Answer Keys to iLearn of Week 5
1. Incorrect financial statements are due to errors and frauds. An accountant intentionally omitted recording $5,500 that were received from a customer and planned to steal the money to buy a new cell phone for himself. This action is an example of error. a. True
2. What key piece of legislation was passed in response to corporate accounting scandals by Enron, WorldCom, and others? a. Sarbanes-Oxley Act.
b. 1933 Securities Act.
c. 1934 Securities Exchange Act.
d. Regulation Fair Disclosure.
3. Internal controls represent plans to:
a. Safeguard the assets
b. Continually improve the efficiency of operation
c. Improve accuracy and reliability of information
d. Both a and c
4. Which of the following is an example of preventive control of cash? a. Match the balance of cash in the bank account with the balance of cash in the company’s own records b. Compare the company’s actual sales with the budgeted sales c. Hire independent auditors to review the company’s financial statements d. None of the above
5. Successful internal control can eliminate employee theft. a. True
6. This year, Funny Company hired Rebecca who graduated from CityU with a Bachelor’s degree in Accountancy. The CFO of Funny was very impressed by Rebecca’s education background and honesty and assigned her to deposit company’s cash and checks on daily basis and keep a journal of the company’s cash. Do you agree with the CFO’s decision? a. Yes, I agree. The CFO is very wise to assign an honest person with excellent accounting background to handle company’s cash. b. No, I disagree. This assignment will weaken the internal control system of the company. 7. Cash transactions recorded by the bank but not yet recorded by the company include all of the following except a. Service fees.
b. Interest earned.
c. Checks outstanding.
d. NSF checks.
8. Checks outstanding are
a. checks the company has written that have not been subtracted from...
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