29 Jan available-for-sale securities.

ACCT212 Financial Accounting

WEEK 3 CHECKPOINT

Question 1

(TCO 5) The three main components of the fraud triangle are

rationalization, opportunity, and greed.

opportunity, motive, and lack of ethics.

motive, opportunity, and rationalization.

None of the above

Question 2

(TCO 5) Fraud is the ultimate unethical act in business because

the perpetrators usually do so for their own short-term economic gain at the expense of others.

fraud is illegal.

fraud violates the rights of many for the temporary betterment of a few.

All of the above

Question 3

(TCO 5) The primary way that fraud is prevented and detected is through a proper system of

checks and balances.

management directives.

internal control.

internal and external audits.

Question 4

(TCO 5) The “tone at the top”

is a component of the control procedures.

starts with low level employees.

means that owners and top managers must behave honorably to set a good example for employees.

is set by the PCAOB.

Question 5

(TCO 5) The information system component of internal control

ensures that every system that processes accounting data should have the ability to capture transactions as they occur.

monitors controls.

offers hints of where fraud or errors could occur.

ensures that the IT department has adequate control procedures in place to ensure that no one can hack into the company’s database.

Question 6

(TCO 5) Creating bogus websites for the purpose of stealing unauthorized data is a(n)

encryption device.

phishing expedition.

computer virus.

Trojan horse.

Question 7

(TCO 5) When preparing a bank reconciliation, which of the following items should be added to the book balance?

EFT receipts

Deposits in transit

Collection items

Both EFT receipts and collection items

Question 8

(TCO 5) When a company receives cash by mail

all incoming mail containing cash receipts should be opened by the accounting department.

the mailroom sends all customer checks to the internal audit department.

the remittance advice goes to the accounting department for preparation of the journal entries.

the bank deposit is prepared by the mail room.

Question 9

(TCO 5) Another name for short-term investments is

equity investments.

marketable securities.

market investments.

available-for-sale securities.

Question 10

(TCO 5) Which of the following is a true statement about sales?

Net revenue is gross revenue plus sales discounts less sales returns and allowances.

Sales discounts are offered to customers in order to speed up cash flow.

Sales returns and allowances increase a company’s profit.

Retailers do not generally record sales returns and allowances in a separate account.