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Homework answers / question archive / University of Alabama ACC 506 Chapter 4 Quiz 1)The most favorable audit opinion that a company can receive is a(n): a

University of Alabama ACC 506 Chapter 4 Quiz 1)The most favorable audit opinion that a company can receive is a(n): a

Accounting

University of Alabama

ACC 506

Chapter 4 Quiz

1)The most favorable audit opinion that a company can receive is a(n):

a.            Adverse opinion

b.            Qualified opinion

c.             Unqualified opinion

d.            Disclaimer of opinion

2.            Which of the following is not considered a common control activity?

a.            Use of prenumbered documents

b.            Bonding of employees

c.             Requiring employees to take vacations

d.            Duplication of duties

3.            In 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) updated its framework for the assessment of internal control. That framework includes all of the following interrelated components except:

a.            Risk assessment

b.            Monitoring

c.             The control environment

d.            Separation of duties

 

4.            Which of the following statements accurately describes a fidelity bond?

a.            Guidelines or policies that limit the actions of different levels of management

b.            Procedures to provide reasonable assurance that the objectives of a company are accomplished

c.             Insurance that the company buys to protect itself from loss due to employee dishonesty

d.            Proper procedures for processing transactions

5.            If the financial statements cannot be relied upon because they contain one or more material departures from GAAP, which type of audit opinion will be issued by the auditor?

a.            Qualified opinion

b.            Adverse opinion

c.             Unqualified opinion

d.            Disclaimer

6.            Which of the following is not a motive for the embezzlement of cash by employees?

 

a.            Small quantities of high denomination can represent significant amounts of value

b.            Ownership of cash is difficult to prove

c.             Cash is the common unit of measurement

d.            Cash has universal appeal

 

7.            Which of the following is not one of the purposes of an internal control system?

a.            The evaluation of performance

b.            The assessment of the degree of compliance with company policies and public laws

c.             Safeguarding the company’s assets

d.            Ensuring that the company is using the most effective marketing plan

8.            Which of the following is not a primary role of an independent auditor?

a.            All of these answer choices are correct

b.            Advise client on tax strategies

c.             Assume legal and professional responsibilities to the public

d.            Determine whether a company’s financial statements are materially correct

 

9.            Which of the following is not one of the articles of the AICPA Code of Professional Conduct?

a.            Conservatism

b.            Due care

c.             Integrity

d.            Objectivity and independence

 

10.          Which document is issued by a bank to advise the depositor of a deduction to the depositor’s checking account balance?

a.            A credit memo

b.            A reconciling entry

c.             A debit entry

d.            A debit memo

 

11.          The bank statement for Tetra Company contained the following items: a bank service charge of $65; a credit memo for interest earned, $70; and a $160 NSF check from a customer. The company had outstanding checks of $375 and a deposit in transit of $850.

 

Assuming that the unadjusted bank balance was $1,700, what is the unadjusted book balance?

a.            $2,550

b.            $1,545

c.             $2,175

d.            $2,330

 

 

12.          Rainey Company's true cash balance at October 31 is $4,040. The following information is available for the bank reconciliation:

 

•             Outstanding checks, $650

•             Deposits in transit, $490

•             Bank service charges, $100

•             The bank had collected an account receivable for Rainey Company, $1,100

•             The bank statement included an NSF check written by one of Rainey's customers for $660

 

Based on this information Rainey's unadjusted book balance at October 31 is:

a.            $4,800

b.            $3,700

c.             $3,800

d.            $4,200

13.          For which of the following bank reconciliation adjustments would an adjusting entry not be necessary?

a.            An error in which the bank charged the company $83 for a check that had been written by another account holder

b.            A check for $37 deposited during the month, but returned for non- sufficient funds

c.             An error in which the company’s accountant recorded a check as $235 that was written correctly for $253

d.            All of these answer choices would require adjusting journal entries

 

14.          On September 30, the bank statement of Fine Company showed a balance of

$7,650. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records:

 

•             Deposits in transit amounted to $3,315

•             Outstanding checks amounted to $6,490

•             A $570 check was incorrectly drawn on Fine's account

•             NSF checks returned by the bank were $790

•             Bank service charge was $31

•             Credit memo for $85 for the collection of one of the company's account receivable

Based on the above information, the true cash balance was:

a.            $5,045

b.            $5,099

c.             $4,309

d.            $6,894

 

15.          At March 31, Cummins Company had a balance in its cash account of $10,800. At the end of March, the company determined that it had outstanding checks of

$1,195, deposits in transit of $730, a bank service charge of $45, and an NSF check from a customer for $230. The true cash balance at March 31 is:

a.            $10,525

b.            $10,335

c.             $10,020

d.            $10,800

16.          While performing the monthly bank reconciliation, the bookkeeper for Avon Company made the adjusting entry for a bank service charge of $20. Which of the following correctly shows the effect of the entry on the financial statements?

a.            Option B

b.            Option A

c.             Option D

d.            Option C

 

17.          Jasper Company accepted a check from Harp Company as payment for services rendered. Jasper's bank statement revealed that the Harp check was an NSF check. What effect will the entry to record the NSF check have on the accounting equation of Jasper Company?

a.            Option B

b.            Option D

c.             Option A

d.            Option C

 

18.          Following the February bank reconciliation for Kincaid Company, the accountant made an entry that increased accounts receivable and decreased cash by $150. This entry may have been used to record:

a.            The collection of an account receivable by the bank that has been deposited in Kincaid’s account

b.            The collection of an account receivable by Kincaid that is part of a deposit in transit

c.             An NSF check received by Kincaid from a customer

d.            Bank charges owed by Kincaid to the bank

 

19.          The bank statement for Tetra Company contained the following items: a bank service charge of $10; a credit memo for interest earned, $15; and a $50 NSF check from a customer. The company had outstanding checks of $100 and a deposit in transit of $300. The adjustment to record the customer's NSF check will:

a.            Decrease the cash account

b.            Increase the accounts receivable balance

c.             Increase the accounts receivable and decrease the cash account balance

d.            Decrease equity

 

 

20.          Owen Company's unadjusted book balance at June 30 is $12,920. The company's bank statement reveals bank service charges of $100. Two credit memos are included in the bank statement: one for $1,330, which represents a collection that the bank made for Owen, and one for $160, which represents the amount of interest that Owen had earned on its interest-bearing account in June. Based on this information, Owen's true cash balance is:

a.            $12,920

b.            $14,310

c.             $14,510

d.            $14,090

 

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