acct final 4

13 November 2022
4.7 (213 reviews)
63 test answers

Unlock all answers in this set

Unlock answers (59)
question
Cash flows from investing activities do not include:
answer
Borrowing.
question
Cash flows from financing activities include:
answer
Dividends paid.
question
Issuing common stock for cash is considered a(n):
answer
Financing cash flow.
question
Providing services to customers on account is considered a(n):
answer
Not a cash flow.
question
Payment of dividends to stockholders is considered a(n):
answer
Financing cash flow.
question
Investing cash flows would include which of the following?
answer
Purchase of a building with cash.
question
Which of the following is NOT correct regarding the reporting of cash?
answer
Cash flows from buying and selling investments and long-term productive assets are called operating cash flows.
question
Cash flows from investing do not include cash flows from:
answer
Borrowing.
question
Operating cash flows would exclude:
answer
Payment of dividends.
question
The statement of cash flows reports cash flows from the activities of:
answer
Financing, investing, and operating.
question
A company's cash balance is reported in which two financial statements?
answer
Balance sheet and statement of cash flows.
question
Consider the following cash flow items: Pay amount owed to bank for previous borrowing. Pay utility costs. Purchase equipment to be used in operations. Purchase office supplies. Purchase one year of rent in advance. Pay workers' salaries. Pay for research and development costs. Pay taxes to the IRS. Sell common stock to investors. How many of these cash flow items involve financing activities?
answer
Two (1) Pay amount owed to bank for previous borrowing and (2) Sell common stock to investors.
question
Consider the following cash flow items: Pay amount owed to bank for previous borrowing. Pay utility costs. Purchase equipment to be used in operations. Purchase office supplies. Pay one year of rent in advance. Pay workers' salaries. Pay for research and development costs. Pay taxes to the IRS. Sell common stock to investors. How many of these cash flow items involve investing activities?
answer
Purchase equipment to be used in operations.
question
The following data were obtained from the bank statement and from the process of reconciling it: Bank service charges = $20 Deposit outstanding = $150 Interest earned on the bank account = $10 Checks outstanding = $400 Which items should be deducted from and added to the bank balance in completing the reconciliation?
answer
Deduct checks outstanding; add deposit outstanding.
question
After preparing a bank reconciliation, a check outstanding for the payment of advertising would be recorded with a:
answer
No entry is needed
question
After preparing a bank reconciliation, the service fee charged by the bank would be recorded with a:
answer
Debit to Service Fees Expense.
question
After preparing a bank reconciliation, the collection of a note by the bank on a company's behalf would be recorded with a:
answer
Credit to Notes Receivable.
question
Which of the following is correct with respect to a bank reconciliation?
answer
Subtract NSF checks from the company's balance.
question
Which of the following is NOT a reason why a bank reconciliation is necessary?
answer
Petty cash has a low balance.
question
Cash transactions that have been recorded by the company but not the bank include:
answer
Deposits outstanding.
question
The following information was taken from the bank reconciliation for Mooner Sooner Inc. at the end of the year: Bank balance: $8,000 Checks outstanding: $5,800 Note collected by the bank: $1,500 Service fee: $20 Deposits outstanding: $4,000 NSF check (bad check) returned for $300 What is the correct cash balance that should be reported in Mooner Sooner's balance sheet at the end of the year?
answer
Bank balance ($8,000) + deposits outstanding ($4,000) βˆ’ checks outstanding ($5,800) = $6,200.
question
Cash transactions recorded by the bank but not yet recorded by the company include all of the following except
answer
Checks outstanding.
question
Which of the following would NOT need to be accounted for in a bank reconciliation?
answer
Checks written by the company and recorded by the bank.
question
Regarding a bank reconciliation, which one of the following is an item recorded by the company but not by the bank?
answer
Checks outstanding.
question
When preparing a bank reconciliation, a deposit outstanding would be:
answer
Added to the bank's cash balance.
question
After preparing the bank reconciliation, an NSF check would result in which of the following when recording the adjustment to the company's cash balance?
answer
Debit to Accounts Receivable.
question
Which of the following would not be considered good internal control for cash receipts?
answer
Requiring the employee receiving cash from customers to also deposit the cash into the company's bank account.
question
Requiring the employee receiving cash from customers to also deposit the cash into the company's bank account.
answer
Employees responsible for making cash disbursements should also be in charge of cash receipts.
question
Which of the following would NOT represent good controls over cash disbursements?
