Question 1

Match each of the following principles of internal control with the appropriate description below.

Accepted Answer

1. E 3. A

Question 2

Indicate how each of the following items would be shown on a bank reconciliation.
1. Bank error (The bank charged our account with another company's check)
2. Check printing charge
3. Deposits in transit
4. Note collected by the bank
5. NSF checks
6. Outstanding checks

Accepted Answer

1. Added to balance per bank
2

Question 3

Controls that enhance the accuracy and reliability of the accounting records are

Accepted Answer

A)  automated controls. 
B)  external controls. 
C)  physical controls. 
D)  human resource. 
A)  automated controls. 
B)  external controls. 
C)  physical controls. 
D)  human resource.

Question 4

In general, documents should be prenumbered and all documents should be accounted for.

Accepted Answer

A) True 
 B)False

Question 5

Cash equivalents include each of the following except

Accepted Answer

A)  bank certificates of deposit. 
B)  money market funds. 
C)  petty cash. 
D)  U.S Treasury bills. 
A)  bank certificates of deposit. 
B)  money market funds. 
C)  petty cash. 
D)  U.S Treasury bills.

Question 6

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Accepted Answer

A) True 
 B)False

Question 7

On October 1, Clutter Company's petty cash fund of €120 is replenished. The fund contains cash of $25, and receipts for supplies of €55 and postage of €40. Prepare the journal entry to record the replenishment of the petty cash fund.

Accepted Answer

The answer of On October 1, Clutter Company's petty cash...

Question 8

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

Accepted Answer

A) True 
 B)False

Question 9

A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

Accepted Answer

A)  credit Cash Over and Short for $3. 
B)  credit Miscellaneous Revenue for $3. 
C)  debit Cash Over and Short for $3. 
D)  debit Miscellaneous Expense for $3. 
A)  credit Cash Over and Short for $3. 
B)  credit Miscellaneous Revenue for $3. 
C)  debit Cash Over and Short for $3. 
D)  debit Miscellaneous Expense for $3.

Question 10

Heath Company gathered the following reconciling information in preparing its July bank reconciliation:   The adjusted cash balance per books on July 31 is

Accepted Answer

A)  ₤8,160. 
B)  ₤8,010. 
C)  ₤6,310. 
D)  ₤6,460. 
A)  ₤8,160. 
B)  ₤8,010. 
C)  ₤6,310. 
D)  ₤6,460.

Question 11

An application of good internal control over cash disbursements is

Accepted Answer

A)  following payment, the approved invoice should be stamped PAID. 
B)  blank checks should be stored in the treasurer's desk. 
C)  each check should be compared with the approved invoice after the check is issued. 
D)  check signers should record the cash disbursements. 
A)  following payment, the approved invoice should be stamped PAID. 
B)  blank checks should be stored in the treasurer's desk. 
C)  each check should be compared with the approved invoice after the check is issued. 
D)  check signers should record the cash disbursements.

Question 12

Match the internal control principle below with the appropriate cash receipts procedure described.
a. Documentation procedures
b. Establishment of responsibility
c. Independent internal verification
d. Human resource controls
e. Physical controls
f. Segregation of duties
_____ 1. Only designated personnel are authorized to handle cash receipts.
_____ 2. Different individuals receive cash and record cash receipts.
_____ 3. Use remittance advice and cash register tapes.
_____ 4. Store cash in safes and bank vaults.
_____ 5. Treasurer compares total receipts to bank deposits daily.
_____ 6. Bonding of employees that handle cash.

Accepted Answer

1. b 3. a

Question 13

All of the following would involve a debit memorandum except

Accepted Answer

A)  a bank service charge. 
B)  an NSF check. 
C)  the cost of printing checks. 
D)  interest earned. 
A)  a bank service charge. 
B)  an NSF check. 
C)  the cost of printing checks. 
D)  interest earned.

