The cash ratios for 4 companys are below.Juan Corp. -0.26Rose Inc. - 0.15Freelance Inc. - 0.18Pioneer Corp. - 0.27which has the maximum ability to repay its current liabilities?
  • Pioneer Corp.
  • an addition on the bank side
  • monitoring of controls
  • addition on the book side
External auditors evaluate company controls to ensure the financial statements are presented fairly, in accordance with Generally Accepted Accounting Principles.(True or false)
  • True
  • False
If the bank reconciliation includes a bank service charge, a journal entry is required, which debits Bank Expense and credits cash.(True or false)
  • True
  • False
Which of the following would be included in the journal to record an NSF check?
  • One of the major purposes of internal control is to ensure that the assets are safeguarded.
  • A receipt is issued for each transaction to ensure that each sale is recorded.
  • a debit to Accounts Receivable and credit to Cash
  • attaching electronic sensors to merchandise inventory
A business keeps cash in a bank account because banks have established practices for safeguarding the business's money.(True or false)
  • True
  • False
In a bank reconciliation, a NSF check will be shown on the book side of the reconciliation.(True or false)
  • True
  • False
Cash and cash equivalents are divided by ____________ to detrmine the cash ratio.
  • a deduction on the book side
  • monitoring of controls
  • an increase in the book balance.
  • total current liabilities
Internal controls is an organizational plan that ensures that the financial statements are prepared and submitted on time.(True or false)
  • True
  • False
A check payment for $658 was incorrectly entered in the cash account as $which adjustment needs to be made
  • a deduction on the book side
  • monitoring of controls
  • an increase in the book balance.
  • an addition on the bank side
Under the Sarbanes-Oxley Act, accounting firms are allowed to audit public company and provide certain consulting services for the same client.(True or false)
  • True
  • False
Two or more people working together to circumvent internal controls and defraud a company is known as ________________.
  • Deposits
  • Collusion
  • Encryption
  • a deduction on the book side
All items on the book side of the bank reconciliation require journal entries.(True or false)
  • True
  • False
Reducing expenses to increase operating profit is representative of ____________.
  • deposits in transit
  • an addition on the bank side
  • It promotes operational efficiency.
  • Promoting operational efficiency
Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.(True or false)
  • True
  • False
Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.(True or false)
  • True
  • False
A check of $300,000, deposited by company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?
  • a debit to Accounts Receivable and credit to Cash
  • an addition on the bank side
  • addition on the book side
  • a deduction on the book side
In a bank reconciliation, a deposit in transit will be shown on the bank side of the reconciliation.(True or false)
  • True
  • False
The environment is the culture of a business, and it starts with the CEO or CFO and the top managers.(True or false)
  • True
  • False
Which of the following describes the risk assessment component of internal control?A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.B) Risk assessment is the "tone at the top" of the business.C) A company must identify its risks and take necessary steps to minimize them.D) Risk assessment is designed to ensure that the business's goals are achieved.
  • To encourage employees follow company policies
  • A company must identify its risks and take necessary steps to minimize them.
  • One of the major purposes of internal control is to ensure that the assets are safeguarded.
  • attaching electronic sensors to merchandise inventory
An information system is one of five components by which a company can achieve its internal control objectives.(True or false)
  • True
  • False
A bank made an EFT payment of a telephone bill of $5,How would this information be included on the bank reconciliation?
  • a deduction on the book side
  • an addition on the bank side
  • monitoring of controls
  • Electronic Data Interchange
A ___________ is a document explaining the reasons for the difference between a depositor's Cash account in the ledger and the depositor's cash balance in its bank account.
  • Pioneer Corp.
  • addition on the book side
  • bank reconciliation
  • Electronic Data Interchange
In a good internal control system, which of the following sets of documents is required for proper approval of a payment to a supplier?A) a journal entry, a supplier invoice, and a description of the goods being purchasedB) a receiving report, an invoice, and a purchase orderC) a purchase order, a journal entry, and a price catalogD) a supplier invoice, a bill of lading, and the supplier's financial statements
  • False
  • A company must identify its risks and take necessary steps to minimize them.
  • To encourage employees follow company policies
  • a receiving report, an invoice, and a purchase order
For good controls over cash payments, the person who orders goods from a supplier should always be different from the person who approves the payment.(True or false)
  • True
  • False
Evaluated Receipts Settlement is ________.A) a streamlined process that bypasses paper documents altogetherB) a process that eliminates the need for separation of dutiesC) a procedure that compresses the payment approval process into a single step by comparing the receiving report to the purchase orderD) an organizational plan and all the related measures adopted by an entity to safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate and reliable accounting records
  • Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate.
  • A company must identify its risks and take necessary steps to minimize them.
  • a procedure that compresses the payment approval process into a single step by comparing the receiving report to the purchase order
  • A receipt is issued for each transaction to ensure that each sale is recorded.
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