Question 1

Deposits in transit

Accepted Answer

A)  have been recorded on the company's books but not yet by the bank. 
B)  have been recorded by the bank but not yet by the company. 
C)  have not been recorded by the bank or the company. 
D)  are checks from customers which have not yet been received by the company. 
A)  have been recorded on the company's books but not yet by the bank. 
B)  have been recorded by the bank but not yet by the company. 
C)  have not been recorded by the bank or the company. 
D)  are checks from customers which have not yet been received by the company.

Question 2

The cash records of Morris Company show the following:
1. The June 30 bank reconciliation indicated that deposits in transit totaled $390. During July the general ledger account Cash shows deposits of $9,900, but the bank statement indicates that only $9,340 in deposits were received during the month.
2. The June 30 bank reconciliation also reported outstanding checks of $800. During the month of July, Morris Company books show that $11,670 of checks were issued, yet the bank statement showed that $11,200 of checks cleared the bank in July.
There were no bank debit or credit memoranda and no errors were made by either the bank or Morris Company.
Answer the following questions:
(a) What were the deposits in transit at July 31?
(b) What were the outstanding checks at July 31?

Accepted Answer

The answer of The cash records of Morris Company show...

Question 3

Cash which is restricted for a specific use should be separately reported.

Accepted Answer

A) True 
 B)False

Question 4

Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

Accepted Answer

A)  documentation procedures are violated. 
B)  independent internal verification is violated. 
C)  segregation of duties is violated. 
D)  establishment of responsibility is violated. 
A)  documentation procedures are violated. 
B)  independent internal verification is violated. 
C)  segregation of duties is violated. 
D)  establishment of responsibility is violated.

Question 5

The principles of internal control include all of the following except

Accepted Answer

A)  establishment of responsibility. 
B)  combining of duties. 
C)  physical controls. 
D)  independent internal verification. 
A)  establishment of responsibility. 
B)  combining of duties. 
C)  physical controls. 
D)  independent internal verification.

Question 6

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

Accepted Answer

A) True 
 B)False

Question 7

A compensating balance is included in the amount of cash reported on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 8

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

Accepted Answer

A)  establishment of responsibility. 
B)  segregation of duties. 
C)  documentation procedures. 
D)  independent internal verification. 
A)  establishment of responsibility. 
B)  segregation of duties. 
C)  documentation procedures. 
D)  independent internal verification.

Question 9

Osborn Company assembled the following information in completing its March bank reconciliation: balance per bank $11,460; outstanding checks $2,325; deposits in transit $3,750; NSF check $240; bank service charge $75; cash balance per books $13,200. As a result of this reconciliation, Osborn will

Accepted Answer

A)  reduce its cash account by $1,425. 
B)  reduce its cash account by $75. 
C)  increase its cash account by $165. 
D)  reduce its cash account by $315. 
A)  reduce its cash account by $1,425. 
B)  reduce its cash account by $75. 
C)  increase its cash account by $165. 
D)  reduce its cash account by $315.

Question 10

Internal control over cash disbursements is more effective when payments are made by ______________, rather than by ______________.

Accepted Answer

The answer of Internal control over cash disbursements is more...

Question 11

Checks received in the mail should be immediately stamped "NSF" to prevent unauthorized cashing of the check.

Accepted Answer

A) True 
 B)False

Question 12

Rodriguez Company gathered the following reconciling information in preparing its February bank reconciliation:   The cash balance reported on the February 28 statement of financial position will be

Accepted Answer

A)  €17,500. 
B)  €17,030. 
C)  €16,100. 
D)  €15,630. 
A)  €17,500. 
B)  €17,030. 
C)  €16,100. 
D)  €15,630.

Question 13

El Greco Inc'.s month-end bank statement shows a balance of €51,000, outstanding checks are €11,000, a deposit of €2,500 which was in transit at month end. In reconciling the bank statement, El Greco discovered that a check for €500 was erroneously charged by the bank against the company's account. The adjusted balance in the bank account at month end is

Accepted Answer

A)  €42,000. 
B)  €42,500. 
C)  €43,000. 
D)  €51,000. 
A)  €42,000. 
B)  €42,500. 
C)  €43,000. 
D)  €51,000.

Question 14

The petty cash fund of CHF200 for the Hansen Company appeared as follows on July 31, 2014:   On July 31, the office manager gives instruction to increase the petty cash fund to CHF300. The journal entry to increase the petty cash fund would include

Accepted Answer

A)  credit to Cash for CHF292.50. 
B)  credit to Petty Cash for CHF192.50. 
C)  debit to Cash for CHF92.50. 
D)  debit to Petty Cash for CHF100. 
A)  credit to Cash for CHF292.50. 
B)  credit to Petty Cash for CHF192.50. 
C)  debit to Cash for CHF92.50. 
D)  debit to Petty Cash for CHF100.

Question 15

At April 30, Mareska Company has the following bank information: cash balance per bank €6,100; outstanding checks €280; deposits in transit €550; credit memo for interest €10; bank service charge €20. What is Mareska's adjusted cash balance on April 30?

