Patterson exam 4 ACG 2021 Questions
with Complete Solutions.
components of fraud - Answer opportunity rationalization financial pressure
The Sarbanes-Oxley Act caused - Answer a system of internal controls
independent auditors
reasons to establish internal controls - Answer safe guard assets
keep the books accurate
make operations more efficient
compliance with rules from the SEC
Primary components of an internal control system - Answer to control the environment
asses risk and minimize it
control activities
have clear information and communication
monitor all employees
principles of internal controls - Answer establish responsibility
segregate duties
documentation
physical control
internal verifications
human resource controls
Limitations of internal controls - Answer reasonable assurance (the cost of internal controls
should not exceed their expected benefit)
Internal auditors - Answer employees of the company
independent auditors - Answer not employees of the company
cash controls - Answer designed to safeguard a companies cash ( cash receipt and
disbursement controls, bank reconciliation, pre numbered checks)
, True Cash for the bank balance - Answer Unadjusted bank balance + deposits in transit -
outstanding checks +/- bank errors
True cash for the book balance - Answer unadjusted book balance + accounts and notes
receivable + interest earned - bank service charges - NSF checks +/- bank errors
credit memo - Answer increase the company's balance
ex) interest payment from bank, collection of accounts/notes receivable
debit memo - Answer decreases the companies balance
ex) bank service charge, bounced check
Journal entries only for company - Answer NSF checks
Bank service charge
interest paid
check error
journal entries required to obtain true cash balance are conducted for - Answer the book
only
Stock holder's rights - Answer elect board of directors
vote
preemptive right
controller - Answer maintains accounting recorders and internal controls, prepares financial
statements, tax returns, and internal reports
treasurer - Answer safeguard assets
Common stock - Answer is legal capital
outstanding stocks - Answer is the number of shares of issued stock held by share holders
Treasury stock - Answer stock the company has bought back from shareholders to show the
stock is good to buy, increase earning per share, give shares to employees as bonuses, and to
use to purchase other companies.
with Complete Solutions.
components of fraud - Answer opportunity rationalization financial pressure
The Sarbanes-Oxley Act caused - Answer a system of internal controls
independent auditors
reasons to establish internal controls - Answer safe guard assets
keep the books accurate
make operations more efficient
compliance with rules from the SEC
Primary components of an internal control system - Answer to control the environment
asses risk and minimize it
control activities
have clear information and communication
monitor all employees
principles of internal controls - Answer establish responsibility
segregate duties
documentation
physical control
internal verifications
human resource controls
Limitations of internal controls - Answer reasonable assurance (the cost of internal controls
should not exceed their expected benefit)
Internal auditors - Answer employees of the company
independent auditors - Answer not employees of the company
cash controls - Answer designed to safeguard a companies cash ( cash receipt and
disbursement controls, bank reconciliation, pre numbered checks)
, True Cash for the bank balance - Answer Unadjusted bank balance + deposits in transit -
outstanding checks +/- bank errors
True cash for the book balance - Answer unadjusted book balance + accounts and notes
receivable + interest earned - bank service charges - NSF checks +/- bank errors
credit memo - Answer increase the company's balance
ex) interest payment from bank, collection of accounts/notes receivable
debit memo - Answer decreases the companies balance
ex) bank service charge, bounced check
Journal entries only for company - Answer NSF checks
Bank service charge
interest paid
check error
journal entries required to obtain true cash balance are conducted for - Answer the book
only
Stock holder's rights - Answer elect board of directors
vote
preemptive right
controller - Answer maintains accounting recorders and internal controls, prepares financial
statements, tax returns, and internal reports
treasurer - Answer safeguard assets
Common stock - Answer is legal capital
outstanding stocks - Answer is the number of shares of issued stock held by share holders
Treasury stock - Answer stock the company has bought back from shareholders to show the
stock is good to buy, increase earning per share, give shares to employees as bonuses, and to
use to purchase other companies.
