Question 1

An exception to disbursements being made by check is acceptable when cash is paid

Accepted Answer

A) to an owner. 
B) to employees as wages. 
C) from petty cash. 
D) to employees as loans. 
A) to an owner. 
B) to employees as wages. 
C) from petty cash. 
D) to employees as loans.

Question 2

A check written by the company for $275 is incorrectly recorded by a company as $257. On the bank reconciliation, the $18 error should be

Accepted Answer

A) added to the balance per books. 
B) deducted from the balance per books. 
C) added to the balance per bank. 
D) deducted from the balance per bank. 
A) added to the balance per books. 
B) deducted from the balance per books. 
C) added to the balance per bank. 
D) deducted from the balance per bank.

Question 3

At April 30, Kessler Company has the following bank information: $$\begin{array} { l r } 
\text { Cash balance per bank } & \$ 6,900 \
\text { Outstanding checks } & \$ 420 \
\text { Deposits in transit } & \$ 825 \
\text { Credit memo for interest } & \$ 15 \
\text { Bank service charge } & \$ 30
\end{array}$$ What is Kessler's adjusted cash balance on April 30?

Accepted Answer

A) $7,290. 
B) $7,320. 
C) $6,495. 
D) $7,305. 
A) $7,290. 
B) $7,320. 
C) $6,495. 
D) $7,305.

Question 4

GAAP, compared to IFRS, tends to be more

Accepted Answer

A) simple in accounting requirements. 
B) rules-based. 
C) principles-based. 
D) simple in disclosures requirements. 
A) simple in accounting requirements. 
B) rules-based. 
C) principles-based. 
D) simple in disclosures requirements.

Question 5

While preparing the bank reconciliation, you notice that a check, written by the company for $750, has been outstanding for 5 months. What is the best action for you to take?

Accepted Answer

A) Void the check.If it has not been cashed in 5 months, it will never be cashed. 
B) Issue a replacement check because you assume the original check has been lost. 
C) Wait 3 more months to give the bank more time to clear the check. 
D) Investigate to determine why the check has not cleared. 
A) Void the check.If it has not been cashed in 5 months, it will never be cashed. 
B) Issue a replacement check because you assume the original check has been lost. 
C) Wait 3 more months to give the bank more time to clear the check. 
D) Investigate to determine why the check has not cleared.

Question 6

The fraud triangle applies to

Accepted Answer

A) U.S companies but not international companies. 
B) international companies but not U.S.companies. 
C) U.S.and Canadian companies but not other international companies. 
D) U.S and international companies. 
A) U.S companies but not international companies. 
B) international companies but not U.S.companies. 
C) U.S.and Canadian companies but not other international companies. 
D) U.S and international companies.

Question 7

A bank reconciliation is generally prepared by the bank and sent to the depositor along with canceled checks.

Accepted Answer

A) True 
 B)False

Question 8

One example of a periodic independent verification is the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 9

All of the following bank reconciliation items would result in an adjusting entry on the company's books except

Accepted Answer

A) interest earned. 
B) deposits in transit. 
C) fee for collection of note by bank. 
D) NSF check of customer. 
A) interest earned. 
B) deposits in transit. 
C) fee for collection of note by bank. 
D) NSF check of customer.

Question 10

All of the following are examples of internal control procedures except

Accepted Answer

A) using prenumbered documents. 
B) reconciling the bank statement. 
C) customer satisfaction surveys. 
D) insistence that employees take vacations. 
A) using prenumbered documents. 
B) reconciling the bank statement. 
C) customer satisfaction surveys. 
D) insistence that employees take vacations.

Question 11

Which of the following is not a basic principle of cash management?

Accepted Answer

A) Increase collection of receivables. 
B) Keep inventory levels high. 
C) Delay payment of liabilities. 
D) Invest idle cash. 
A) Increase collection of receivables. 
B) Keep inventory levels high. 
C) Delay payment of liabilities. 
D) Invest idle cash.

Question 12

A $300 petty cash fund has cash of $39 and receipts of $255. The journal entry to replenish the account would include

Accepted Answer

A) debit to Cash for $255. 
B) credit to Petty Cash for $255. 
C) debit to Petty Cash for $261. 
D) credit to Cash for $261. 
A) debit to Cash for $255. 
B) credit to Petty Cash for $255. 
C) debit to Petty Cash for $261. 
D) credit to Cash for $261.

