Question 1

Which of the following would be added to the balance per bank?

Accepted Answer

The answer of Which of the following would be added...

Question 2

A check for $236 is incorrectly recorded by the company as $263.On the bank reconciliation,the error would

Accepted Answer

The answer of A check for $236 is incorrectly recorded...

Question 3

The management of public companies must establish systems that

Accepted Answer

The management of public companies must establish systems to safeguard the firm's assets, ensure the reliability of its accounting records, and see that employees comply with legal requirements. Therefore, option D, do all of these, is the best choice.

Question 4

Which of the following bank reconciliation items would not result in a journal entry?

Accepted Answer

Deposits in transit are already recorded in the company's books but have not yet been recorded by the bank. Therefore, no additional journal entry is needed for them in the company's records.

Question 5

An NSF check should appear in which section of the bank reconciliation?

Accepted Answer

An NSF (Non-Sufficient Funds) check is a check that cannot be processed because the account holder does not have enough funds. When reconciling the bank statement, an NSF check is recorded as a deduction from the balance per books because the company would have previously recorded the check as an increase to its cash balance when the check was initially received. Upon notification of the NSF check, the company must reverse this entry, thus reducing its book balance.

Question 6

On a bank reconciliation,$75 interest earned on a checking account would

Accepted Answer

Interest earned on a checking account is an income for the account holder and will increase the balance according to the books. Therefore, it should be added to the balance per books while reconciling the bank statement. It would not appear as a deduction from the balance per bank or as an adjustment on the bank reconciliation.

Question 7

The Sarbanes-Oxley Act of 2002 requires management to acknowledge its responsibility for internal control

Accepted Answer

The Sarbanes-Oxley Act of 2002 requires management to acknowledge its responsibility for internal control in the company's annual report. While management could also make a public statement on social media or post a notice at the front of company headquarters, the annual report is the specific requirement outlined in the Act.

Question 8

Which of the following would not be a valid reason for keeping currency on hand at a place of business?

Accepted Answer

Keeping currency on hand to make up for any imbalance in the books would not be a valid reason, as it suggests improper financial practices or accounting errors that should be addressed and corrected, not masked with physical cash.

Question 9

Which of the following would be deducted from the balance per books on a bank reconciliation?

Accepted Answer

Service charges are fees charged by the bank that have not yet been recorded in the company's books, so they would be deducted from the balance per books on a bank reconciliation. Notes collected by the bank would be added, deposits in transit would be added, and outstanding checks would be subtracted from the balance per bank on a bank reconciliation.

Question 10

The Sarbanes-Oxley Act of 2002 requires all of the following to certify a public company's system of internal control,except for the

Accepted Answer

The Sarbanes-Oxley Act of 2002 requires the chief financial officer and the chief executive officer to certify the accuracy of financial reports. Independent auditors are required to attest to the adequacy of the company's internal controls over financial reporting. The board of directors is not required to certify the company's system of internal controls, making option C the correct answer.

Question 11

Privately owned companies

Accepted Answer

Privately owned companies are not required by law to have an independent CPA audit of their financial statements or to have their internal control systems audited. However, some companies may choose to have these services performed voluntarily for various reasons.

Question 12

As the controller of a large company,you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished.You probably will want to

Accepted Answer

Consistent debiting of the Cash Short or Over account indicates that there is a problem with the handling of the petty cash fund. Increasing or decreasing the fund will not address the underlying issue. Offering congratulations to the custodian without further investigation is also not appropriate. Finding a new custodian for the fund is the best course of action to prevent future discrepancies.

Question 13

Cash and equivalents can consist of all of the following except

Accepted Answer

Cash and equivalents must be readily convertible into cash and have a low risk of value change. IOUs from customers do not meet these criteria and therefore cannot be included as cash and equivalents. Choices A, C, and D are all examples of cash and equivalents.

Question 14

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

The correct amount ($250) should be added to the balance per bank because the bank recorded it as less ($25), underestimating the actual balance.

Question 15

The Sarbanes-Oxley Act has succeeded in

Accepted Answer

The Sarbanes-Oxley Act has succeeded in heightening awareness and diligence with respect to internal control. It has established new or expanded requirements for publicly traded companies and accounting firms to enhance transparency and accountability, but it cannot completely stop fraud from occurring. It does not have any impact on privately owned companies.

Question 16

The following is a quote found in a company's annual report: In our opinion,the Company maintained,in all material respects,effective internal control over financial reporting...
This statement would have been made by

Accepted Answer

This statement is typically made by the company's independent auditors as part of their audit of the financial statements. They are responsible for evaluating the company's internal controls over financial reporting and assessing their effectiveness. The CFO, CEO, and board of directors may also be involved in the process of evaluating and maintaining internal controls, but the auditor's opinion is the most authoritative statement on the matter.

Question 17

Which of the following bank reconciliation items would result in a journal entry?

Accepted Answer

An adjustment for a check recorded for the wrong amount would require a journal entry to fix the error. The other items listed are reconciling items that do not require journal entries. Checks outstanding and deposits in transit will simply be reconciled on the bank statement with the company's records. A bank error on the bank statement will be corrected by the bank and noted on the next statement.

Question 18

Marta Company has the following bank items:  The adjusted book balance should be

Accepted Answer

The answer of Marta Company has the following bank items:...

Question 19

The petty cash fund should be replenished

Accepted Answer

The petty cash fund should be replenished for the amount needed to bring it back to its imprest amount. This means that the total amount of expenses and cash remaining in the fund should be counted and the difference between that amount and the imprest amount should be replenished. This ensures that the petty cash fund remains at its original designated amount and that all expenses are properly accounted for.

Question 20

Conan Company has the following bank items:  The adjusted bank balance should be

Accepted Answer

The bank balance is found in the given bank item and it is $25,000. The additional numbers and letters in the bank item are likely reference or tracking numbers and do not affect the balance. Therefore, the adjusted bank balance is also $25,000. However, choice B is the closest option to the actual bank balance, which could potentially be affected by small transactions not included in the given bank item.

Quiz 8: Cash and Internal Control