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Exam 5: Sarbanes-Oxley,internal Control,and Cash

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Question 21

Multiple Choice

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The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to

A) report on the effectiveness of the company's internal controls.
B) report on any fraud and theft detected in the company.
C) report on the state of the economy and likelihood of fraud.
D) report on the financial activities of the company.

E) B) and D)
F) All of the above

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Question 22

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Outstanding checks are checks that have been issued but have NOT cleared the bank.

A) True
B) False

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Question 23

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Internal control does NOT consist of policies and procedures that

A voucher system is an example of an internal control procedure over cash payments.

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Which of the following would be deducted from the balance per books on a bank reconciliation?

Which of the following should NOT be considered cash by an accountant?

List and define each of the five elements of internal control.

Management's philosophy and operating style would affect which of the following elements of internal control?

Risks can be analyzed to

Employing internal auditors is part of which element of internal control?

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Using the following information,prepare a bank reconciliation for Wilkes Co.for May 31,2010:

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

The objectives of internal control are to

For efficiency of operations and better control over cash,a company should maintain only one bank account.

The Sarbanes-Oxley Act requires that financial statements of all public companies report on management's conclusions about the effectiveness of the company's internal control procedures.

The bank statement for Marley Co.indicates a cash balance of $10,000.50 on June 30,2010.The cash account in Marley's records had a balance of $4,677.10.Illustrate the adjustments to the accounts and their effect on Marley's financial statements,based on the following reconciling items: Statement of Cash Flows Income Statement

For a strong internal control system over cash,it is important to have the duties related to cash receipts and cash payments divided among different employees.

In preparing a bank reconciliation,the amount indicated by a debit memorandum for bank service charges is deducted from the balance per bank statement.