Question 1

Which of the following would be added to the balance per bank on a bank reconciliation?

Accepted Answer

A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) Service charges. 
A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) Service charges.

Question 2

Control over cash disbursements is improved if major expenditures are paid by check.

Accepted Answer

A) True 
 B)False

Question 3

A credit balance in Cash Over and Short account is shown as

Accepted Answer

A) an asset. 
B) a liability. 
C) a revenue. 
D) an expense. 
A) an asset. 
B) a liability. 
C) a revenue. 
D) an expense.

Question 4

A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: $$\begin{array} { l r } 
\text { July } & \$ 300,000 \
\text { August } & 180,000 \
\text { September } & 450,000
\end{array}$$ The cash inflow in the month of September is expected to be

Accepted Answer

A) $339,000. 
B) $256,500. 
C) $270,000. 
D) $324,000. 
A) $339,000. 
B) $256,500. 
C) $270,000. 
D) $324,000.

Question 5

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

Accepted Answer

A) True 
 B)False

Question 6

Karlin Company gathered the following reconciling information in preparing its April bank reconciliation: $\begin{array}{lr}
\text { Cash balance per books, } 4 / 30 & \$ 17,600 \
\text { Deposits in transit } & 2,400 \
\text { Notes receivable and interest collected by bank } & 5,920 \
\text { Bank charge for check printing } & 200 \
\text { Outstanding checks } & 12,000 \
\text { NSF check } & 1,120
\end{array}$ The adjusted cash balance per books on April 30 is

Accepted Answer

A) $24,600. 
B) $23,520. 
C) $22,200. 
D) $24,440. 
A) $24,600. 
B) $23,520. 
C) $22,200. 
D) $24,440.

Question 7

Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

Accepted Answer

A) An error by the bank. 
B) Outstanding checks. 
C) A bank service charge. 
D) A deposit in transit. 
A) An error by the bank. 
B) Outstanding checks. 
C) A bank service charge. 
D) A deposit in transit.

Question 8

What is the rationale for the internal control principle, segregation of duties?

Accepted Answer

A) History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties. 
B) The work of one employee should, without duplication of effort, provide a reliable basis for evaluating the work of another employee. 
C) Control is most effective when only one person is responsible for a given task. 
D) Segregation of duties causes companies to hire more employees and thus it supports the economy. 
A) History has shown that employees are generally dishonest and thus cannot be entrusted with performing related duties. 
B) The work of one employee should, without duplication of effort, provide a reliable basis for evaluating the work of another employee. 
C) Control is most effective when only one person is responsible for a given task. 
D) Segregation of duties causes companies to hire more employees and thus it supports the economy.

Question 9

Which of the following is not an internal control activity for cash?

Accepted Answer

A) The number of persons who have access to cash should be limited. 
B) The functions of record keeping and maintaining custody of cash should be combined. 
C) Surprise audits of cash on hand should be made occasionally. 
D) All cash receipts should be recorded promptly. 
A) The number of persons who have access to cash should be limited. 
B) The functions of record keeping and maintaining custody of cash should be combined. 
C) Surprise audits of cash on hand should be made occasionally. 
D) All cash receipts should be recorded promptly.

Question 10

A traditional definition of internal control specifically includes all of the following features except

Accepted Answer

A) adherence to prescribed managerial policies. 
B) promotion of operational efficiency. 
C) reliability of accounting data. 
D) insistence that employees not take earned vacations. 
A) adherence to prescribed managerial policies. 
B) promotion of operational efficiency. 
C) reliability of accounting data. 
D) insistence that employees not take earned vacations.

Question 11

A consequence of separation of duties is that

Accepted Answer

A) theft by employees becomes impossible. 
B) operations become extremely inefficient because of constant training of employees. 
C) more employees will need to be bonded. 
D) theft is still possible when several employees are involved. 
A) theft by employees becomes impossible. 
B) operations become extremely inefficient because of constant training of employees. 
C) more employees will need to be bonded. 
D) theft is still possible when several employees are involved.

