Survey of Accounting 6Th Edition Warren Test Bank Full Chapter PDF
Survey of Accounting 6Th Edition Warren Test Bank Full Chapter PDF
Survey of Accounting 6Th Edition Warren Test Bank Full Chapter PDF
Student: ___________________________________________________________________________
2. The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over
recording transactions and preparing financial statements.
True False
3. The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness
of the company’s internal controls.
True False
4. Employee fraud is the intentional act of deceiving an employer for personal gain.
True False
5. All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal
control can be achieved.
True False
6. The internal control environment is enhanced by the hiring and retention of competent, honest employees.
True False
7. There are only two internal control objectives: to ensure accurate financial reports, and to ensure compliance
with applicable laws.
True False
8. Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the
control procedure: separating operations, custody of assets, and accounting.
True False
10. Information and communication are essential elements of an organization's internal control.
True False
12. If a business has several bank accounts, it will have a separate record for each of them.
True False
14. For a strong internal control system over cash, it is important to have the duties related to cash receipts and
cash payments divided among different employees.
True False
15. A remittance advice is the notification accompanying the check issued to a creditor that states the specific
invoice being paid.
True False
16. A voucher is a written authorization to make a cash payment.
True False
17. A voucher system is an example of an internal control procedure over cash receipts.
True False
18. A voucher is a form where pertinent data about a liability and the particulars of its payment are recorded.
True False
19. A voucher system is an example of an internal control procedure over cash payments.
True False
20. In a computerized system, paid vouchers are transferred to a paid voucher file.
True False
21. A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice
being paid.
True False
22. Internal control is enhanced by combining the control of a transaction with the record-keeping function.
True False
23. For efficiency of operations and better control over cash, a company should maintain only one bank
account.
True False
24. The bank informs the depositor of bank service charges by including a debit memorandum with the monthly
bank statement.
True False
25. Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the
bank's records.
True False
26. A credit memorandum received with a bank statement means the company's bank account has been
increased.
True False
27. Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over
cash.
True False
28. In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per
bank.
True False
29. In preparing a bank reconciliation, the amount of outstanding checks is added to the cash balance per
books.
True False
30. In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is
added to the cash balance per books.
True False
31. In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is
deducted from the cash balance per books.
True False
32. The amount of the "adjusted balance" appearing on a bank reconciliation as of a given date is the amount
that is shown on the balance sheet for that date after all adjusting entries have been entered.
True False
33. The data needed to adjust a depositor's books are shown in the "adjustments to the depositor's records"
section of a bank reconciliation.
True False
34. All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.
True False
36. Outstanding checks are checks that have been issued but have not cleared by the bank.
True False
38. The depositor reconciles the bank's statement to the depositor's records.
True False
39. A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to
balance, you must subtract $198 from the bank statement balance.
True False
40. In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per
books.
True False
41. In preparing a bank reconciliation, the amount of outstanding checks is deducted from the cash balance per
books.
True False
42. In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable
collected by the bank is added to the cash balance per books.
True False
43. In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is
deducted from the cash balance per bank.
True False
44. A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's
account.
True False
45. A business that requires all cash payments be made by check cannot use a petty cash system.
True False
46. When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures
made since the fund was last replenished.
True False
47. Minimum cash balance maintained in the bank account is called line of credit.
True False
48. Money market funds, commercial paper, and U.S. Treasury Bills are examples of cash equivalents.
True False
51. The framework that has become widely accepted as the standard by which companies design, analyze, and
evaluate internal controls is the:
A. Internal Control - Integrated Framework by the Committee of Sponsoring Organizations.
B. Internal Control - Integrated Framework by the Congress of Special Offerings.
C. Internal Control Localized Structure by the Committee of Sponsoring Organizations.
D. Internal Control Localized Structure by the Congress of Special Offerings.
55. Internal control does not consist of policies and procedures that:
A. guarantee the company will not go bankrupt.
B. ensure that laws and regulations are being followed.
C. protect assets from misuse.
D. ensure that business information is accurate.
56. A firm's internal control environment is influenced by:
A. management's operating style.
B. organizational structure.
C. personnel policies.
D. all of these.
57. Management's philosophy and operating style would affect which of the following elements of internal
control?
A. Risk assessment
B. Monitoring
C. Control environment
D. Information and communication
58. A business's organizational structure influences which of the following elements of internal control?
A. Control procedures
B. Risk assessment
C. Control environment
D. Information and communication
63. Requiring employees to take annual vacations is part of which element of internal control?
A. Control environment
B. Risk assessment
C. Control procedures
D. Monitoring
64. Separating the custody of assets from accounting for assets is a part of which element of internal control?
A. Information and communication
B. Monitoring
C. Control environment
D. Control procedures
65. Which of the following elements of internal control focuses on locating weaknesses and improving control
effectiveness?
