ACCT 200 - EXAM 3 STUDY GUIDE U OF A UPDATED
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Good Slides to Review
Answer:
Chapter 8 Slides - Slide 20
Question:
2. Fraud Triangle
Answer:
3 factors that contribute to fraud activity
Question:
3. Top of Fraud Triangle
Answer:
Opportunity - When the workplace lacks sufficient controls to deter and detect
fraud
Question:
4. Left Side of Fraud Triangle
Answer:
Financial Pressure - When employees have personal financial problems caused by
too much debt, or a desire to lead a lifestyle they cannot afford on their current
salary
Question:
5. Right Side of Fraud Triangle
Answer:
Rationalization - Employees believing their dishonest actions are justified
,Question:
6. The Sarbanes-Oxley Act (SOX)
Answer:
-Resulted from corporate scandals like ENRON in early 2000s
-SOX created the Public Company Accounting Oversight Board (PCAOB)
(Know that that resulted from ENRON)
-SOX Requirements:
-Publicly traded corporations must maintain a system of internal control
-Corporate executives and boards of directors must ensure that the controls are
reliable and effective
-Independent outside auditors must attest to the adequacy of the internal control
system
Question:
7. Book Balance
Answer:
The cash balance a company has
Question:
8. Know for the bank side...
Answer:
A company's asset account Cash is the "flipside" of the bank's liability account for
that company.
Question:
9. Per Bank Statement
Answer:
Cash Balance per Bank
+Deposit in Transit (DIT)
-Outstanding Checks
+/- Bank Errors
Should equal Per Book Statement
Question:
10. Per Book Statements
Answer:
Cash Balance per Book
+EFT & Other Bank Collections
-NSF Checks (Bounced Checks)
-Service Charges and Other Payments
+/- Company Errors
Should equal Per Bank Statement
, Question:
11. EFT & Other Bank Collections Journal Entry (JE)
Answer:
Dr Cash
Cr A/R
Question:
12. Book Error JE
Answer:
Dr Cash
Cr A/P
Question:
13. NSF Checks JE
Answer:
Dr A/R
Cr Cash
Question:
14. Bank Charge JE
Answer:
Dr Bank Charge Expense
Cr Cash
Question:
15. 6 Principles of Internal Control Activities
Answer:
1. Establishment of responsibility
2. Segregation of duties
3. Documentation procedures
4. Physical controls
5. Independent internal verification
6. Human resource controls
Question:
16. Establishment of Responsibility
Answer:
•Assign responsibility to specific employees
•Most effective when only one person is responsible for a given task
•Requires limiting access only to authorized personnel.
Ex)
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Good Slides to Review
Answer:
Chapter 8 Slides - Slide 20
Question:
2. Fraud Triangle
Answer:
3 factors that contribute to fraud activity
Question:
3. Top of Fraud Triangle
Answer:
Opportunity - When the workplace lacks sufficient controls to deter and detect
fraud
Question:
4. Left Side of Fraud Triangle
Answer:
Financial Pressure - When employees have personal financial problems caused by
too much debt, or a desire to lead a lifestyle they cannot afford on their current
salary
Question:
5. Right Side of Fraud Triangle
Answer:
Rationalization - Employees believing their dishonest actions are justified
,Question:
6. The Sarbanes-Oxley Act (SOX)
Answer:
-Resulted from corporate scandals like ENRON in early 2000s
-SOX created the Public Company Accounting Oversight Board (PCAOB)
(Know that that resulted from ENRON)
-SOX Requirements:
-Publicly traded corporations must maintain a system of internal control
-Corporate executives and boards of directors must ensure that the controls are
reliable and effective
-Independent outside auditors must attest to the adequacy of the internal control
system
Question:
7. Book Balance
Answer:
The cash balance a company has
Question:
8. Know for the bank side...
Answer:
A company's asset account Cash is the "flipside" of the bank's liability account for
that company.
Question:
9. Per Bank Statement
Answer:
Cash Balance per Bank
+Deposit in Transit (DIT)
-Outstanding Checks
+/- Bank Errors
Should equal Per Book Statement
Question:
10. Per Book Statements
Answer:
Cash Balance per Book
+EFT & Other Bank Collections
-NSF Checks (Bounced Checks)
-Service Charges and Other Payments
+/- Company Errors
Should equal Per Bank Statement
, Question:
11. EFT & Other Bank Collections Journal Entry (JE)
Answer:
Dr Cash
Cr A/R
Question:
12. Book Error JE
Answer:
Dr Cash
Cr A/P
Question:
13. NSF Checks JE
Answer:
Dr A/R
Cr Cash
Question:
14. Bank Charge JE
Answer:
Dr Bank Charge Expense
Cr Cash
Question:
15. 6 Principles of Internal Control Activities
Answer:
1. Establishment of responsibility
2. Segregation of duties
3. Documentation procedures
4. Physical controls
5. Independent internal verification
6. Human resource controls
Question:
16. Establishment of Responsibility
Answer:
•Assign responsibility to specific employees
•Most effective when only one person is responsible for a given task
•Requires limiting access only to authorized personnel.
Ex)
