ScienceEconomicsACG 2021 Patterson Exam 3
Please enter something

ACG 2021 Patterson Exam 3

Zayne Williams avatar Zayne Williams
2 June 2023
4.7 (231 reviews)
11 test answers

Unlock all answers in this set

Unlock answers (7)
question
Which of the following is not an element of the fraud triangle? -Rationalization -Financial pressure -Opportunity -Collusion -All of these are elements of the fraud triangle.
answer
Collusion
question
Which one of the following is not a primary component of an internal control system? -Information and communication -Control activities -Opportunity -Control environment -Risk assessment
answer
Opportunity The five primary components of an internal control system are (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring.
question
Which of the following is a reason why an organization establishes a system for internal control? -To safeguard its assets -To increase the efficiency of its operations -To ensure compliance with laws and regulations -All of these -None of these
answer
All of these Internal control consists of all the related methods and measures adopted within an organization to (1) safeguard its assets, (2) enhance the reliability of its accounting records, (3) increase efficiency of operations, and (4) ensure compliance with laws and regulations.
question
Which of the following was a result of the Sarbanes-Oxley Act? -Companies must file financial statements with the Internal Revenue Service. -All publicly traded companies must maintain adequate internal controls. -All publicly traded corporations can use the cash basis method of accounting financial reporting purposes. -Executives cannot receive stock or stock options are part of their compensation. -All of these are results of the Sarbanes-Oxley Act.
answer
All publicly traded companies must maintain adequate internal controls
question
Reasonable assurance rests on the premise that
answer
the costs of establishing controls should not exceed their expected benefit.
question
Handy Inc. permits only designated personnel such as cashiers to handle cash receipts. What principle is being applied? -Segregation of duties -Establishment of responsibility -Independent internal verification -Rotation of employees -None of these
answer
Establishment of responsibility
question
For which of the following might a bank issue a debit memorandum to a depositor's account? Deposits in transit Monthly service charges Outstanding checks Collection of a note receivable Interest earned
answer
Monthly service charges Because the bank considers the depositor's account balance to be a liability, a credit memo from a bank indicates that that bank increased the account balance (i.e., the bank credited its liability owed to the customer) and a debit memo causes a decrease. Monthly service charges would decrease the liability of the bank and be processed with a debit memo.
question
Which of the following will not require an adjusting entry as a result of a bank reconciliation? NSF checks Book errors Bank service charges Deposits in transit
answer
Deposits in transit Deposits in transit are deposits the company presented to the bank before the end of the month that have not yet been posted to the bank account. They will be posted in the next accounting period. No adjusting entry is needed.
question
A check correctly written by Speedy Delivery Company for $1,430 was incorrectly recorded on its books as $1,340. As a result, the company's next monthly bank reconciliation should include
answer
$90 deducted from the cash balance per books The company deducted too little (i.e., $1,430 - $1,340 = $90) from its cash balance. Correcting the error requires deducting the $90.
question
An office supply store has a cashier who is also the accounts receivable clerk for the company. Which internal control principle is violated?
answer
Segregation of duties
question
For which item below might a bank issue a credit memorandum to a depositor's account? Deposits in transit Outstanding checks Interest earned An NSF check Monthly service charges
answer
interest earned Because the bank considers the depositor's account balance to be a liability, a credit memo from a bank indicates that the bank increased the account balance (i.e., the bank credited its liability owed to the customer) and a debit memo causes a decrease. Interest earned increases the liability of the bank and is accomplished with a credit memo. credit memo means the bank is giving you money and the only time they give you money based on options is when you earn interest