Question 1

Match the following elements of internal control:
-Control environment

Accepted Answer

A) Provides reasonable assurance that business goals will be achieved 
B) Used by management for guiding operations and ensuring compliance with requirements 
C) Overall attitude of management and employees 
D) Used to locate weaknesses and improve controls 
E) Identify, analyze, and assess likeliness of vulnerabilities 
A) Provides reasonable assurance that business goals will be achieved 
B) Used by management for guiding operations and ensuring compliance with requirements 
C) Overall attitude of management and employees 
D) Used to locate weaknesses and improve controls 
E) Identify, analyze, and assess likeliness of vulnerabilities C

Question 2

The bank reconciles its statement to the company's records.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following would not be included with the cash and cash equivalents on the balance sheet?

Accepted Answer

A)  commercial paper 
B)  short-term receivables 
C)  certificates of deposit 
D)  money market mutual funds 
A)  commercial paper 
B)  short-term receivables 
C)  certificates of deposit 
D)  money market mutual funds B

Question 4

List the principal advantages of electronic funds transfers.

Accepted Answer

EFTs cost less than receiving cash payme

Question 5

On April 2, Granger Sales decides to establish a $125 petty cash fund to relieve the burden on Accounting.?
(a) Journalize the establishment of the fund.
(b) On April 10, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of$29.50, meals and entertainment of $38.25, and $13.55 in cash. Journalize the replenishment of the fund.
(c) On April 11, Granger Sales decides to increase petty cash to $200. Journalize this event.

Accepted Answer

None

Question 6

A bank reconciliation should be prepared periodically because

Accepted Answer

A)  the company's records and the bank's records are in agreement 
B)  the bank has not recorded all of its transactions 
C)  any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected 
D)  the bank must make sure that its records are correct 
A)  the company's records and the bank's records are in agreement 
B)  the bank has not recorded all of its transactions 
C)  any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected 
D)  the bank must make sure that its records are correct

Question 7

Which of the following would be subtracted from the balance per books on a bank reconciliation?

Accepted Answer

A)  outstanding checks 
B)  deposits in transit 
C)  notes collected by the bank 
D)  error in recording a check for $732 as $723 
A)  outstanding checks 
B)  deposits in transit 
C)  notes collected by the bank 
D)  error in recording a check for $732 as $723

Question 8

Stephanie Jo Company established a petty cash fund of $300 on May 1. At the end of the month, the petty cash fund has $42 in cash; receipts for postage, $39; entertainment, $146; and office supplies, $70.Prepare the needed journal entries, recording any discrepancy in the cash short and over account.? $$\begin{array}{l}
\text { Journal }\
\begin{array} { | c | c | c | c | c | } 
\hline \text { Date } & \text { Description } & \begin{array} { c } 
\text { Post. } \
\text { Ref. }
\end{array} & \text { Debit } & \text { Credit } \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline
\end{array}
\end{array}$$

Accepted Answer

The answer of Stephanie Jo Company established a petty cash...

Question 9

Jamison Company gathered the following reconciling information in preparing its June bank reconciliation:?? $$\begin{array} { | l | r | } 
\hline \text { Cash balance per bank, June } 30 & \$ 13,000 \
\hline \text { Note receivable collected by bank } & 4,000 \
\hline \text { Outstanding checks } & 7,000 \
\hline \text { Deposits in transit } & 2,500 \
\hline \text { Bank service charge } & 35 \
\hline \text { NSF check } & 1,900 \
\hline
\end{array}$$ Using the above information, determine the cash balance per books (before adjustments) for Jamison Company.

Accepted Answer

A)  $8,065 
B)  $10,565 
C)  $15,065 
D)  $6,435 
A)  $8,065 
B)  $10,565 
C)  $15,065 
D)  $6,435

Question 10

A minimum cash balance required by a bank is called

Accepted Answer

A)  cash in bank 
B)  a cash equivalent 
C)  a compensating balance 
D)  an EFT 
A)  cash in bank 
B)  a cash equivalent 
C)  a compensating balance 
D)  an EFT

Question 11

During the year, Tempo Inc. has monthly cash expenses of $115,000. On December 31, its cash balance is $1,437,500. The ratio of cash to monthly cash expenses is

Accepted Answer

A)  8.0 months 
B)  12.5 months 
C)  87.5 months 
D)  11.5 months 
A)  8.0 months 
B)  12.5 months 
C)  87.5 months 
D)  11.5 months

Question 12

Cash equivalents include

Accepted Answer

A)  checks 
B)  coins and currency 
C)  money market accounts and commercial paper 
D)  stocks and short-term bonds 
A)  checks 
B)  coins and currency 
C)  money market accounts and commercial paper 
D)  stocks and short-term bonds

Question 13

An example of good internal controls over cash payments is the taking of all cash discounts offered.

