Question 1

The purpose of the Sarbanes-Oxley Act of 2002 is to:

Accepted Answer

A)   restore public confidence and trust in the financial statements of publicly held companies.
B)   require all companies to prepare financial statements.
C)   protect companies from demands of investors, stockholders, and creditors.
D)   do all of these.E) C) and D)
F) B) and C)

Question 2

Internal controls are important because they:

Accepted Answer

A)   deter fraud and prevent misleading financial statements.
B)   eliminate fraud.
C)   ensure that the company maintains a compensating balance.
D)   guarantee accurate financial statements.E) A) and D)
F) None of the above

Question 3

A customer's check received in settlement of an account receivable is considered cash.

Accepted Answer

A) True 
 B)False

Question 4

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Accepted Answer

A)   Increase Notes Receivable; decrease Cash
B)   Increase Cash; increase Miscellaneous Income
C)   Increase Cash; decrease Notes Receivable
D)   Increase Accounts Receivable; decrease CashE) None of the above
F) A) and B)

Question 5

In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 6

A special cash fund used to make small payments that occur frequently is called a(n) :

Accepted Answer

A)   operating expenses fund.
B)   change fund.
C)   market fund.
D)   petty cash fund.E) B) and C)
F) B) and D)

Question 7

A credit memorandum from the bank :

Accepted Answer

A)   decreases a bank customer's account.
B)   is used to show a bank service charge.
C)   shows that a company has deposited a customer's NSF check.
D)   shows the bank has collected a note receivable for the customer.E) B) and C)
F) A) and B)

Question 8

A business that requires all cash payments be made by check cannot use a petty cash system.

Accepted Answer

A) True 
 B)False

Question 9

Money orders are considered cash.

Accepted Answer

A) True 
 B)False

Question 10

Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor's accounts?

Accepted Answer

A)   Increase Miscellaneous Expense; decrease Cash
B)   Increase Cash; increase Other Income
C)   Increase Cash; increase Accounts Payable
D)   Decrease Accounts Payable; decrease CashE) A) and B)
F) A) and C)

Question 11

A voucher:

Accepted Answer

A)   is received from customers to explain the purpose of a payment.
B)   is normally prepared in the Accounting Department.
C)   system is used to control cash receipts.
D)   system is an internal control procedure to verify that the assets in the records are the ones the company owns.E) None of the above
F) A) and B)

Question 12

On the bank's accounting records, customers' accounts are normally shown as a(n) :

Accepted Answer

A)   revenue.
B)   liability.
C)   asset.
D)   expenses.E) B) and C)
F) All of the above

Question 13

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Accepted Answer

A) True 
 B)False

Question 14

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

Accepted Answer

A) True 
 B)False

Question 15

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a:

Accepted Answer

A)   debit to Accounts Receivable.
B)   debit to Cash.
C)   debit to Accounts Payable.
D)   credit to Accounts Payable.E) B) and C)
F) A) and C)

Question 16

Using the following information, prepare a bank reconciliation for Wilkes Co. for May 31, 2013:
 (a)The bank statement balance is $ \$ 3,512 $.
(b)The cash ac count balance is $ \$ 3,165 $.
(c)Outstanding checks amounted to $ \$ 590 $.
(d)Deposits in transit are $ \$ 204 $.
(e)The bank service charge is $ \$ 30 $.
(f)A check for $ \$ 76 $ for supplieswasrecorded on the depositor's books as $ \$ 67 $.

Accepted Answer

The answer of Using the following information, prepare a bank...

Question 17

What adjustment is required in the depositor's accounts to record outstanding checks?

Accepted Answer

A)   None
B)   Increase Cash; decrease Accounts Receivable
C)   Increase Cash; increase Accounts Payable
D)   Increase Accounts Receivable; decrease CashE) A) and B)
F) A) and C)

Question 18

Outstanding checks are checks that have been issued but have not cleared by the bank.

Accepted Answer

A) True 
 B)False

Question 19

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n) :

Accepted Answer

A)   addition to the cash balance per books.
B)   addition to the cash balance per bank.
C)   deduction from the cash balance per bank.
D)   deduction from the cash balance per books.E) B) and C)
F) A) and B)

Question 20

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Accepted Answer

A) True 
 B)False

Exam 5: Sarbanes-Oxley, Internal Control, and Cash

Outstanding checks are checks that have been issued but have not cleared by the bank.

Correct Answer
verified

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

Correct Answer
verified

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a:

Correct Answer
verified

Internal controls are important because they:

Correct Answer
verified

What adjustment is required in the depositor's accounts to record outstanding checks?

Correct Answer
verified

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Correct Answer
verified

A credit memorandum from the bank :

Correct Answer
verified

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n) :

Correct Answer
verified

A special cash fund used to make small payments that occur frequently is called a(n) :

Correct Answer
verified

Money orders are considered cash.

Correct Answer
verified

On the bank's accounting records, customers' accounts are normally shown as a(n) :

Correct Answer
verified

In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the cash balance per books.

Correct Answer
verified

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Correct Answer
verified

A voucher:

Correct Answer
verified

Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor's accounts?

Correct Answer
verified

A business that requires all cash payments be made by check cannot use a petty cash system.

Correct Answer
verified

A customer's check received in settlement of an account receivable is considered cash.

Correct Answer
verified

The purpose of the Sarbanes-Oxley Act of 2002 is to:

Correct Answer
verified

Correct Answer
verified

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Correct Answer
verified

Exam 5: Sarbanes-Oxley, Internal Control, and Cash

Outstanding checks are checks that have been issued but have not cleared by the bank.

Correct AnswerverifiedShow Answer

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a:

Correct AnswerverifiedShow Answer

Internal controls are important because they:

Correct AnswerverifiedShow Answer

What adjustment is required in the depositor's accounts to record outstanding checks?

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Correct AnswerverifiedShow Answer

A credit memorandum from the bank :

Correct AnswerverifiedShow Answer

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n) :

Correct AnswerverifiedShow Answer

A special cash fund used to make small payments that occur frequently is called a(n) :

Correct AnswerverifiedShow Answer

Money orders are considered cash.

Correct AnswerverifiedShow Answer

On the bank's accounting records, customers' accounts are normally shown as a(n) :

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the cash balance per books.

Correct AnswerverifiedShow Answer

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Correct AnswerverifiedShow Answer

A voucher:

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor's accounts?

Correct AnswerverifiedShow Answer

A business that requires all cash payments be made by check cannot use a petty cash system.

Correct AnswerverifiedShow Answer

A customer's check received in settlement of an account receivable is considered cash.

Correct AnswerverifiedShow Answer

The purpose of the Sarbanes-Oxley Act of 2002 is to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Correct AnswerverifiedShow Answer

Correct Answer
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