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Solutions

Multiple Choice Questions - Solutions​

  1. The fraud triangle includes which three factors?

    • Answer: a) Pressure (motive), Opportunity, and Rationalization.

  2. Internal controls that prevent problems from occurring are called:

    • Answer: b) Preventive controls stop problems before they occur.

  3. Petty cash is replenished by:

    • Answer: c) Replenishment debits expenses and credits Cash (Bank); Petty Cash account stays at original amount.

  4. Outstanding checks on a bank reconciliation are:

    • Answer: b) Outstanding checks are subtracted from bank balance (checks written but not yet cashed).

  5. SEPA stands for:

    • Answer: c) Single Euro Payments Area - standardized euro payment system.

  6. In Luxembourg, fiscal cash registers are required for:

    • Answer: c) Fiscal cash registers are required for restaurants, retail stores, and businesses with cash sales.

  7. The purpose of separating duties is to:

    • Answer: b) Separation of duties reduces opportunity for fraud by preventing one person from having too much control.

  8. Bank service charges on a bank reconciliation are:

    • Answer: d) Bank service charges are subtracted from book balance (expense on bank statement not yet in books).

  9. Which PCN account is used for petty cash?

    • Answer: b) 500000 is Petty Cash (Class 5).

  10. Management's attitude toward controls and ethics is called:

  • Answer: b) "Tone at the top" refers to management's attitude toward controls and ethical conduct.

Note: Solutions will be provided in a separate solutions manual. For now, students should work through problems and cases, then compare with instructor-provided solutions or discuss in class.