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- 1. Multiple ChoiceWhich of the following statements is true of the Sarbanes-Oxley Act?Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients.All private and foreign companies must issue an internal control report evaluated by an outside auditor.The Public Company Accounting Oversight Board oversees the work of auditors of public companies.Those who commit securities fraud must be sentenced to 10 years in prison.
- 2. Multiple ChoiceWhich of the following describes the risk assessment component of internal control?Risk assessment is the "tone at the top" of the business.Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.Risk assessment is designed to ensure that the business's goals are achieved.A company must identify its risks and take necessary steps to minimize them.
- 3. Multiple ChoiceAt Cadmia Services, the cashier collects checks and cash from customers, and the junior accountant records the transactions in the journal. The controller approves the journal entries and bank reconciliations. The treasurer signs checks and approves contracts.
Which internal control procedure is exemplified in the above situation?separation of duties
competent, reliable, and ethical personnelassignment of responsibilitiesdocuments - 4. Multiple ChoiceWhich of the following is included in the internal control procedure documents?A company should purchase a fireproof vault to protect legal documents.The invoices and orders must be pre-numbered.Separate the custody of assets from accounting.Mandatory vacations will improve internal control.
- 5. Multiple ChoiceWhich of the following would be included in the entry to record the replenishment of a petty cash fund?a credit to Casha credit to Miscellaneous Expensea credit to Petty Casha debit to Accounts Receivable
- 6. Multiple ChoiceThe bank recorded a $3,000 deposit as $300. How would this information be included on the bank reconciliation?an addition on the book sidea deduction on the book sidea deduction on the bank sidean addition on the bank side
- 7. Multiple ChoiceA check of $300,000, deposited by a company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?a deduction on the book sidea deduction on the bank sidean addition on the book sidean addition on the bank side
- 8. Multiple ChoiceWhich of the following items are reconciling items on the bank side of the reconciliation?outstanding checks and correction of book errorbank service charge and correction of book errordeposit in transit and outstanding checksdeposit in transit and NSF check
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