Q&A Hero

Q: Mutual funds whose bonds have a ____ average time to maturity are ____ sensitive to interest rate fluctuations. a. longer; less b. shorter; less c. shorter; more d. longer; less AND shorter; more

Q: ​Mutual funds composed of stocks that have potential for very high growth, but may also be unproven, are called a. ​income funds. b. ​capital appreciation funds. c. ​specialty funds. d. ​dividend funds.

Q: The cash count sheet determines all of the following except the: A) cash shortage or overage, if any. B) amount of cash available for deposit in the bank C) amount of cash to be reported on the balance sheet. D) amount of cash received.

Q: Money market funds commonly invest in a. stocks. b. real estate. c. commercial paper. d. U.S. Treasury bonds. e. None of these are correct.

Q: The cashier uses the cash register and its accompanying point-of-sale accounting system to perform three important functions. Which of the following is not one of those functions? A) Document total cash sales B) Document amount charged for each item sold C) Segregate duties D) Restrict access

Q: ​A mutual funds expense ratio represents the ____ divided by the fund's ____. a. ​annual fees charged to investors; 12b-1 fees b. ​annual fees charged to investors; net asset value c. ​initial sales charge (load); 12b-1 fees d. ​initial sales charge (load); net asset value

Q: A companys cash receipts procedures include the following. Cashiers collect cash and issue a receipt at the point of sale. Supervisors take custody of the cash at the end of each cashiers shift and deposit it in the bank. Accounting staff then ensure the receipts from cash sales are properly recorded in the accounting system. Which internal control principle is most evident with these procedures? A) Restrict access B) Segregate duties C) Document procedures D) Independently verify

Q: Cash sales rung up by cashiers totaled $117,000. Cash in the drawer was counted and found to be $119,000. The journal entry to record the days sales would include a: A) debit to Cash for $117,000. B) credit to Cash Overage for $2,000. C) credit to Sales Revenue for $119,000. D) debit to Sales Revenue for $117,000.

Q: ​____ trade at one-tenth of the S&P 500 value. a. ​Spiders b. ​Cubes c. ​Diamonds d. ​World Equity Benchmark Shares

Q: Which of the following is not a reason why it is especially important for companies to have internal controls over cash? A) Most businesses accept remote sources of payment on account. B) The volume of cash transactions is enormous. C) Cash is portable. D) There is a high risk of theft of cash.

Q: The average annual fee on actively managed exchange-traded funds is ________. a. zero b. lower than the typical annual fee on open-end mutual funds c. higher than the typical annual fee on open-end mutual funds d. the same as the typical annual fee on open-end mutual funds

Q: Criminally minded employees have been known to override internal controls or do which of the following to get around them? A) Collude B) Segregate duties C) Disarm D) Restrict access

Q: The ____ of a mutual fund indicates the value per share. a. net asset value b. gross asset value c. net stock value d. net bond value e. None of these are correct.

Q: Which of the following is not a commonly used internal control? A) Mandatory vacations B) Anonymous hotlines C) Bonding employees D) Consolidating duties

Q: Money market fund assets include all of the following, EXCEPT a. stocks. b. repurchase agreements. c. Treasury bills. d. CDs.

Q: The use of passcodes is an example of which internal control principle? A) Segregate duties B) Restrict access C) Document procedures D) Independently verify

Q: ​Equity real estate investment trusts invest a. ​in mortgage and construction loans. b. ​directly in properties. c. ​in common stocks issued by construction companies. d. ​in common stocks issued by real estate brokerage firms.

Q: The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as: A) duplication of responsibility. B) mandatory vacations. C) segregation of duties. D) rotation of duties.

Q: Which of the following statements is NOT correct? a. ETFs are like index mutual funds in that the share price adjusts over time in response to changes in the index level. b. ETFs normally do not have capital gains and losses that must be distributed to shareholders. c. The portfolio management of both ETFs and index mutual funds is very complex. d. ETFs can be traded throughout the day.

Q: The ____ of a mutual fund represents the price at which shares can be purchased from the mutual fund. a. gross asset value b. net asset value c. net stock value d. net bond value

Q: Segregation of duties means that a company assigns responsibilities so that: A) sufficient workers are available to cover all necessary jobs. B) responsibilities for related activities are assigned to two or more people. C) employees are restricted to jobs for which they have adequate training. D) workers are divided into those who do the same tasks but on different days.

Q: When at least two-thirds of a bond mutual funds portfolio consists of bonds rated below Baa by Moody's or BBB by Standard and Poor's, the fund is called a ____ fund. a. growth b. capital appreciation c. high-yield bond d. leveraged bond e. None of these are correct.

Q: The principles of internal control include which of the following? A) Use only computerized systems B) Establish responsibility C) Maintain perpetual inventory records D) Eliminate fraud

Q: Hedge funds a. are typically organized as limited partnerships. b. were accused of making market conditions worse during the credit crisis because they commonly took short positions in the stock of financial institutions that held subprime mortgages. c. commonly rely heavily on financial leverage. d. generally charge both a management fee and an incentive fee. e. All of these are correct.

