Mahmoud Hemood
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Mahmoud Hemood
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Chapter 7 - Sarbanes Oxley, Internal Control, and Cash

Chapter 7 - Sarbanes Oxley, Internal Control, and Cash

Question 1 of 24

1

SarbanesOxley applies to

Select one of the following:

  • Publicly held companies

  • not for profit organizations

  • privately held businesses

  • all of these

Explanation

Question 2 of 24

1

"To maintain public confidence and trust in the financial reporting of companies" is the purpose of

Select one of the following:

  • the FASB

  • the IRS

  • Sarbanes Oxley

  • GAAP

Explanation

Question 3 of 24

1

Which one of the following below is NOT an element of internal control?

Select one of the following:

  • risk assessment

  • monitoring

  • information and communication

  • cost-benefit considerations

Explanation

Question 4 of 24

1

The objectives of internal control are to

Select one of the following:

  • control the internal organization of the accounting department personnel and equipment

  • provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with

  • prevent fraud, and promote the social interest of the company

  • provide control over "internal-use only" reports and employee internal conduct

Explanation

Question 5 of 24

1

Which one of the following reflects a weak internal control system?

Select one of the following:

  • all employees are well supervised

  • a single employee is responsible for comparing a receiving report to an invoice

  • all employees must take their vacations

  • a single employee is responsible for collecting and recording of cash

Explanation

Question 6 of 24

1

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Select one of the following:

  • Risk Assessment

  • Monitoring

  • Proofs and Security Measures

  • Information and Communication

Explanation

Question 7 of 24

1

The portion of an invoice that is returned with payment is a

Select one of the following:

  • remittance advice

  • voucher

  • debit memo

  • credit memo

Explanation

Question 8 of 24

1

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n)

Select one of the following:

  • Invoice

  • Voucher

  • Debit Memo

  • Remittance Advice

Explanation

Question 9 of 24

1

A voucher is usually supported by

Select one of the following:

  • A Supplier's invoice

  • A purchase order

  • A receiving report

  • All of these

Explanation

Question 10 of 24

1

Credit memos from the bank

Select one of the following:

  • decrease a bank customer's account

  • are used to show a bank service charge

  • show that a company has deposited a customer's NSF check

  • show the bank has collected a note receivable for the customer

Explanation

Question 11 of 24

1

A bank statement

Select one of the following:

  • is a credit reference letter written by the company's bank

  • shows a company the financial position of the bank as of a certain date

  • is a bill from the bank for services rendered

  • shows the activity that increased or decreased the company's account balance

Explanation

Question 12 of 24

1

The amount of deposits in transit is included on the bank reconciliation as a(n)

Select one of the following:

  • deduction from the balance per the company's books

  • deduction from the balance per bank statement

  • addition to the balance per company books

  • addition to the balance per bank statement

Explanation

Question 13 of 24

1

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)

Select one of the following:

  • addition to the balance per company's records

  • deduction from the balance per bank statement

  • addition to the balance per bank statement

  • deduction from the balance per company's records

Explanation

Question 14 of 24

1

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)

Select one of the following:

  • addition to the balance per the company's records

  • addition to the balance per the bank statement

  • deduction from the balance per the bank statement

  • deduction from the balance per the company's records

Explanation

Question 15 of 24

1

A bank reconciliation should be prepared periodically because

Select one of the following:

  • the company's records and the bank's records are in agreement

  • the bank has not recorded all of its transactions

  • any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected

  • the bank must make sure that its records are correct

Explanation

Question 16 of 24

1

Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is

Select one of the following:

  • a deduction from the balance per company's records

  • an addition to the balance per bank statement

  • a deduction from the balance per bank statement

  • an addition to the balance per company's records

Explanation

Question 17 of 24

1

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n)

Select one of the following:

  • deduction from the balance per the company's records

  • addition to the balance per the bank statement

  • deduction from the balance per the bank statement

  • addition to the balance per the company's records

Explanation

Question 18 of 24

1

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

Select one of the following:

  • deduction from the balance per company's records

  • addition to the balance per bank statement

  • deduction from the balance per bank statement

  • addition to the balance per company's records

Explanation

Question 19 of 24

1

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)

Select one of the following:

  • deduction from the balance per company's records

  • addition to the balance per bank statement

  • deduction from the balance per bank statement

  • addition to the balance per company's records

Explanation

Question 20 of 24

1

The amount of the outstanding checks is included on the bank reconciliation as a(n)

Select one of the following:

  • deduction from the balance per company's records

  • addition to the balance per bank statement

  • deduction from the balance per bank statement

  • addition to the balance per company's records

Explanation

Question 21 of 24

1

Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n)

Select one of the following:

  • deduction from the balance per company's records

  • addition to the balance per bank statement

  • deduction from the balance per bank statement

  • addition to the balance per company's records

Explanation

Question 22 of 24

1

Which of the following would be subtracted from the balance per books on a bank reconciliation?

Select one of the following:

  • outstanding checks

  • deposits in transit

  • notes collected by the bank

  • error in recording a check for $732 as $723

Explanation

Question 23 of 24

1

Cash equivalents include

Select one of the following:

  • checks

  • coins and currency

  • money market accounts and commercial paper

  • stocks and short-term bonds

Explanation

Question 24 of 24

1

Cash equivalents

Select one of the following:

  • are illegal in some states

  • will be converted to cash within two years

  • will be converted to cash within 90 days

  • will be converted to cash within 120 days

Explanation

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