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Exam 6: Fraud, Internal Control, and Cash

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Question 101

Multiple Choice

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The use of prenumbered checks is an example of

A) documentation procedures.
B) independent internal verification.
C) establishment of responsibility.
D) segregation of duties.

E) C) and D)
F) None of the above

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Question 102

Multiple Choice

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Which one of the following is not an objective of a system of internal controls?

A) Safeguard company assets.
B) Enhance the accuracy and reliability of accounting records.
C) Fairness of the financial statements.
D) Reduce the risks of errors.

E) B) and C)
F) A) and B)

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Question 103

Multiple Choice

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In a small business, the lack of certain separations of duties can best be overcome by

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

Segregation of duties among employees eliminates the possibility of collusion.

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

Bishop Company wrote checks totaling $51,240 during October and $55,950 during November. $48,720 of these checks cleared the bank in October, and $54,660 cleared the bank in November. What was the amount of outstanding checks on November 30?

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

Cash is defined by IFRS as

An example of segregation of duties is having a check signer recording cash disbursements.

What percentage of companies worldwide have experienced fraud in a recent 12-month period?

The following information was taken from Hurlbert Company cash budget for the month June $\begin{array}{lr}\text { Beginning cash balance } & \$ 69,000 \\\text { Cash receipts } & 93,000 \\\text { Cash disbursements } & 117,000\end{array}$ If the company has a policy of maintaining an end of the month cash balance of $60,000, the amount the company would have to borrow is

Physical controls to safeguard assets do not include

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Which of the following does not appear as a separate section on the cash budget?

A $300 petty cash fund has cash of $55 and receipts of $240. The journal entry to replenish the account would include a

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

Internal controls are not designed to safeguard assets from

The entry to replenish a petty cash fund includes a credit to