Question 14

Identify which principle of internal control is being followed in each of the following cases.
1. Warehouse employees do not have access to the accounting records.
2. Prenumbered shipping documents are prepared for each shipment of goods.
3. The locked warehouse is accessible only by warehouse employees with keys.

Accepted Answer

1. Segregation of du

Question 15

Blank checks

Accepted Answer

A)  should be safeguarded. 
B)  should be pre-signed. 
C)  do not need to be safeguarded since they must be signed to be valid. 
D)  should not be prenumbered. 
A)  should be safeguarded. 
B)  should be pre-signed. 
C)  do not need to be safeguarded since they must be signed to be valid. 
D)  should not be prenumbered.

Question 16

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.

Question 17

Match between columns
                        Premises: Employees’ time is tracked using a time clock.
Only the treasurer of the company can sign checks.
Employees who receive shipments of goods do not have access to the accounting records for merchandise.
Shipping documents are prenumbered.
The bookkeeper does not have physical custody of assets.

Accepted Answer

The Answer of Accountability for assets and Establishment of responsibility is...

Question 18

A credit balance in Cash Over and Short is reported as a(n)

Accepted Answer

A)  asset. 
B)  liability. 
C)  miscellaneous expense. 
D)  miscellaneous revenue. 
A)  asset. 
B)  liability. 
C)  miscellaneous expense. 
D)  miscellaneous revenue.

Question 19

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

Question 20

The size of the petty cash fund is dependent on

Accepted Answer

A)  the wishes of the custodian of the fund. 
B)  anticipated disbursements for the year. 
C)  anticipated disbursements for a three- to four-week period. 
D)  the size of the regular cash account. 
A)  the wishes of the custodian of the fund. 
B)  anticipated disbursements for the year. 
C)  anticipated disbursements for a three- to four-week period. 
D)  the size of the regular cash account.

Match each of the following principles of internal control with the appropriate description below.

Indicate how each of the following items would be shown on a bank reconciliation. 1. Bank error (The bank charged our account with another company's check) 2. Check printing charge 3. Deposits in transit 4. Note collected by the bank 5. NSF checks 6. Outstanding checks

Controls that enhance the accuracy and reliability of the accounting records are

In general, documents should be prenumbered and all documents should be accounted for.

Cash equivalents include each of the following except

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

On October 1, Clutter Company's petty cash fund of €120 is replenished. The fund contains cash of $25, and receipts for supplies of €55 and postage of €40. Prepare the journal entry to record the replenishment of the petty cash fund.

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

Heath Company gathered the following reconciling information in preparing its July bank reconciliation: The adjusted cash balance per books on July 31 is

An application of good internal control over cash disbursements is

All of the following would involve a debit memorandum except

Blank checks

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

A credit balance in Cash Over and Short is reported as a(n)

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

The size of the petty cash fund is dependent on

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting Principles and Contingent Liabilities in Business Operations

Filters

Exam 7: Fraud, Internal Control, and Cash

Match each of the following principles of internal control with the appropriate description below.

Indicate how each of the following items would be shown on a bank reconciliation. 1. Bank error (The bank charged our account with another company's check) 2. Check printing charge 3. Deposits in transit 4. Note collected by the bank 5. NSF checks 6. Outstanding checks

Controls that enhance the accuracy and reliability of the accounting records are

In general, documents should be prenumbered and all documents should be accounted for.

Cash equivalents include each of the following except

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

On October 1, Clutter Company's petty cash fund of €120 is replenished. The fund contains cash of $25, and receipts for supplies of €55 and postage of €40. Prepare the journal entry to record the replenishment of the petty cash fund.

All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

Heath Company gathered the following reconciling information in preparing its July bank reconciliation: The adjusted cash balance per books on July 31 is

An application of good internal control over cash disbursements is

All of the following would involve a debit memorandum except

Blank checks

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

A credit balance in Cash Over and Short is reported as a(n)

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

The size of the petty cash fund is dependent on

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting Principles and Contingent Liabilities in Business Operations

Filters