answer
Require only one signature for checks, especially larger ones.
question
A customer purchased a $2,000 item at ApplianceWorld, paying with a credit card. ApplianceWorld is charged a 2% fee by the credit card company. When recording this sale, ApplianceWorld would:
answer
Credit Sales Revenue for $2,000.
question
McGregor Company allows customers to pay with credit cards. The credit card company charges McGregor 3% of the sale. When a customer uses a credit card to pay McGregor $200 for services provided, McGregor would:
answer
Debit Service Fee Expense for $6.
question
Which of the following would NOT be recorded as a cash sale?
answer
A customers who buys on account.
question
Which of the following would NOT represent good controls over cash receipts?
answer
The employee that receives cash and checks should also deposit them in the bank.
question
Common examples of cash equivalents include all of the following except:
answer
Accounts receivable.
question
Cash may not include:
answer
Accounts receivable.
question
Which of the following is considered cash for financial reporting purposes?
answer
Checks received from customers.
question
Which employees have an impact on the operation and effectiveness of internal controls?
answer
All employees.
question
Separation of duties refers to:
answer
Individuals who have physical responsibility for assets should not also have access to accounting records
question
The components of internal control do not directly include:
answer
Inflation adjustment.
question
A framework for designing an internal control system is provided by the:
answer
Committee of Sponsoring Organizations.
question
Having an independent party assess each year the adequacy of the company's internal control procedures is an example of which detective control?
answer
Audits.
question
Checking actual outcome of individuals or processes against their expected outcome is an example of which detective control?
answer
Performance reviews.
question
Having management periodically determine whether the amount of physical assets of the company match the accounting records is an example of which detective control?
answer
Reconciliations.
question
Allowing only certain individuals to have passwords to conduct online purchases is an example of which preventive control?
answer
E-commerce controls.
question
Providing employees with appropriate guidance to ensure they have the knowledge necessary to carry out their job duties is an example of which preventive control?
answer
Employee management.
question
Giving only management the right to make purchases over a certain amount is an example of which preventive control?
answer
Proper authorization.
question
Keeping supplies in a locked room with access allowed only to authorized personnel is an example of which preventive control?
answer
Physical controls.
question
Which of the following is an example of detective controls?
answer
Reconciliations.
question
Which of the following is not an example of preventive controls?
answer
Reconciliations.
question
What is the concept behind separation of duties in establishing internal controls?
answer
Employee fraud is less likely to occur when access to assets and access to accounting records are separated.
question
Which of the following best describes the goal of internal controls?
answer
Improving the accuracy and the reliability of financial information.
question
Which employees are the ones who must take final responsibility for the establishment and success of internal controls?
answer
Top executives.
question
The act of collusion refers to:
answer
Two or more people acting in coordination to circumvent internal controls.
question
Which of the following is NOT a design feature of effective internal controls?
answer
Ensure the company's price advantage over competitors.
question
The Sarbanes-Oxley Act (SOX) mandates which of the following?
answer
Increased regulations related to auditor-client relations. Increased regulations related to internal control. Increased regulations related to corporate executive accountability. All of these.
question
Fraudulent reporting by management could include:
answer
Fictitious revenues from a fake customer. Improper asset valuation. Mismatching revenues and expenses. All of these.
question
Which element of the fraud triangle do companies have the greatest ability to eliminate?
answer
Opportunity.
question
The three elements of the fraud triangle are:
answer
Motive. Rationalization. Opportunity. All of these.
question
Occupational fraud:
answer
Is the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources.
question
Under the provisions of the Sarbanes-Oxley Act, auditors must do which of the following?
answer
Maintain working papers for at least seven years following an audit.
question
Under the provisions of the Sarbanes-Oxley Act, corporate executives:
answer
Must personally certify the company's financial statements.
question
Which of the following does not represent a major provision of the Sarbanes-Oxley Act?
answer
Quarterly financial statements.
question
What key piece of legislation was passed in response to corporate accounting scandals by Enron, WorldCom, and others?
answer
Sarbanes-Oxley Act.