Question 12

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

Accepted Answer

A) True 
 B)False

Question 13

Expected direct materials purchases in Wade Company are $630,000 in the first quarter and $810,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are:

Accepted Answer

A) $864,000. 
B) $810,000. 
C) $702,000. 
D) $648,000. 
A) $864,000. 
B) $810,000. 
C) $702,000. 
D) $648,000.

Question 14

Restricted cash should be reported

Accepted Answer

A) always as a noncurrent asset. 
B) separately on the income statement. 
C) separately on the balance sheet. 
D) always as a current asset. 
A) always as a noncurrent asset. 
B) separately on the income statement. 
C) separately on the balance sheet. 
D) always as a current asset.

Question 15

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

Accepted Answer

A) Segregation of duties. 
B) Documentation procedures. 
C) Independent internal verification. 
D) Employee background check. 
A) Segregation of duties. 
B) Documentation procedures. 
C) Independent internal verification. 
D) Employee background check.

Question 16

For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?

Accepted Answer

A) Check written for $63, but recorded by the company as $36. 
B) Deposit of $600 recorded by the bank as $60. 
C) A returned $300 check recorded by the bank as $30. 
D) Check written for $57, but recorded by the company as $75. 
A) Check written for $63, but recorded by the company as $36. 
B) Deposit of $600 recorded by the bank as $60. 
C) A returned $300 check recorded by the bank as $30. 
D) Check written for $57, but recorded by the company as $75.

Question 17

The following information was taken from Mitchell Company cash budget for the month of July: $\begin{array}{lr}
\text { Beginning cash balance } & \$ 125,000 \
\text { Cash receipts } & 120,000 \
\text { Cash disbursements } & 170,000
\end{array}$ If the company has a policy of maintaining an end of the month cash balance of $125,000, the amount the company would have to borrow is

Accepted Answer

A) $50,000. 
B) $25,000. 
C) $75,000. 
D) $36,000. 
A) $50,000. 
B) $25,000. 
C) $75,000. 
D) $36,000.

Question 18

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is

Accepted Answer

A) a contra asset account. 
B) a liability account. 
C) also an asset account. 
D) a stockholders' equity account. 
A) a contra asset account. 
B) a liability account. 
C) also an asset account. 
D) a stockholders' equity account.

Question 19

Expected direct materials purchases in Rees Company are $210,000 in the first quarter and $270,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are:

Accepted Answer

A) $288,000. 
B) $270,000. 
C) $234,000. 
D) $216,000. 
A) $288,000. 
B) $270,000. 
C) $234,000. 
D) $216,000.

Question 20

Related selling activities do not include

Accepted Answer

A) ordering the merchandise. 
B) making a sale. 
C) shipping the goods. 
D) billing the customer. 
A) ordering the merchandise. 
B) making a sale. 
C) shipping the goods. 
D) billing the customer.

Which of the following would be added to the balance per bank on a bank reconciliation?

Control over cash disbursements is improved if major expenditures are paid by check.

A credit balance in Cash Over and Short account is shown as

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

What is the rationale for the internal control principle, segregation of duties?

Which of the following is not an internal control activity for cash?

A traditional definition of internal control specifically includes all of the following features except

A consequence of separation of duties is that

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

Expected direct materials purchases in Wade Company are $630,000 in the first quarter and $810,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are:

Restricted cash should be reported

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is

Expected direct materials purchases in Rees Company are $210,000 in the first quarter and $270,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are:

Related selling activities do not include

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 6: Fraud, Internal Control, and Cash

Which of the following would be added to the balance per bank on a bank reconciliation?

Control over cash disbursements is improved if major expenditures are paid by check.

A credit balance in Cash Over and Short account is shown as

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

What is the rationale for the internal control principle, segregation of duties?

Which of the following is not an internal control activity for cash?

A traditional definition of internal control specifically includes all of the following features except

A consequence of separation of duties is that

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

Restricted cash should be reported

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is

Related selling activities do not include

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters