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Exam 6: Internal Control and Accounting for Cash

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Question 41

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If the financial statements cannot be relied upon because they contain one or more material departures from GAAP,what type of opinion will the auditor issue?

A) Qualified opinion
B) Disclaimer of opinion
C) Adverse opinion
D) Unqualified opinion

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

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Question 42

Multiple Choice

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How will a certified check be shown on a company's bank reconciliation?

A) As a deduction to the company's unadjusted book balance.
B) As an increase to the bank's unadjusted bank balance.
C) As a deduction to the bank's unadjusted bank balance.
D) There is no adjustment when preparing the bank reconciliation.

E) B) and D)
F) C) and D)

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Question 43

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On September 30 the bank statement of Fine Company showed a balance of $7,800.The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records: Deposits in transit amounted to $3,150 Outstanding checks amounted to $6,200 A $550 check was incorrectly drawn on Fine's account NSF checks returned by the bank were $750 The bank service charge was $29 Credit memo for $75 for the collection of one of the company's account receivable What is the true cash balance?

Which of the following is an internal control procedure used to safeguard a company's assets?

Which of the following is not a common feature of an internal control system?

Segregation of duties in an organization should be required to reduce the likelihood of theft.

Most audits result in unqualified audit opinions.

Assuming the entries used to record the disbursements and to replenish the fund are combined,which of the following is included in the entry to replenish a petty cash fund?

Which of the following is not a common internal control procedure that would be implemented with regards to cash receipts?

Duke Company's unadjusted bank balance at March 31 is $2,300.The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $400.What is the true cash balance?

An error is considered material if it would trigger an IRS audit.

A bank statement debit memo describes a transaction that increases a customer's account balance.

What is the most favorable audit opinion that a company can receive on its financial statements?

Which of the following procedures are typically used when a petty cash fund is established?

Requiring segregation of duties in a business eliminates the need for the work of one employee to serve as a check on the work of other employees.

Which of the following is not a motive for the embezzlement of cash by employees?

A review of the bank statement and accounting records of Blake Company revealed the following items: -Which of the item(s) would be subtracted from the company's unadjusted book balance to determine the true cash balance?

Which of the following internal control procedures should be implemented to control cash?

Keatts Company's bank statement included an NSF check written by one of its customers.What effect will the entry to recognize the NSF check have on the company's financial statements?

For financial reporting purposes,cash generally includes currency and other items that are payable on demand,such as checks,money orders,bank drafts,and certain savings accounts.