Q: The purpose of internal controls includes all of the following except: A) improving efficiency. B) producing timely accounting information. C) minimizing errors. D) completely eliminating fraud.

Q: The evaluation of the internal control system to determine whether it is working as intended is referred to as: A) the control environment. B) information and communication. C) risk assessment. D) monitoring activities.

Q: ​Mutual funds composed of bonds that offer periodic coupon payments are a. ​income funds. b. ​specialty funds. c. ​dividend funds d. ​growth funds.

Q: ​____ are beneficial for investors who want to invest in tax-exempt securities. a. ​Municipal bond funds b. ​Growth and income funds c. ​International and global funds d. ​Money market funds

Q: The control components used by companies as a framework when analyzing their internal control systems include all of the following except: A) control environment. B) compliance. C) monitoring activities. D) risk assessment.

Q: ​Mutual funds a. ​are unregulated. b. ​are required to disclose the names of their portfolio managers in the prospectus. c. ​are not required to disclose any information about their past performance. d. ​are exempt from all taxes.

Q: The attitude that people in the organization hold regarding internal control is referred to as the: A) control environment. B) control atmosphere. C) risk assessment. D) monitoring activities.

Q: Mutual funds that include both non-U.S. stocks and U.S. stocks are called ____ funds. a. global b. international c. combined d. mixed

Q: Which of the following is not a reason that a business needs an effective internal control system? A) Ensure that work is completed efficiently and effectively B) Produce reliable and timely accounting information for use by people external to the organization C) Protect assets by reducing the risk of fraud D) Identify ways to circumvent applicable laws and regulations

Q: ​Mutual funds that are willing to repurchase their shares from investors at any time are referred to as a. ​closed-end funds. b. ​load mutual funds. c. ​no-load mutual funds. d. ​open-end mutual funds.

Q: The main purposes of internal controls include all of the following except: A) prevention of error, theft, and fraud. B) promotion of operational efficiency. C) ensuring compliance with laws and regulations. D) providing more favorable financial information.

Q: If interest rates are expected to ________, mortgage real investment trusts (REITs) ___________. a. decline; become less attractive b. rise; become less attractive c. rise; are not affected d. decline; are not affected

Q: The objectives of a company's system of internal control include all of the following except: A) completing work efficiently and effectively and protecting assets by reducing the risk of fraud. B) producing reliable and timely accounting information for use by people internal and external to the organization. C) ensuring the companys stock price provides a reasonable return to investors. D) adhering to laws and regulations.

Q: ​Money market funds are normally perceived to have ____ interest rate risk and ____ credit risk. a. ​low; high b. ​high; high c. ​high; low d. ​low; low

Q: Internal controls are concerned with: A) only manual accounting systems. B) the extent of government regulations. C) protecting against theft of assets and enhancing accounting information. D) preparing income tax returns.

Q: Shares of exchange-traded funds can be sold _________, and shares of open-end mutual funds can be sold _________. a. at any time during trading hours; at any time via private trading networks b. only at the end of the day; at any time during trading hours c. at any time via private trading networks; at any time during trading hours d. at any time during trading hours; only at the end of the day

Q: The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the: A) president of the company. B) chief financial officer of the company. C) independent directors. D) companys external auditors.

Q: Mutual funds with ____ expense ratios tend to ____ other funds that have a similar investment objective. a. lower; underperform b. higher; outperform c. lower; outperform d. lower; underperform AND higher; outperform

Q: All of the following are requirements of the Sarbanes-Oxley Act (SOX) except: A) evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies. B) evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies. C) establishment of an audit committee of independent directors to ensure the companys accounting, internal control, and audit functions are effective. D) adoption of a code of ethics covering all employees.

Q: Most closed-end funds invest in a. bonds and other debt securities. b. money market securities. c. gold. d. derivatives.

Q: Considering current laws that deal with misstatements of financial results, which of the following statements is correct? A) Managers found guilty can escape paying fines if they declare bankruptcy. B) Managers can be sentenced to maximum jail terms of up to 20 years for each violation. C) Managers found guilty may keep any bonuses or profits from the misrepresentation if their fines are less than such bonuses or profits. D) Whistleblowers who secretly submit concerns about questionable accounting practices will be fired.

Q: Which of the following statements is NOT correct? a. Investors can purchase shares directly from an open-end fund at any time. b. The number of shares of an open-end fund is always changing. c. Open-end funds typically maintain some cash on hand in case investments exceed redemptions. d. There are many different categories of open-end mutual funds.

Q: Money market funds invest mostly in a. stocks. b. long-term bonds. c. real estate. d. short-term securities.

Q: All of the following are requirements of the Sarbanes-Oxley Act (SOX) except: A) tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices B) fines of up to $5 million plus repayment of any fraud proceeds C) evaluation and reporting on the effectiveness of internal control over financial reporting for large public companies by external auditors D) evaluation and reporting on the effectiveness of internal control over financial reporting for all public companies by management with disclosure that management is not responsible for the internal control system

Q: Companies that must comply with the requirements of the Sarbanes-Oxley Act (SOX) include all: A) U.S. companies. B) companies that trade on U.S. stock exchanges. C) U.S. companies that trade on U.S. stock exchanges. D) foreign companies that trade on U.S. stock exchanges.