A. Control environment
B. Risk assessment
C. Control procedures
D. Monitoring
66. When a firm uses internal auditors, it is adhering to which of the following internal control elements?
A. Risk assessment
B. Control procedures
C. Monitoring
D. Information and communication
69. EFT:
A. means Efficient Funds Transfer.
B. can process certain cash transactions at less cost than by using the mail.
C. makes it easier to document purchase and sale transactions.
D. means Effective Funds Transfer.
70. A voucher:
A. is received from customers to explain the purpose of a payment.
B. is normally prepared in the Accounting Department.
C. system is used to control cash receipts.
D. system is an internal control procedure to verify that the assets in the records are the ones the company owns.
71. On the bank's accounting records, customers' accounts are normally shown as a(n):
A. revenue.
B. liability.
C. asset.
D. expenses.
73. A check drawn by a depositor for $295 in payment of a liability was recorded in the depositor’s book as
$925. The $630 difference would be included on the bank reconciliation as a(n):
A. addition to the cash balance per books.
B. addition to the cash balance per bank.
C. deduction from the cash balance per bank.
D. deduction from the cash balance per books.
74. A check drawn by a depositor for $915 in payment of a liability was recorded in the depositor’s book as
$195. What adjustment is required in the depositor's accounts?
A. Decrease Accounts Payable; decrease Cash
B. Increase Cash; decrease Accounts Receivable
C. Increase Cash; increase Accounts Payable
D. Increase Accounts Receivable; decrease Cash
77. Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is
required in the depositor's accounts?
A. Increase Miscellaneous Expense; decrease Cash
B. Increase Cash; increase Other Income
C. Increase Cash; increase Accounts Payable
D. Decrease Accounts Payable; decrease Cash
78. Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800
difference would be included on the bank reconciliation as a(n):
A. addition to the cash balance per books.
B. addition to the cash balance per bank.
C. deduction from the cash balance per bank.
D. deduction from the cash balance per books.
79. Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700. What adjustment is
required in the bank’s accounts?
A. Decrease Sales; decrease Cash
B. Increase Cash; decrease Accounts Receivable
C. Increase Cash; increase Sales
D. No adjustment needed
80. Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for
the depositor. This item would be included on the bank reconciliation as a(n):
A. deduction from the cash balance per books.
B. addition to the cash balance per bank.
C. deduction from the cash balance per bank.
D. addition to the cash balance per books.
81. Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for
the customer. What adjustment is required in the depositor's accounts?
A. Increase Notes Receivable; decrease Cash
B. Increase Cash; increase Miscellaneous Income
C. Increase Cash; decrease Notes Receivable
D. Increase Accounts Receivable; decrease Cash
82. The amount of the outstanding checks is included on the bank reconciliation as a(n):
A. deduction from the cash balance per books.
B. addition to the cash balance per bank.
C. deduction from the cash balance per bank.
D. addition to the cash balance per books.
83. What adjustment is required in the depositor's accounts to record outstanding checks?
A. None
B. Increase Cash; decrease Accounts Receivable
C. Increase Cash; increase Accounts Payable
D. Increase Accounts Receivable; decrease Cash
84. Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.
This item would be included on the bank reconciliation as a(n):
A. deduction from the cash balance per books.
B. addition to the cash balance per bank.
C. deduction from the cash balance per bank.
D. addition to the cash balance per books.
85. A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180. The
$630 difference would be included on the bank reconciliation as a(n):
A. addition to the cash balance per books.
B. addition to the cash balance per bank.
C. deduction from the cash balance per bank.
D. deduction from the cash balance per books.
86. The amount of deposits in transit is included on the bank statement as a(n):
A. deduction from the cash balance per books.
B. deduction from the cash balance per bank.
C. addition to the cash balance per bank.
D. addition to the cash balance per books.
87. Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.
This item would require an adjusting entry including a:
A. debit to Accounts Receivable.
B. debit to Cash.
C. debit to Accounts Payable.
D. credit to Accounts Payable.
88. Which of the following would be deducted from the cash balance per books on a bank reconciliation?
A. Service charges
B. Outstanding checks
C. Deposits in transit
D. Notes collected by the bank
89. Which of the following would be added to the cash balance per books on a bank reconciliation?
A. Service charges
B. Outstanding checks
C. Deposits in transit
D. Notes collected by the bank
90. A special cash fund used to make small payments that occur frequently is called a(n):
A. operating expenses fund.
B. change fund.
C. market fund.
D. petty cash fund.
91. Which of the following should not be considered cash by an accountant?
A. Money orders
B. Bank checking accounts
C. Postage stamps
D. Travelers' checks
94. List the objectives of internal control and give an example of how each is implemented.
95. For each of the following procedures, indicate whether it is an internal control strength or a weakness. Also,
for each weakness, explain why it is a weakness and how it can be corrected.
(a) Only the best accounting graduates are hired to eliminate the need for training.
(b) The person responsible for ordering and receiving supplies is not permitted to record or pay for the supplies.
(c) Company policy mandates that all employees take vacation time.
(d) Internal auditors constantly monitor the internal control system.
(e) The accountant deposits cash at least once each day to prevent holding large amounts of cash on hand.
96. List and define each of the five elements of internal control set forth by the Integrated Framework.
97. Describe the features of a voucher system and list typical supporting documents for a voucher.
Language: English
BY FANNY BUTCHER
WITH ILLUSTRATIONS BY
THERESA GARRETT ELIOT