Question 1

A debit memorandum would not be issued by the bank for

Accepted Answer

A)  a bank service charge. 
B)  the issuance of traveler's checks. 
C)  the wiring of funds. 
D)  the collection of a notes receivable. 
A)  a bank service charge. 
B)  the issuance of traveler's checks. 
C)  the wiring of funds. 
D)  the collection of a notes receivable.

Question 2

If a check correctly written and paid by the bank for ¥4,710 is incorrectly recorded on the company's books for ¥4,170, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  add ¥540 to the book's balance. 
B)  subtract ¥540 from the book's balance. 
C)  deduct ¥540 from the bank's balance. 
D)  deduct ¥4,710 from the book's balance. 
A)  add ¥540 to the book's balance. 
B)  subtract ¥540 from the book's balance. 
C)  deduct ¥540 from the bank's balance. 
D)  deduct ¥4,710 from the book's balance.

Question 3

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Accepted Answer

A) True 
 B)False

Question 4

A disbursement system that uses wire, telephone, computers, etc., to transfer cash from one location to another is referred to as ______________.

Accepted Answer

The answer of A disbursement system that uses wire, telephone,...

Question 5

High-quality accounting requires both high-quality accounting standards and

Accepted Answer

A)  the development of new principles of internal control activities. 
B)  government intervention to ensure that the public interest is protected. 
C)  high-quality auditing standards. 
D)  a reconsideration of SOX to make it less onerous. 
A)  the development of new principles of internal control activities. 
B)  government intervention to ensure that the public interest is protected. 
C)  high-quality auditing standards. 
D)  a reconsideration of SOX to make it less onerous.

Question 6

Short-term, highly liquid investments are currently reported as short-term investments on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Cash equivalents, such as highly liquid investments that can be converted into a specific amount of cash, are currently reported with cash on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 9

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

Accepted Answer

A) True 
 B)False

Question 10

A debit memorandum issued by the bank ______________ the cash balance in the depositor's account.

Accepted Answer

The answer of A debit memorandum issued by the bank...

Question 11

A €200 petty cash fund has cash of €35 and receipts of €160. The journal entry to replenish the account would include a credit to

Accepted Answer

A)  Cash for €165. 
B)  Petty Cash for €165. 
C)  Cash Over and Short for €5. 
D)  Cash for €160. 
A)  Cash for €165. 
B)  Petty Cash for €165. 
C)  Cash Over and Short for €5. 
D)  Cash for €160.

Question 12

Important objectives of a system of internal controls are to safeguard assets and to enhance the accuracy and reliability of the accounting records. Briefly discuss how (1) cost-benefit considerations, (2) the human element, and (3) the size of the business, affect the implementation of a system of internal controls.

Accepted Answer

The implementation of a system of intern

Question 13

Entries are made to the Petty Cash account when

Accepted Answer

A)  establishing the fund. 
B)  making payments out of the fund. 
C)  recording shortages in the fund. 
D)  replenishing the fund. 
A)  establishing the fund. 
B)  making payments out of the fund. 
C)  recording shortages in the fund. 
D)  replenishing the fund.

Question 14

In the month of November, Coler Company wrote checks in the amount of $27,750. In December, checks in the amount of $37,974 were written. In November, $25,404 of these checks were presented to the bank for payment, and $32,649 were presented in December. What is the amount of outstanding checks at the end of November?

Accepted Answer

A)  $5,325 
B)  $2,346 
C)  $7,671 
D)  $10,650 
A)  $5,325 
B)  $2,346 
C)  $7,671 
D)  $10,650

Question 15

A voucher system is used by many large companies as a means of controlling cash receipts.

Accepted Answer

A) True 
 B)False

Question 16

Identify which of the following reconciling items would require an adjusting entry to be made by Farrell Company.
1. Deposits in transit totaled $2,000.
2. A check written to the company for $350 by Harder Company was returned NSF.
3. The bank charged the company $46 for printing checks.
4. Outstanding checks totaled $1,667.
5. A debit memorandum reported an EFT of $178 to Paco Utilities.

Accepted Answer

Adjusting entries would be req

Question 17

Because cash is the least liquid current asset it is listed last in the current assets section of the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 18

Bank errors

Accepted Answer

A)  occur because of time lags. 
B)  must be corrected by debits. 
C)  are infrequent in occurrence. 
D)  are corrected by making an adjusting entry on the depositor's books. 
A)  occur because of time lags. 
B)  must be corrected by debits. 
C)  are infrequent in occurrence. 
D)  are corrected by making an adjusting entry on the depositor's books.

Question 19

Which one of the following is not necessarily a party to a check?

Accepted Answer

A)  Maker 
B)  Buyer 
C)  Payee 
D)  Payer 
A)  Maker 
B)  Buyer 
C)  Payee 
D)  Payer

Question 20

Physical controls to safeguard assets do not include

Accepted Answer

A)  cashier department supervisors. 
B)  vaults. 
C)  television monitors. 
D)  security guards. 
A)  cashier department supervisors. 
B)  vaults. 
C)  television monitors. 
D)  security guards.

A debit memorandum would not be issued by the bank for

If a check correctly written and paid by the bank for ¥4,710 is incorrectly recorded on the company's books for ¥4,170, the appropriate treatment on the bank reconciliation would be to

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

A disbursement system that uses wire, telephone, computers, etc., to transfer cash from one location to another is referred to as ______________.

High-quality accounting requires both high-quality accounting standards and

Short-term, highly liquid investments are currently reported as short-term investments on the statement of financial position.

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

Cash equivalents, such as highly liquid investments that can be converted into a specific amount of cash, are currently reported with cash on the statement of financial position.

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

A debit memorandum issued by the bank ______________ the cash balance in the depositor's account.

A €200 petty cash fund has cash of €35 and receipts of €160. The journal entry to replenish the account would include a credit to

Entries are made to the Petty Cash account when

A voucher system is used by many large companies as a means of controlling cash receipts.

Because cash is the least liquid current asset it is listed last in the current assets section of the statement of financial position.

Bank errors

Which one of the following is not necessarily a party to a check?

Physical controls to safeguard assets do not include

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

A debit memorandum would not be issued by the bank for

If a check correctly written and paid by the bank for ¥4,710 is incorrectly recorded on the company's books for ¥4,170, the appropriate treatment on the bank reconciliation would be to

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

A disbursement system that uses wire, telephone, computers, etc., to transfer cash from one location to another is referred to as ______________.

High-quality accounting requires both high-quality accounting standards and

Short-term, highly liquid investments are currently reported as short-term investments on the statement of financial position.

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

Cash equivalents, such as highly liquid investments that can be converted into a specific amount of cash, are currently reported with cash on the statement of financial position.

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

A debit memorandum issued by the bank ______________ the cash balance in the depositor's account.

A €200 petty cash fund has cash of €35 and receipts of €160. The journal entry to replenish the account would include a credit to

Entries are made to the Petty Cash account when

A voucher system is used by many large companies as a means of controlling cash receipts.

Because cash is the least liquid current asset it is listed last in the current assets section of the statement of financial position.

Bank errors

Which one of the following is not necessarily a party to a check?

Physical controls to safeguard assets do not include

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