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Fraud triangle The three factors that contribute to fraudulent Petty cash fund A cash fund used to pay relatively small
Internal control All of the related methods and activities adopted Voucher system A network of approvals by authorized in-
SELF-STUDY QUESTIONS
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Answers are at the end a/the chapter.
1.
7.
~s
triangle?
Rationalization.
Financial pressure.
Segregation of duties.
8. A company writes a check to replenish a $100 petty cash (SO 5 fund
Opportunity.
when the fund contains receipts of $94 and $3 in
2. An organization uses internal control to enhance the accuracy
cash. In recording the check, the company should:
and reliability of its accounting records and to:
a. debit Cash Over and Short for $3.
a. safeguard its assets.
b. debit Petty Cash for $94.
b. prevent fraud.
c. credit Cash for $94.
c. produce correct financial statements.
d. credit Petty Cash for $3.
d. deter employee dishonesty.
9.The control features of a bank account do not include:
(SO 6
(SO 2) 3. The principles of internal control do not include:
a.
having
bank
auditors
verify
the
correctness
of
the
bank
a. establishment of responsibility.
balance per books.
b. documentation procedures.
b. minimizing the amount of cash that must be kept on hand.
c. management responsibility.
c. providing a double record of all bank transactions.
d. independent internal verification.
d. safeguarding cash by using a bank as a depository.
(SO 2) 4. Physical controls do not include:
10.
In a bank reconciliation, deposits in transit are:
a. safes and vaults to store cash.
(507
a.
deducted from the book balance.
b. independent bank reconciliations.
b. added to the book balance.
c. locked warehouses for inventories.
c. added to the bank balance.
d. bank safety deposit boxes for important papers.
(SO 3) 5. Permitting only designated personnel to handle cash receipts isd.an deducted from the bank balance.
application of the principle of:
a. segregation of duties.
11. The reconciling item in a bank reconciliation that will (SO 7 result in
b. establishment of responsibility.
an adjusting entry by the depositor is:
c. independent check.
a. outstanding checks.
d. human resource controls.
b. deposit in transit.
(SO 3) 6. Which of the following control activities is not relevant when
c. a a bank error.
company uses a computerized (rather than manual)
d. bank service charges.
accounting system?
12. Which of the following items in a cash drawer at (SO 8) November 30
a. Establishment of responsibility.
is not cash?
b. Segregation of duties.
a. Money orders.
c. Independent internal verification.
b. Coins and currency.
d. All of these control activities are relevant to a comput
erized system.
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a.
b.
c.
d.