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Exam 4: Cash and Internal Controls

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Question 21

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

A) True
B) False

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Question 22

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Which of the following is considered cash for financial reporting purposes?

A) Accounts receivable.
B) Investments with maturity dates greater than three months.
C) Checks received from customers.
D) Accounts payable.

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

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Question 23

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In response to corporate accounting scandals and to public outrage over seemingly widespread unethical behavior of top executives,Congress passed the Sarbanes-Oxley Act.

Risk assessment procedures include periodic reviews of internal controls,assessing management's oversight of the internal control,developing solutions to known cases of internal control failures,and determining whether each division or operation within a company is meeting its objectives.

Cash flows from investing do not include cash flows from:

Payment of dividends to stockholders is considered a(n) :

After preparing a bank reconciliation,a check outstanding for the payment of advertising would be recorded with:

Investing activities include transactions designed to raise cash or finance the business.

Giving only management the right to make purchases over a certain amount is an example of which preventive control?

An example of separation of duties would be not allowing an employee who receives cash to also be responsible for depositing that cash in the bank account.

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

The following information was taken from the bank reconciliation for Mooner Sooner Inc.at the end of 2012: Bank balance: $8,000 Checks outstanding: $5,800 Note collected by the bank: $1,500 Service fee: $20 Deposits outstanding: $4,000 NSF check (bad check) returned for $300 What is the correct cash balance that should be reported in Mooner Sooner's balance sheet at the end of 2012?

Terastar Corp.reports the following amounts for 2012 and 2013. $\begin{array} { | l | c | c | c | c | } \hline & \text { Net Income } & \text { Operating } & \text { Investing } & \text { Financing } \\\hline 2012 & \$ 10,000 & \$ 15,000 & - \$ 8,000 & \$ 10,000 \\\hline 2013 & 12,000 & 19,000 & - \$ 10,000 & - 6,000 \\\hline\end{array}$ What is the trend in free cash flows relative to net income?

Operating cash flows would exclude:

Which of the following is not an example of preventive controls?

A company's bank statement shows a cash balance of $4,170.Comparing the company's cash records with the monthly bank statement reveals several additional cash transactions such as checks outstanding of $2,110,NSF check of $200,interest earned of $30,service fee of $40,and a check for $150 recorded twice by the company.Calculate the correct balance of cash.

A company had the following transactions during the year: 1.Paid rent for the next two years,$8,000. 2.Purchased office supplies on account,$2,400. 3.Purchased equipment,paying $12,000 cash and issuing a note payable for $4,000. 4.Borrowed from the bank,$6,000. 5.Paid employee salaries,$7,200. 6.Paid $2,000 on account related to transaction 2 above. 7.Paid dividends to stockholders,$2,800. 8.Sold land for $10,000 that was purchased in a prior year for $7,500. 9.Collected cash from customers for services provided,$25,700. Calculate cash flows from operating activities,investing activities,and financing activities.

Which of the following would NOT be recorded as a cash sale?

Only transactions involving cash affect a company's cash flows.

During the current year,a company provides services on account for $100,000.By the end of the year,$60,000 of this amount had been received.In addition,cash payments for the year were employees' salaries,$50,000; office supplies,$10,000; and utilities $20,000.Determine the amount of operating cash flows the company will report in the current year.