Question 1

A bank statement includes

Accepted Answer

A)  A list of outstanding cheques 
B)  A list of petty cash amounts 
C)  The beginning and ending balance of the depositor's chequing account 
D)  A list of outstanding cheques and a list of petty cash amounts 
E)  All of the above 
A)  A list of outstanding cheques 
B)  A list of petty cash amounts 
C)  The beginning and ending balance of the depositor's chequing account 
D)  A list of outstanding cheques and a list of petty cash amounts 
E)  All of the above

Question 2

At the end of the day, the cash register shows a balance of $635. The cash drawer has a balance of $650. The difference of $15 should be debited to miscellaneous expense.

Accepted Answer

A) True 
 B)False

Question 3

DMS offers lawn and garden maintenance services. DMS customers pay largely by cheque and submit a remittance slip with their payment, to identify the customer account number to which the payment is applied. Ditta Mistry is the company owner and she attended a conference on internal controls. She plans to institute stronger internal controls over customer cash receipts. What controls might Ditta introduce?

Accepted Answer

Someone other than the accountant should

Question 4

In reconciling the bank balance, the amount of an unrecorded bank service charge should be:

Accepted Answer

A)  Added to the book balance of cash. 
B)  Deducted from the book balance of cash. 
C)  Added to the bank balance of cash. 
D)  Deducted from the bank balance of cash. 
E)  Noted as a memo. 
A)  Added to the book balance of cash. 
B)  Deducted from the book balance of cash. 
C)  Added to the bank balance of cash. 
D)  Deducted from the bank balance of cash. 
E)  Noted as a memo.

Question 5

An internal control system is the policies and procedures that managers use to

Accepted Answer

A)  Protect assets 
B)  Ensure reliable accounting 
C)  Promote efficient operations 
D)  Encourage adherence to company policies. 
E)  All of the above 
A)  Protect assets 
B)  Ensure reliable accounting 
C)  Promote efficient operations 
D)  Encourage adherence to company policies. 
E)  All of the above

Question 6

Internal control over cash receipts ensures that all cash received is properly recorded and deposited.

Accepted Answer

A) True 
 B)False

Question 7

A petty cash fund was originally established with a cheque for $150. On December 31, you find the following items in the petty cash fund:
 $$\begin{array} { | l | r | } 
\hline \text { Postage } & \$ 43.50 \
\hline \text { Office supplies } & 51.85 \
\hline \text { Office equipment repair } & 49.00 \
\hline \text { Cash } & 4.25 \
\hline
\end{array}$$ Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

Accepted Answer

The answer of A petty cash fund was originally established...

Question 8

The custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include

Accepted Answer

A)  A debit to Miscellaneous Expenses for $377.50 
B)  A credit to Cash Over and Short for $5.00 
C)  A debit to Petty Cash for $382.50 
D)  A credit to Cash for $387.50 
E)  A debit to Cash for $387.50 
A)  A debit to Miscellaneous Expenses for $377.50 
B)  A credit to Cash Over and Short for $5.00 
C)  A debit to Petty Cash for $382.50 
D)  A credit to Cash for $387.50 
E)  A debit to Cash for $387.50

Question 9

Below, preceded by identifying letters, are seven items that would cause Xavier Sales Company's book balance of cash to differ from its bank statement balance.
 (a) A customer's cheque returned by the bank marked "Not Sufficient Funds." A customer's cheque returned by the bank marked "Not Sufficient Funds."
(b) A cheque listed as outstanding on the previous month's reconciliation that is still outstarding:
(c) A service charge made by the bank.
(d) A deposit consisting solely of cheques which was mailed to the bank on the last day of Novernber and is unrecorded on the Novernber bank statement.
(e) A cheque paid by the bank at its correct $\$ 200$ amount but recorded in error in the Cheque Register at $\$ 20$.
(f) An unrecorded credit memorandum indicating the bank had collected a note receivable for Xavier Sales Compary and deposited the proceeds in the compary's account.
(g) A cheque written but not yet paid or retuned by the bank Indicate where each item would appear on Xavier Sales Company's bank reconciliation by putting an "X" in the correct column below.

Accepted Answer

The answer of Below, preceded by identifying letters, are seven...

Question 10

The Petty Cash account is a separate chequing account used for small amounts.

Accepted Answer

A) True 
 B)False

Question 11

Cash equivalents

Accepted Answer

A)  Are short-term, highly liquid investments 
B)  Include 6-month certificates of deposit 
C)  Include chequing accounts 
D)  Are recorded in petty cash 
E)  Are short-term, highly liquid investments and include chequing accounts 
A)  Are short-term, highly liquid investments 
B)  Include 6-month certificates of deposit 
C)  Include chequing accounts 
D)  Are recorded in petty cash 
E)  Are short-term, highly liquid investments and include chequing accounts

Question 12

Cash equivalents

Accepted Answer

A)  Include savings accounts 
B)  Include chequing accounts 
C)  Are short-term investments that a company invests their cash in to increase their earnings 
D)  Include savings and chequing accounts 
E)  All of the above 
A)  Include savings accounts 
B)  Include chequing accounts 
C)  Are short-term investments that a company invests their cash in to increase their earnings 
D)  Include savings and chequing accounts 
E)  All of the above

Question 13

Separation of duties divides responsibility for a series of transactions between two or more employees or departments. Despite the increased complexity, separation of duties reduces the risk of error and fraud.

