Strayer ACC556 CHAPTER 7 EXERCISE Latest 2019 April Question # 00600841 Course Code : ACC556 Subject: Business Due on: 04/30/2019 Posted On: 04/30/2019 07:40 AM Tutorials: 1 Rating: 4.9/5

ACC556 Financial Accounting for Managers

CHAPTER 7 EXERCISE

Question 1 In
large companies, the independent internal verification procedure is often
assigned to

Answers:

computer
operators.

management.

internal
auditors.

outside
CPAs.

Question 2 Under
the concept of establishment of responsibility, how many people should have the
ultimate responsibility?

Answers:

Everyone in
the organization.

An
individual and his/her supervisor.

Only one
individual.

The CEO.

Question 3 Cash
equivalents are highly liquid investments that can be converted into a specific
amount of cash.

Answers:

True

False

Question 4 All
of the following are true regarding the management and monitoring of cash
except

Answers:

companies
may have plenty of sales, but insufficient cash to support operations.

the cash to
cash operating cycle for a manufacturer is generally shorter than that of a
merchandising company.

manufacturers
may experience a significant lag between the purchase of raw materials and the
receipt of cash from customers.

companies should
have sufficient cash to meet payments but minimize the amount of
non-revenue-generating cash on hand.

Question 5 Sam’s
Grocery Store has the following policy. ‘Only one cashier can have access to a
cash drawer.’ Which internal control principle supports this policy?

Answers:

Documentation
procedures.

Segregation
of duties.

Physical
controls.

Establishment
of responsibilities.

Question 6 Notification
by the bank that a deposited customer check was returned NSF requires that the
company make the following adjusting entry:

Answers:

Accounts Receivable

Cash

Cash

Accounts
Receivable

Miscellaneous
Expense

Accounts
Receivable

No
adjusting entry is necessary.

Question 7 Under
an effective system of internal control, errors occur only as a result of fraud
or dishonesty.

Answers:

True

False

Question 8 A
Consequence of separation of duties is that

Answers:

theft by
employees becomes impossible.

operations
become extremely inefficient because of constant training of employees.

more
employees will need to be bonded.

theft is
still possible when several employees are involved.

Question 9 Match
the items below by entering the appropriate code letter in the space provided.

Prenumbered documents	Prevent a transaction from being recorded more than once.
Custody of an asset should be kept separate from the record-keeping for that asset	Segregation of duties.
Television monitors, garment sensors and burglar alarms are examples	Physical control devices.
Bonding employees	Insurance protection against misappropriation of assets.
Collusion	Two or more employees circumventing prescribed procedures.
Cash	Anything that a bank will accept for deposit.
Cash budget	A projection of anticipated cash flows.
Restricted cash	Cash that is not available for general use, but instead is restricted for a particular purpose.
Invest idle cash	A basic principle of cash management.
Canceled checks	Checks which have been paid by the depositor’s bank.
NSF checks	Checks which have been returned by the maker’s bank for lack of funds.
Outstanding checks	Issued checks that have not been paid by the bank.
Petty cash receipt	Document indicating the purpose of a petty cash expenditure.
Cash equivalents	Highly liquid investments.

Question 10
Which of the following would be added to the balance per bank on a bank
reconciliation?

Answers:

Outstanding
checks.

Deposits in
transit.

Notes
collected by the bank.

Service
charges.

Question 11
The most important element of the fraud triangle is rationalization.

Answers:

True

False

Question 12
Requiring employees to take vacations is a weakness in the system of internal
controls because it does not promote operational efficiency.

Answers:

True

False

Question 13
All of the following are true regarding bank statements except

Answers:

the bank
statement will show a credit for deposits received from a company.

the bank
statement balance will always agree with the company recorded balance.

the bank
statement is a copy of the bank’s records sent to the customer for periodic
review.

the bank
statement will show a debit if a check is paid for a company issuing the check.

Question 14
Clark Company developed the following reconciling information in preparing its
September bank reconciliation:

Cash
balance per bank, 9/30 $30,800

Note
receivable collected by bank 16,800

Outstanding
checks
25,200

Deposits in
transit
12,600

Bank
service charge
210

NSF
check
3,360

Using the
above information, determine the cash balance per books (before adjustments)
for the Clark Company.

Answers:

$27,370.

$43,400.

$4,970.

$42,000.