Which of the following statements regarding a system of internal control is false?
a. Effective internal control systems provide complete assurance against the occurrence of material frauds and embezzlements.
b. Internal control systems depend largely on the competency and honesty of people.
c. Because internal control systems have a cost, management should evaluate the cost/benefit of each control plan.
d. The development of an internal control system is the responsibility of management.
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Q. 2) Tim's Tots, Inc.
September 30, 2012
Cash 5,000 Accounts Payable 3,200
Accounts receivable 3,500 Notes payable 6,500
Inventory ________ Common stock 5,000
Equipment 10,500 Retained earnings 7,300
Total assets ________ Total liabilities & shareholders' equity ________
What is the name of the financial statement above?
A) income statement
B) balance sheet
C) statement of cash flows
D) statement of changes in shareholders' equity
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Q. 3) The check written to establish the petty cash fund is entered in the journal by
a. debiting Cash and crediting Petty Cash.
b. debiting Petty Cash and crediting Owner's Capital.
c. debiting Owner's Capital and crediting Petty Cash.
d. debiting Petty Cash and crediting Cash.
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Q. 4) A purchase order is a document that is ________.
A) sent to a supplier or vendor requesting that an item be shipped
B) used internally to request that something be purchased
C) used internally to approve a payment for inventory
D) sent to a supplier along with payment for inventory purchased
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Q. 5) Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as
a. selling expenses
b. general expenses
c. other expenses
d. administrative expenses
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Q. 6) Identify the appropriate financial statement for each of the items listed below. Some items may be found on more than one financial statement.
a. Balance sheet
b. Income statement
c. Statement of changes in shareholders' equity
d. Statement of cash flows
_____ 1. Cash paid for supplies
_____ 2. Net income
_____ 3. Sales revenue
_____ 4. Rent expense
_____ 5. Inventory
_____ 6. Retained earnings
_____ 7. Cash received from customers
_____ 8. Cash
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