10. Which of the following describes the environment in internal control? A) Internal auditors monitor company controls to safeguard assets, and external auditors Page 2 of 4 monitor the controls to ensure that the accounting records are accurate. B) The environment is the "tone at the top" of the business. C) The environment is designed to ensure that the business earns profit. D) A company must identify its risks 11. Rearranging plain-text messages by a mathematical process is known as A) password B) phishing C) encryption D) virus 12. Two or more people working together to circumvent internal controls and defraud a company is known as A) encryption B) firewall C) collusion D) separation of duties 13. Which of the following is the last step in the daily control over cash receipts by mail? A) A mailroom employee sends all customer checks to the treasurer who has the cashier make the bank deposit. B) The controller opens the mail and sends the remittance advices to the accounting department. C) The controller compares the records of the day's bank deposit amount from the treasurer and the debit to Cash from the accounting department. D) The accounting department prepares journal entries to cash and the customers' accounts 14. Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts? A) an encryption system B) an imprest system C) a lock-box system D) a firewall system 15. Mercury Company established a petty cash fund with a $500 balance. Which of the following statements is incorrect? A) A journal entry is needed to debit the Cash account and credit the Petty Cash account for $500. B) There is no net effect on current assets. C) The sum of the cash plus the total of the petty cash tickets should equal $500 at all times. D) The petty cash custodian cashes a check for $500 and places the currency in the petty cash fund box. 16. The petty cash fund had an initial imprest balance of $230. It currently has $15 in cash, $3 in miscellaneous petty cash tickets, and an additional $207 in specific petty cash tickets. The debit to Cash Short & Over would be A) $5 B) $15 C) $207 D) $210