1.

The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of
the employer’s resources is called occupational

Ans;
Fraud

2. The Public Company Accounting Reform and Investor Protection Act of 2002 is know as the

Ans:
Sarbanes-Oxley Act.

3. Internal control consists of plans to

Ans:
- Provide accurate and reliable accounting information
- Safeguard company assets

4. The framework for designing an internal control system is provided by the

Ans:
Committee of Sponsoring Organisations (COSO) of the Treadway Commission

5. Two types of control activities are

Ans:
Preventive and detective controls

6. When a person intentionally deceives another person to company for personal gain, this is referred to as

Ans:
Fraud

7. The assets that is most susceptible to employee fraud is

Ans:
Cash

8. The Sarbanes-Oxley Act applies to

Ans:
Companies that are required to file with the SEC

9. A company’s plans to safeguard company asserts and enhance the reliability and accuracy of accounting
information are referred to as

Ans:
Internal control

10. Which of the following items are not included in cash

Ans:
Accounts receivable from customers
11. The Committee of Sponsoring Organisations (COSO) of the Treadway Commission provided a
framework for

Ans:
Designing an internal control system

12. Effective internal control over cash requires segregation of duties. Which of the following duties should
be segregated

Ans:
- Opening the mail and deposit of checks in the bank
- Depositing checks into the bank and recording receipts in the accounting records

Explanation:
The individual who opens the mail should make a list of the checks

13. The two types of control procedures are preventive and

Ans:
Detective

14. One of the most important internal controls for cash is the bank

Ans:
Reconciliation

15. The assets that is most easily stolen and susceptible to fraud is

Ans:

Cash

16. What is the primary purpose of a bank reconciliation

Ans:
To ensure the bank balance per reconciliation is equal to the company balance per reconciliation

17. The Public Company Accounting Reform and Investor Protection Act of 2002 is known as the

Ans:
Sarbanes-Oxley Act

18. What would cause a bank statement not to agree with the cash balance in the accounting records

Ans:
- The bank paid interest that the company has not recorded
- Deposits outstanding that have been recorded on the company’s records, bit not on the bank’s
- The company made an error in recording a deposit
- The bank made an error in recording a deposit
- The bank made an error in recording a deposit made by the company
19. Which of the following items are included in cash

Ans:
- Currency and coins
- Balance in checking accounts
- Checks from customers

20. If a company records a transaction before the bank records the same transactions, this is called a/an
_____ difference

Ans:
Timing

21. Which of the following are common controls over cash receipts

Ans:
- Open mail day and making a detailed list of checks received
- Having two different employees take custody of the checks and make the deposit

22. Preparation of a bank _____ helps maintain control of cash accounts

Ans:
Reconciliation

23. Order of bank reconciliation

a. Bank’s cash balance
b. Company’s cash balance
c. Company’s cash account adjustment

24. A bank reconciliation reconciles the bank statement with the company’s

Ans:
Cash account in the balance sheet

25. Cash disbursement that have been recorded in the company’s accounting records but are not yet recorded
by the bank are called

Ans:
Check outstanding

26. A bank statement may not agree with the amount of cash recorded but the company in the cash account
because of ____ differences and errors

Ans:
Timing

27. A(n) ____ difference in cash occurs when a company records a transaction either before or after the bank
records the same transaction

Ans:
Timing
28. When adjusting the company’s cash account balance in a bank reconciliation, which item must be added
to the cash account balance

Ans:
Collection of funds by the bank

29. Effective internal control over cash requires segregation of duties. Which of the following duties should
be segregated

Ans:
- Opening the mail and deposit of checks in the bank
- Depositing checks into the bank and recording receipts in the accounting.records

30. A non-sufficient funds check requiring an adjustment to the cash balance was written

Ans:
To the company preparing the bank reconciliation

31. Which of the following steps are necessary to reconcile the bank balance and the cash account balance

Ans:
- Adjust bank’s cash balance for items not in bank statement
- Adjust the company’s cash balance for items not in company records
- Record items that reconcile the company’s cash balance

32. Cash receipts that have been recorded in the company’s accounting records but are not yet recorded by
the bank are

Ans:
Deposits outstanding

33. In a bank reconciliation, which of the following will require a journal entry by the company

Ans:
Adjustments to the balance per books for items discovered on the bank reconciliation that were not yet
recorded on the books

34. What would cause a bank statement not to agree with the cash balance in the accounting records

Ans:
- The bank paid interest that the company has not recorded
- Deposits outstanding that have been recorded on the company’s records, but not on the bank’s
- The company made an error in recording a deposit
- The bank made an error in recording a deposit made by the company

35. A petty cash fund is used for

Ans:
Small amounts of cash needed for low-cost items
36. When adjusting the company’s cash account balance in a bank reconciliation, which items reduce the
company’s cash account balance

Ans:
- Service charges
- Charges for NSF checks

37. Margot, a prospective investor, wants to know how much cash Ziegler Inc. has on December 31. Margot
can find the information in Ziegler’s

Ans:
- Statement of cash flows
- Balance sheet

38. A check that is NSF (non sufficient funds) is a check that

Ans:
Cannot be paid because the account does not contain enough funds

39. Smith’s operating cash flow in millions were $100, $180, $80 during the past three years; while Jone’s
operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of
operations cash flows, which company would likely be perceived a riskier?

Ans:
Smith

Explanation:
Smith, because h=its operating cash flow shoe more variability

40. Order of bank reconciliation

a. Bank’s cash balance
b. Company’s cash balance
c. Company’s cash account adjustment

41. Which of the following items will require a journal entry following a bank reconciliation

Ans:
- NFS checks
- Notes collected by the bank

42. A small amount of cash on hand to pay for minor purchase is commonly referred to as a(n) ___ _____
fund

Ans:
Petty cash

43. The ending balance in cash is reported in which financial statement(s)

Ans:
The balance sheet and statement of cash flow
44. True or false: variability in operating cash flows is unimportant as long as the total cash flows over a
three-year period is sufficiently positive

Ans:
False

45. In a bank reconciliation, which of the following will require a journal entry by the company

Ans:
Adjustments to the balance per books for items discovered on the bank reconciliation that were nit yet
recorded on the books

46. Smith’s operating cash flow in millions were $100, $180, $80 during the past three years; while Jone’s
operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of
operations cash flows, which company would likely be perceived a riskier?

Ans:
Smith

47. Which of the following items will require a journal entry following a bank reconciliation

Ans:
- NSF checks
- Notes collected by the bank