Q: ​If a mutual fund distributes at least ____ percent of its taxable income to shareholders, the fund is exempt from taxes on dividends, interest, and capital gains distributed to shareholders. a. ​25 b. ​50 c. ​75 d. ​90

Q: Exchange-traded funds can be a. traded throughout the day. b. purchased on margin. c. sold short. d. All of these are correct.

Q: Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence? A) Enron Act B) Federal Accounting Standards Board Act C) Sarbanes-Oxley Act D) Securities and Exchange Act

Q: Consumer finance companies primarily focus on a. consumer loans. b. consumer advising. c. consumer regulation. d. None of these are correct.

Q: Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s? A) Federal Accounting Standards Board Act B) Securities and Exchange Act C) Sarbanes-Oxley Act D) Clayton Act

Q: Which of the following would overstate a company's net income? A) Counting shipments of customers' orders as revenue before payment has been received. B) Shipping goods to customers without receiving orders from those customers, and recording the transactions as revenue. C) Accruing liabilities for marketing expenses before they are incurred. D) Making an accrual adjusting entry for interest earned on a bond investment.

Q: ____ finance companies provide financing for customers of retail stores and provide personal loans to individuals. a. Consumer b. Sales c. Commercial d. None of these are correct.

Q: Research has found that three factors exist when fraud occurs. Which of the following is not one of the three factors of the fraud triangle? A) Incentive to commit fraud B) Opportunity to commit fraud C) Ability to rationalize the fraud D) Lack of a code of ethics

Q: ​A finance companys cash flows are _____ related to changes in economic growth and may be ____ related to changes in the risk-free rate. a. ​positively; inversely b. ​inversely; positively c. ​inversely; inversely d. ​positively; positively

Q: Employee fraud includes all of the following categories except: A) asset misappropriation. B) corruption. C) deception. D) financial statement fraud.

Q: Finance companies would prefer to increase their long-term debt when interest rates a. ​are relatively low and are expected to increase. b. ​have increased. c. ​have been stable for several years. d. ​are projected to decrease.

Q: Cash that is legally or contractually required to be set aside for a specific purpose cannot be reported with Cash and Cash Equivalents on the balance sheet.

Q: Finance companies are subject to a. disclosure requirements and truth in lending rules. b. minimum specified interest rates on loans provided. c. a minimum length on loan maturity. d. regulations that require finance companies to only operate in one state.

Q: The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

Q: ​Finance companies participate in the ____ market to reduce interest rate risk. a. ​money b. ​bond c. ​options d. ​swap

Q: ​The ________ is the federal agency responsible for regulating consumer finance products and services that may be offered by finance companies. a. ​Consumer Financial Safety Commission b. ​Securities and Exchange Commission c. ​Consumer Financial Protection Bureau d. ​Federal Trade Commission

Q: Cash equivalents are short-term, highly liquid investments purchased within one year of maturity.

Q: Which of the following is NOT a main source of funds for finance companies? a. bank loans b. commercial paper issues c. bonds d. borrowing from the Federal Reserve

Q: On a bank statement, deposits are listed as debits and cleared checks are listed as credits.

Q: Finance companies can accumulate capital by doing all of the following EXCEPT a. retaining earnings. b. issuing stock. c. issuing commercial paper. d. Finance companies can build their capital base by doing all of these.

Q: A petty cash fund is a separate checking account used to reimburse employees for expenditures they have made on behalf of the organization.

Q: ​Finance companies differ from commercial banks, savings institutions, and credit unions in that they a. ​do not rely heavily on deposits as a source of funds. b. ​focus on financing acquisitions by companies. c. ​focus on providing residential mortgages. d. ​use most of their funds to purchase stocks

Q: A good voucher system includes procedures and approvals designed to control cash payments.

Q: ​When a finance company purchases a firm's receivables at a discount and becomes responsible for processing and collecting the balances of these accounts, it acts as a a. ​leasing agent. b. ​lessor. c. ​lessee. d. ​factor.

Q: When duties are properly segregated, the accounting department should compare the cash in the register with the cash count sheet.

Q: ​If finance companies have liabilities that are more rate sensitive than their assets and want to reduce interest rate risk, they could a. ​shorten their average asset life. b. ​lengthen their average asset life. c. ​shorten the maturity of debt that they issue. d. ​make greater use of fixed-rate loans.

Q: The use of internal controls guarantees protection against losses due to fraud, errors, and inefficiencies.

Q: ​A wholly owned subsidiary whose primary purpose is to finance sales of the parent company's products and services, provide wholesale financing to distributors of the parent company's products, and purchase receivables of the parent company is a a. ​captive finance subsidiary. b. ​factor. c. ​leasing agent. d. ​captive factoring agent.

Q: A highly effective internal control should not be implemented if the cost is greater than the benefit.

Q: Which of the following is NOT a use of finance company funds? a. consumer loans b. business loans c. commercial paper d. real estate loans e. All of the above are uses of finance company funds.

Q: The components of an internal control system include control environment, risk assessment, control activities, information and communication, and rationalization.