit card statements against purchase receipts.

    Make sure that duties are separated. Employees responsible for making cash disbursements should not also be in charge of cash receipts.