Accepted Answer

A)  €6,360 
B)  €6,380 
C)  €5,830 
D)  €6,370 
A)  €6,360 
B)  €6,380 
C)  €5,830 
D)  €6,370

Question 16

A company stamps checks received in the mail with the words "For Deposit Only". This endorsement is called a(n)

Accepted Answer

A)  blank endorsement. 
B)  rubber stamp. 
C)  restrictive endorsement. 
D)  operational endorsement. 
A)  blank endorsement. 
B)  rubber stamp. 
C)  restrictive endorsement. 
D)  operational endorsement.

Question 17

A bank reconciliation should be prepared

Accepted Answer

A)  whenever the bank refuses to lend the company money. 
B)  when an employee is suspected of fraud. 
C)  to explain any difference between the depositor's balance per books and the balance per bank. 
D)  by the person who is authorized to sign checks. 
A)  whenever the bank refuses to lend the company money. 
B)  when an employee is suspected of fraud. 
C)  to explain any difference between the depositor's balance per books and the balance per bank. 
D)  by the person who is authorized to sign checks.

Question 18

Control over cash disbursements is generally more effective when

Accepted Answer

A)  all bills are paid in cash. 
B)  disbursements are made by the accounts payable subsidiary clerk. 
C)  payments are made by check. 
D)  all purchases are made on credit. 
A)  all bills are paid in cash. 
B)  disbursements are made by the accounts payable subsidiary clerk. 
C)  payments are made by check. 
D)  all purchases are made on credit.

Question 19

At August 31, Litke Company has this bank information: cash balance per bank ₤7,150; outstanding checks ₤962; deposits in transit ₤1,700; and a bank service charge ₤20. Determine the adjusted cash balance per bank at August 31, 2014.

Accepted Answer

The answer of At August 31, Litke Company has this...

Question 20

Identify the internal control procedures applicable to cash receipts for Ferguson Company in each of the following cases.
1. All cashiers are bonded.
2. The treasurer compares the total cash receipts to the bank deposit daily.
3. The bookkeeper records cash receipts which are held by the treasurer.
4. Only the treasurer holds cash receipts.
5. Deposit slips are completed for each deposit.

Accepted Answer

1. Human resource controls
2.

Deposits in transit

Cash which is restricted for a specific use should be separately reported.

Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

The principles of internal control include all of the following except

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

A compensating balance is included in the amount of cash reported on the statement of financial position.

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

Osborn Company assembled the following information in completing its March bank reconciliation: balance per bank $11,460; outstanding checks $2,325; deposits in transit $3,750; NSF check $240; bank service charge $75; cash balance per books $13,200. As a result of this reconciliation, Osborn will

Internal control over cash disbursements is more effective when payments are made by , rather than by .

Checks received in the mail should be immediately stamped "NSF" to prevent unauthorized cashing of the check.

Rodriguez Company gathered the following reconciling information in preparing its February bank reconciliation: The cash balance reported on the February 28 statement of financial position will be

The petty cash fund of CHF200 for the Hansen Company appeared as follows on July 31, 2014: On July 31, the office manager gives instruction to increase the petty cash fund to CHF300. The journal entry to increase the petty cash fund would include

At April 30, Mareska Company has the following bank information: cash balance per bank €6,100; outstanding checks €280; deposits in transit €550; credit memo for interest €10; bank service charge €20. What is Mareska's adjusted cash balance on April 30?

A company stamps checks received in the mail with the words "For Deposit Only". This endorsement is called a(n)

A bank reconciliation should be prepared

Control over cash disbursements is generally more effective when

At August 31, Litke Company has this bank information: cash balance per bank ₤7,150; outstanding checks ₤962; deposits in transit ₤1,700; and a bank service charge ₤20. Determine the adjusted cash balance per bank at August 31, 2014.

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

Deposits in transit

Cash which is restricted for a specific use should be separately reported.

Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

The principles of internal control include all of the following except

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

A compensating balance is included in the amount of cash reported on the statement of financial position.

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

Osborn Company assembled the following information in completing its March bank reconciliation: balance per bank $11,460; outstanding checks $2,325; deposits in transit $3,750; NSF check $240; bank service charge $75; cash balance per books $13,200. As a result of this reconciliation, Osborn will

Internal control over cash disbursements is more effective when payments are made by ______________, rather than by ______________.

Checks received in the mail should be immediately stamped "NSF" to prevent unauthorized cashing of the check.

Rodriguez Company gathered the following reconciling information in preparing its February bank reconciliation: The cash balance reported on the February 28 statement of financial position will be

The petty cash fund of CHF200 for the Hansen Company appeared as follows on July 31, 2014: On July 31, the office manager gives instruction to increase the petty cash fund to CHF300. The journal entry to increase the petty cash fund would include

At April 30, Mareska Company has the following bank information: cash balance per bank €6,100; outstanding checks €280; deposits in transit €550; credit memo for interest €10; bank service charge €20. What is Mareska's adjusted cash balance on April 30?

A company stamps checks received in the mail with the words "For Deposit Only". This endorsement is called a(n)

A bank reconciliation should be prepared

Control over cash disbursements is generally more effective when

At August 31, Litke Company has this bank information: cash balance per bank ₤7,150; outstanding checks ₤962; deposits in transit ₤1,700; and a bank service charge ₤20. Determine the adjusted cash balance per bank at August 31, 2014.

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

Internal control over cash disbursements is more effective when payments are made by , rather than by .