Accepted Answer

A) True 
 B)False

Question 14

Two clerks sharing the same cash register is a violation of which internal control principle?

Accepted Answer

A)  Establish responsibilities 
B)  Maintain adequate records 
C)  Insure assets 
D)  Bond key employees 
E)  Apply technological controls 
A)  Establish responsibilities 
B)  Maintain adequate records 
C)  Insure assets 
D)  Bond key employees 
E)  Apply technological controls

Question 15

When used to monitor and control operations, internal control systems are a low priority for managers.

Accepted Answer

A) True 
 B)False

Question 16

Internal control procedures for cash receipts require

Accepted Answer

A)  Separation of custody of cash receipts from their recordkeeping 
B)  In-store cash sales be recorded on a cash register at the time of each sale 
C)  All cheques to be numbered in sequence 
D)  Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale 
E)  All of the above 
A)  Separation of custody of cash receipts from their recordkeeping 
B)  In-store cash sales be recorded on a cash register at the time of each sale 
C)  All cheques to be numbered in sequence 
D)  Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale 
E)  All of the above

Question 17

An internal control system is comprised of the policies and procedures companies use to protect assets, ensure reliable accounting, and promote efficient operations.

Accepted Answer

A) True 
 B)False

Question 18

Banking activities include

Accepted Answer

A)  Bank accounts 
B)  Bank deposits 
C)  Chequing 
D)  Electronic funds transfer 
E)  All of the above 
A)  Bank accounts 
B)  Bank deposits 
C)  Chequing 
D)  Electronic funds transfer 
E)  All of the above

Question 19

Good internal control procedures for cash receipts imply that cash receipts by mail should be opened by an accounting employee who is responsible for recording and depositing receipts.

Accepted Answer

A) True 
 B)False

Question 20

Annie's Attic reported the following information for September 30.
 $$\begin{array}{l}
\begin{array} { | l | r | } 
\hline \text { Cash }&\$23,000\
\hline \text { Accounts receivable } & 53,200 \
\hline \text { Merchardise invertory } & 220,000 \
\hline \text { Prepaid experse } & 13,200 \
\hline \text { Accounts payable } & 83,000 \
\hline \text { Balaries payable } & 12,000 \
\hline \text { Other current payables } & 1,500 \
\hline
\end{array}
\end{array}$$ Instructions: (1) Explain the purpose of the quick ratio. (2) Calculate the quick ratio to two decimals. (3) What does the quick ratio reveal about Annie's Attic?

Accepted Answer

(1) The purpose of the acid-test ratio i

A bank statement includes

At the end of the day, the cash register shows a balance of $635. The cash drawer has a balance of $650. The difference of $15 should be debited to miscellaneous expense.

In reconciling the bank balance, the amount of an unrecorded bank service charge should be:

An internal control system is the policies and procedures that managers use to

Internal control over cash receipts ensures that all cash received is properly recorded and deposited.

The custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include

The Petty Cash account is a separate chequing account used for small amounts.

Cash equivalents

Cash equivalents

Separation of duties divides responsibility for a series of transactions between two or more employees or departments. Despite the increased complexity, separation of duties reduces the risk of error and fraud.

Two clerks sharing the same cash register is a violation of which internal control principle?

When used to monitor and control operations, internal control systems are a low priority for managers.

Internal control procedures for cash receipts require

An internal control system is comprised of the policies and procedures companies use to protect assets, ensure reliable accounting, and promote efficient operations.

Banking activities include

Good internal control procedures for cash receipts imply that cash receipts by mail should be opened by an accounting employee who is responsible for recording and depositing receipts.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters

Exam 7: Internal Control and Cash

A bank statement includes

At the end of the day, the cash register shows a balance of $635. The cash drawer has a balance of $650. The difference of $15 should be debited to miscellaneous expense.

In reconciling the bank balance, the amount of an unrecorded bank service charge should be:

An internal control system is the policies and procedures that managers use to

Internal control over cash receipts ensures that all cash received is properly recorded and deposited.

The custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include

The Petty Cash account is a separate chequing account used for small amounts.

Cash equivalents

Cash equivalents

Separation of duties divides responsibility for a series of transactions between two or more employees or departments. Despite the increased complexity, separation of duties reduces the risk of error and fraud.

Two clerks sharing the same cash register is a violation of which internal control principle?

When used to monitor and control operations, internal control systems are a low priority for managers.

Internal control procedures for cash receipts require

An internal control system is comprised of the policies and procedures companies use to protect assets, ensure reliable accounting, and promote efficient operations.

Banking activities include

Good internal control procedures for cash receipts imply that cash receipts by mail should be opened by an accounting employee who is responsible for recording and depositing receipts.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters