Accounting 201Chapter 04 Practice Test Flashcards
The Sarbanes-Oxley Act of 2002 applies to:
A) All companies that use accrual-basis accounting.
B) All companies that use either cash or accrual-basis accounting.
C) All companies that file reports with the SEC.
D) All companies that file their tax return with the IRS.
C
Who is ultimately responsible for the establishment and success of a company's internal control system? A) The company's top executives. B) The company's stockholders. C) The company's external auditors. D) The company's board of director.
A
Effective internal control over cash includes the requirement that:
A) Only checks are used for payment of purchases.
B) The same person who makes deposits should also record the deposits.
C) The person who makes deposits should NOT record the deposits.
D) a and b.
C
Consistent with the COSO framework, an effective internal control system includes the control environments. The control environment refers to:
A) The ethical tone set by top management.
B) Accountability through separation of duties. C) The risk of failing to achieve company objectives.
D) The reliability of financial information.
A
Which of the following is considered cash for financial reporting purposes?
A) Prepaid insurance.
B) Credit card purchases.
C) Investments in a 6-month Certificate of Deposit.
D) Checks received from a customer from the sale of merchandise
D
Which of the following adjusts the bank's balance of cash in a bank reconciliation? A) Interest on bank deposit. B) NSF check. C) Deposits outstanding. D) Bank service fees.
C
Which of the following adjusts the company's balance of cash in a bank reconciliation? A) Interest on bank deposit. B) Checks outstanding. C) An error by the bank. D) Deposits outstanding.
A
Investing cash flows include the following:
A) Cash received from a customer.
B) Cash paid for supplies.
C) Cash received from the sale of a used company truck.
D) Cash received from the issuance of common stock.
C
Financing cash flows include the following:
A) Cash received from a customer.
B) Cash paid for supplies.
C) Cash received from the sale of a used company truck.
D) Cash received from the issuance of common stock.
D
Operating cash flows include the following:
A) Cash received from a bank loan.
B) Cash paid for supplies.
C) Cash received from the sale of a used company truck.
D) Cash received from the issuance of common stock.
B
When expenditures from the petty cash fund are recorded: A) Cash is debited. B) Expenses are debited. C) Retained Earnings is debited. D) Receivables are debited.
B
A company’s quality of earnings is assumed to be high when
A) Operating cash flows are positive.
B) Operating cash flows are negative.
C) Net income provides a good predictor of the company’s success.
D) Net income is positive.
C
