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Exam 4: Cash and Internal Controls

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Question 41

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At the time a $400 petty cash fund is being replenished,the company's accountant finds vouchers totaling $350 and petty cash of $50.The vouchers include: postage,$100;business lunches,$150;delivery fees,$75;and office supplies,$25.Which of the following is not recorded when recognizing expenditures from the petty cash fund?

A) Debit Postage Expense,$100.
B) Debit Supplies,$25.
C) Credit Petty Cash,$350.
D) Debit Petty Cash,$350.

E) A) and D)
F) A) and B)

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Question 42

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A company's operating cash inflows less operating cash outflows generally equals the reported amount of net income in the income statement.

A) True
B) False

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Question 43

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Internal control is a company's plan to (1)improve the accuracy and reliability of accounting information and (2)safeguard the company's assets.

The Sarbanes-Oxley Act is also known as Generally Accepted Accounting Principles.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Lead audit partners are required to change every five years.

Which of the following best describes the goal of internal controls?

A company's free cash flows equal operating cash flows plus financing cash flows during the period.

A framework for designing an internal control system is provided by the:

Fraudulent reporting by management could include:

Regarding a bank reconciliation,which one of the following is an item recorded by the company but not by the bank?

Investing activities include cash investments in long-term assets and investment securities.

Auditors of public companies can perform the full range of audit and nonaudit consulting services for their audit clients.

The amount of cash reported in a company's balance sheet does not include cash equivalents,defined as short-term investments that have a maturity date no longer than three months from the date of purchase.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Formal policies to evaluate internal and external threats to achieving company objectives.

The petty cash fund should have just enough cash to make minor expenditures over a reasonable period (such as a week or a month).

Listed below are six terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ The company recorded a deposit twice.

The components of internal control do not directly include:

Interest earned on a bank account is an example of a cash transaction recorded by the company and then later by the bank after notification.

Which of the following is an example of detective controls?

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Minor amount of cash kept on hand.