Exam (elaborations)
Chapter 08 Sarbanes Oxley Internal Control and Cash
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- Chapter_08_Sarbanes-Oxley
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- Chapter_08_Sarbanes-Oxley
Chapter 08 Sarbanes Oxley Internal Control and Cash Accounting 26th Ed by Warren -Test Bank
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CHAPTER 8: SARBANES-OXLEY, INTERNAL CONTROL, AND CASH1. The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-01 - 08-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics
2. SarbanesOxley’s purpose is to maintain public confidence and trust in the financial reporting of companies.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-01 - 08-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics
3. There are three internal control objectives and they are to safeguard the company's reputation, ensure
accurate financial reports, and ensure compliance with applicable laws.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-01 - 08-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
4. The Sarbanes-Oxley Act requires that financial statements of all public companies report on
management's conclusions about the effectiveness of the company's internal control procedures.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-01 - 08-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics
5. Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus deter fraud
and prevent misleading financial statements.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-01 - 08-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics
6. The control environment in an internal control structure is the overall attitude of management and employees
about the importance of internal control.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-02 - 08-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
7. Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the
control procedure: separating operations, custody of assets, and accounting.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-02 - 08-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
8. Internal control is enhanced by separating the control of a transaction from the record-keeping function.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-02 - 08-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. A backlog in recording transactions is an example of a warning sign from the accounting system.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-02 - 08-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
10. Money orders are considered cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-03 - 08-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
11. A customer's check received in settlement of an account receivable is considered cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-03 - 08-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.04 - Cash vs. Accrual
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. Businesses who have several bank accounts, petty cash, and cash on hand, would maintain a separate ledger
account for each type of cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.08-03 - 08-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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