Accepted Answer

A) True 
 B)False

Question 14

List the objectives of internal control and give an example of how each is implemented.

Accepted Answer

Internal control provides reasonable ass

Question 15

You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or decrease your company's bank account balance. Complete the following table to help your new staff understand. $$\begin{array} { | l | c | c| } 
\hline  { \text { Item } } & \begin{array} { c } 
\text { Debit } \
\text { or } \
\text { Credit } \
\text { Memo }
\end{array} & \begin{array} { c } 
\text { Increases or } \
\text { Decreases the } \
\text { Company's Bank } \
\text { Account Balance }
\end{array} \
\hline \text { EFT payment } & & \
\hline \begin{array} { l } 
\text { Bank correction of an error due to posting another } \
\text { customer's check to your account }
\end{array} & & \
\hline \text { Service charge } & & \
\hline \text { Note and interest collected for our company } & & \
\hline \text { NSF check } & & \
\hline \begin{array} { l } 
\text { Bank correction of an error recording a } \$ 250 \text { deposit as } \
\$ 520
\end{array} & & \
\hline \text { EFT deposit } & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | l | } 
\hlin

Question 16

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a (n)

Accepted Answer

A)  invoice 
B)  voucher 
C)  debit memo 
D)  remittance advice 
A)  invoice 
B)  voucher 
C)  debit memo 
D)  remittance advice

Question 17

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Accepted Answer

A)  risk assessment 
B)  monitoring 
C)  proofs and security measures 
D)  information and communication 
A)  risk assessment 
B)  monitoring 
C)  proofs and security measures 
D)  information and communication

Question 18

What entry is required in the company's accounts to record outstanding checks?

Accepted Answer

A)  debit Accounts Receivable; credit Cash 
B)  debit Cash; credit Accounts Receivable 
C)  debit Cash; credit Accounts Payable 
D)  no entry required 
A)  debit Accounts Receivable; credit Cash 
B)  debit Cash; credit Accounts Receivable 
C)  debit Cash; credit Accounts Payable 
D)  no entry required

Question 19

Aspen, Inc. reported the following data in its annual report:?
Cash and cash equivalents $460,000
Cash flow from operations 
(240,000)?Required
(1) What is the company's "cash burn" per month?
(2) What is the company's ratio of cash to monthly cash expenses?

Accepted Answer

(1) $240,000/12 = $2

Question 20

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Charges for some other company's safe deposit box were posted to your account

Accepted Answer

A) Bank statement adjustment 
B) Company books adjustment 
C) Either 
A) Bank statement adjustment 
B) Company books adjustment 
C) Either

Exam 8: Internal Control and Cash

Match the following elements of internal control: -Control environment

The bank reconciles its statement to the company's records.

Which of the following would not be included with the cash and cash equivalents on the balance sheet?

List the principal advantages of electronic funds transfers.

A bank reconciliation should be prepared periodically because

Which of the following would be subtracted from the balance per books on a bank reconciliation?

A minimum cash balance required by a bank is called

During the year, Tempo Inc. has monthly cash expenses of $115,000. On December 31, its cash balance is $1,437,500. The ratio of cash to monthly cash expenses is

Cash equivalents include

An example of good internal controls over cash payments is the taking of all cash discounts offered.

List the objectives of internal control and give an example of how each is implemented.

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a (n)

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

What entry is required in the company's accounts to record outstanding checks?

Aspen, Inc. reported the following data in its annual report:? Cash and cash equivalents $460,000 Cash flow from operations (240,000)?Required (1) What is the company's "cash burn" per month? (2) What is the company's ratio of cash to monthly cash expenses?

Match each item to a bank statement adjustment, a company books adjustment, or either. -Charges for some other company's safe deposit box were posted to your account

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

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