Q: A company’s bank reconciliation includes a deposit in transit of $$1,200 and outstanding checks totaling 800. If $$the bank statement shows a balance of $5,000, what is the adjusted bank balance?

$$5,400 \\ (\5$$,000 + \$$1,200 - \800$$)$

Q: A company’s bank reconciliation shows the following: Book balance = $$8,000; Bank collections not yet recorded = 500$$; Service charge = $$20; NSF check = 100. $$What is the adjusted book balance?

$$8,380 \\ (\8$$,000 + \$$500 - \20$$ - \$$100)$$

Question 1

Which of the following best describes the 'Fraud Triangle' and its components?

Accepted Answer

It consists of three elements: Motive, Opportunity, and Rationalization, all of which must be present for fraud to occur.

Question 2

A company discovers that an employee has been reimbursed twice for the same travel expense. According to the ACFE, this is an example of which type of expense reimbursement fraud?

Accepted Answer

Multiple reimbursements

Question 3

Which of the following is NOT a primary objective of internal control?

Accepted Answer

Increase company profits at all costs

Question 4

A company’s accounting department compares the cash balance per the general ledger to the cash balance per the bank statement. This process is known as:

Accepted Answer

Bank reconciliation

Question 5

Which of the following is an example of a preventative internal control procedure?

Accepted Answer

Separation of duties

Question 6

A company’s bank statement shows a service charge of $25 that was not recorded in the company’s books. How should this be reflected in the bank reconciliation?

Accepted Answer

Subtract $25 from the book balance

Question 7

Which of the following items would require a journal entry after preparing a bank reconciliation?

Accepted Answer

Bank collections recorded by the bank but not yet in the books

Question 8

Which of the following is considered a cash equivalent?

Accepted Answer

A U.S. Treasury bill with a maturity of two months

Question 9

A company’s internal control system includes the following: background checks, training, and competitive salaries. These are examples of which type of control?

Accepted Answer

Preventative controls

Question 10

Which of the following best describes the purpose of a firewall in an accounting information system?

Accepted Answer

To limit unauthorized access to the company’s computer network

Question 11

A company’s bank reconciliation includes a deposit in transit of $$1,200 and outstanding checks totaling 800. If $$the bank statement shows a balance of $5,000, what is the adjusted bank balance?

Accepted Answer

$$5,400 \ (\5$$,000 + \$$1,200 - \800$$)$

Question 12

Which of the following is a limitation of internal controls?

Accepted Answer

Collusion among employees

Question 13

A company’s petty cash fund is maintained on an imprest system. At the end of the month, the fund contains $$50 in cash and 150 in $$petty cash vouchers. What was the original amount of the petty cash fund?

Accepted Answer

$$200 \ (\50$$ + \$$150)$$

Question 14

Which of the following is an example of a detective (monitoring) control?

Accepted Answer

Exception reporting

Question 15

Which of the following best explains why companies use electronic funds transfer (EFT) for payments?

Accepted Answer

It provides a record of payment and reduces the risk of theft

Question 16

A company’s bank reconciliation shows the following: Book balance = $$8,000; Bank collections not yet recorded = 500$$; Service charge = $$20; NSF check = 100. $$What is the adjusted book balance?

Accepted Answer

$$8,380 \ (\8$$,000 + \$$500 - \20$$ - \$$100)$$

Question 17

Which of the following is NOT a component of an internal control system?

Accepted Answer

Financial leverage

Question 18

Which of the following best describes unsupervised machine learning in the context of expense reimbursement fraud detection?

Accepted Answer

It identifies unusual receipts as possible fraud cases without prior labeling, which are then investigated by humans.

Question 19

A company’s controller is responsible for which of the following in the context of cash receipts by mail?

Accepted Answer

Verifying that the total amount debited to Cash matches the deposit ticket

Question 20

Which of the following is the correct journal entry to record a bank collection of $1,000 not previously recorded in the books?

Accepted Answer

$$	ext{Debit Cash } \1$$,000; 	ext{ Credit Accounts Receivable } \$$1,000$$

Internal Control and Cash: Study Notes for Financial Accounting

Study Guide - Practice Questions

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