AC 116 Unit 2 Sarbanes-Oxley. Internal Control. and Cash - Practice for Review 100% Satisfaction

1. The Sarbanes-Oxley Act of 2002 was passed by Congress due to the public outcry after the financial scandals of the early 2000s. (Points: 1) True False 2. There are two internal control objectives and they are to ensure accurate financial reports, and ensure compliance with applicable laws. (Points: 1) True False 3. 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. (Points: 1) True False 4. The control environment in an internal control structure is the attitude and awareness of internal control by all employees. (Points: 1) True False 5. Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting. (Points: 1) True False 6. Internal control is enhanced by separating the control of a transaction from the record-keeping function. (Points: 1) True False 7. A customer's check received in settlement of an account receivable is considered cash. (Points: 1) True False 8. Businesses who have several bank accounts, petty cash, and cash on hand, would maintain a separate ledger account for each type of cash. (Points: 1) True False 9. For strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees. (Points: 1) True False 10. If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortages have exceeded cash overages for the period. (Points: 1) True False 11. The bank often informs the company of bank service charges by including a credit memo with the monthly bank statement. (Points: 1) True False 12. Bank customers are considered creditors of the bank so the bank shows their accounts with credit balances on the bank's records. (Points: 1) True False 13. Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash. (Points: 1) True False 14. In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement. (Points: 1) True False 15. In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records. (Points: 1) True False 16. In preparing a bank reconciliation, the amount of a check omitted from the journal is added to the balance per company's records. (Points: 1) True False 17. In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash. (Points: 1) True False 18. Expenditures from a petty cash fund are documented by a petty cash receipt. (Points: 1) True False 19. When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished. (Points: 1) True False 20. Money market accounts, commercial paper, and United States Treasury Notes are examples of cash equivalents. (Points: 1) True False