Question 13

Cash equivalents include money market accounts, commercial paper, and U.S. treasury bills held for ninety days or less.

Accepted Answer

A) True 
 B)False

Question 14

A check returned by the bank marked "NSF" means

Accepted Answer

A) no service fee. 
B) no signature found. 
C) not satisfactorily filled out. 
D) not sufficient funds. 
A) no service fee. 
B) no signature found. 
C) not satisfactorily filled out. 
D) not sufficient funds.

Question 15

Which of the following statements is correct?

Accepted Answer

A) Due to its liquid nature, cash is the easiest asset to steal. 
B) A good system of internal control will ensure that employees will not be able to steal cash. 
C) It takes two or more employees working together to be able to steal cash. 
D) All of these answer choices are correct. 
A) Due to its liquid nature, cash is the easiest asset to steal. 
B) A good system of internal control will ensure that employees will not be able to steal cash. 
C) It takes two or more employees working together to be able to steal cash. 
D) All of these answer choices are correct.

Question 16

Two individuals at a retail store work the same cash register. You evaluate this situation as

Accepted Answer

A) a violation of establishment of responsibility. 
B) a violation of separation of duties. 
C) supporting the establishment of responsibility. 
D) supporting internal independent verification. 
A) a violation of establishment of responsibility. 
B) a violation of separation of duties. 
C) supporting the establishment of responsibility. 
D) supporting internal independent verification.

Question 17

Lackey Company wrote checks totaling $38,430 during October and $41,964 during November. $36,540 of these checks cleared the bank in October, and $40,995 cleared the bank in November. What was the amount of outstanding checks on November 30?

Accepted Answer

A) $2,859. 
B) $519. 
C) $1,374. 
D) $4,455. 
A) $2,859. 
B) $519. 
C) $1,374. 
D) $4,455.

Question 18

Which one of the following sections would not appear on a cash budget?

Accepted Answer

A) Cash receipts. 
B) Financing. 
C) Investing. 
D) Cash disbursements. 
A) Cash receipts. 
B) Financing. 
C) Investing. 
D) Cash disbursements.

Question 19

For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation?

Accepted Answer

A) Check for $63 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 for $75 recorded by the company as $57. 
A) Check for $63 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 for $75 recorded by the company as $57.

Question 20

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

Accepted Answer

A) Accounts Receivable Cash 
B) Cash Accounts Receivable 
C) Miscellaneous Expense Accounts Receivable 
D) No adjusting entry is necessary. 
A) Accounts Receivable Cash 
B) Cash Accounts Receivable 
C) Miscellaneous Expense Accounts Receivable 
D) No adjusting entry is necessary.

Exam 6: Fraud, Internal Control, and Cash

An exception to disbursements being made by check is acceptable when cash is paid

A check written by the company for $275 is incorrectly recorded by a company as $257. On the bank reconciliation, the $18 error should be

At April 30, Kessler Company has the following bank information: Cash balance per bank \ 6,900 Outstanding checks \ 420 Deposits in transit \ 825 Credit memo for interest \ 15 Bank service charge \ 30 What is Kessler's adjusted cash balance on April 30?

GAAP, compared to IFRS, tends to be more

While preparing the bank reconciliation, you notice that a check, written by the company for $750, has been outstanding for 5 months. What is the best action for you to take?

The fraud triangle applies to

A bank reconciliation is generally prepared by the bank and sent to the depositor along with canceled checks.

One example of a periodic independent verification is the bank reconciliation.

All of the following bank reconciliation items would result in an adjusting entry on the company's books except

All of the following are examples of internal control procedures except

Which of the following is not a basic principle of cash management?

A $300 petty cash fund has cash of $39 and receipts of $255. The journal entry to replenish the account would include

Cash equivalents include money market accounts, commercial paper, and U.S. treasury bills held for ninety days or less.

A check returned by the bank marked "NSF" means

Which of the following statements is correct?

Two individuals at a retail store work the same cash register. You evaluate this situation as

Lackey Company wrote checks totaling $38,430 during October and $41,964 during November. $36,540 of these checks cleared the bank in October, and $40,995 cleared the bank in November. What was the amount of outstanding checks on November 30?

Which one of the following sections would not appear on a cash budget?

For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation?

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

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