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Exam 4: Cash and Internal Controls

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Question 31

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Interest earned on a bank account is an example of a cash transaction recorded by the company and then later by the bank after notification.Interest earned is initially recorded by the bank.

A) True
B) False

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Question 32

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The following information pertains to Sooner Company's cash balance and bank reconciliation as of August 31: What is the correct cash balance for Sooner Company? $\begin{array} { | l | r | } \hline \text { Compary balance before reconciliation } & \$ 5,000 \\\hline \text { Checks outstanding } & \$ 2,500 \\\hline \text { Notes collected by the bank } & \$ 2,200 \\\hline \text { Serice fee } & \$ 50 \\\hline \text { Deposits outstanding } & \$ 2,000 \\\hline\end{array}$

A) $7,150.
B) $5,150.
C) $7,650.

D) A) and B)
E) A) and C)

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Question 33

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The Public Company Accounting Oversight Board (PCAOB)has the authority to establish standards dealing with auditing,quality control,ethics,independence,and other activities relating to the preparation of audited financial reports.

Allowing only certain individuals to have passwords to conduct online purchases is an example of which preventive control?

A good internal control system would require that the employee who handles cash must not be involved in:

An NSF check is an example of a cash transaction that is initially recorded by the bank and later by the company after notification.

Consider the following cash flow items: Pay amount owed to bank for previous borrowing.Pay utility costs.Purchase equipment to be used in operations.Purchase office supplies.Purchase one year of rent in advance.Pay workers' salaries.Pay for research and development costs.Pay taxes to the IRS.Sell common stock to investors.How many of these cash flow items involve financing activities?

Cash flows from investing activities do not include:

The Sarbanes-Oxley Act requires that companies must:

The amount of cash reported in a company's balance sheet includes items acceptable for deposit in bank accounts,such as checks received from customers.

Having management periodically determine whether the amount of physical assets of the company match the accounting records is an example of which detective control?

Cash transactions recorded by the bank but not yet recorded by the company include all of the following except

Fraudulent reporting by management could include:

Which of the following does not represent a major provision of the Sarbanes-Oxley Act?

Cash flows from financing activities include:

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

The phrase "cooking the books" is commonly used to refer to:

When a sale is made to a customer who pays with a debit card,the company records:

A minor amount of cash kept on hand to pay for small purchases is referred to as a:

The balance of cash reported in the balance sheet would include which of the following?