Question 1

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Accepted Answer

A)  an expense on the income statement 
B)  income on the income statement 
C)  an asset on the balance sheet 
D)  a liability on the balance sheet 
A)  an expense on the income statement 
B)  income on the income statement 
C)  an asset on the balance sheet 
D)  a liability on the balance sheet

Question 2

During a bank reconciliation process,

Accepted Answer

A)  outstanding checks and deposits in transit are added to the bank statement balance 
B)  outstanding checks are subtracted and deposits in transit are added to the bank statement balance 
C)  outstanding checks and deposits in transit are subtracted from the bank statement balance 
D)  outstanding checks are added and deposits in transit are subtracted from the bank statement balance 
A)  outstanding checks and deposits in transit are added to the bank statement balance 
B)  outstanding checks are subtracted and deposits in transit are added to the bank statement balance 
C)  outstanding checks and deposits in transit are subtracted from the bank statement balance 
D)  outstanding checks are added and deposits in transit are subtracted from the bank statement balance

Question 3

Bank reconciliation information for Kaden Co. for May 31 is as follows:?
(a)The bank statement balance is $2,936.
(b)The cash account balance is $3,194.
(c)Outstanding checks amounted to $465.
(d)Deposits in transit are $655.
(e)The bank service charge is $50.
(f)A check for $97 for supplies was recorded as $79 in the ledger.?Record the appropriate journal entry for Kaden Co.

Accepted Answer

Miscellaneous Admini

Question 4

A petty cash fund is used to pay relatively large amounts.

Accepted Answer

A) True 
 B)False

Question 5

Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end-of-month balance by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the statement period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley collected a $4,000 note receivable plus $120 of interest revenue. The bank charges $20 for the collection service. The bank charges a monthly account fee of $35. The end-of-month balance per company books is $11,135.?Prepare a bank/account reconciliation and write any necessary journal entries for the reconciliation.

Accepted Answer

None

Question 6

The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator.

Accepted Answer

A) True 
 B)False

Question 7

For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

Accepted Answer

A) True 
 B)False

Question 8

The following data were gathered to use in reconciling the bank account of Savannah Company:? $$\begin{array} { | l | r | } 
\hline \text { Balance per bank } & \$ 16,750 \
\hline \text { Balance per company records } & 16,125 \
\hline \text { Bank service charges } & 80 \
\hline \text { Deposit in transit } & 2,195 \
\hline \text { NSF check } & 950 \
\hline \text { Outstanding checks } & 3,850 \
\hline
\end{array}$$ What is the adjusted balance on the bank reconciliation?

Accepted Answer

$15,095  ($16,750 +

Question 9

In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.

Accepted Answer

A) True 
 B)False

Question 10

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

Accepted Answer

A) True 
 B)False

Question 11

Money orders are considered cash.

Accepted Answer

A) True 
 B)False

Question 12

A voucher is a written authorization to make a cash payment.

Accepted Answer

A) True 
 B)False

Question 13

In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.

Accepted Answer

A) True 
 B)False

Question 14

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Error in recording a check

Accepted Answer

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

Question 15

Match each item to a bank statement adjustment, a company books adjustment, or either.
-NSF check

Accepted Answer

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

Question 16

Cash equivalents

Accepted Answer

A)  are illegal in some states 
B)  will be converted to cash within two years 
C)  will be converted to cash within 90 days 
D)  will be converted to cash within 120 days 
A)  are illegal in some states 
B)  will be converted to cash within two years 
C)  will be converted to cash within 90 days 
D)  will be converted to cash within 120 days

Question 17

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Deposit in transit

Accepted Answer

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

Question 18

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

Accepted Answer

A)  accounting controls 
B)  cash controls 
C)  FASB controls 
D)  GAAP controls 
A)  accounting controls 
B)  cash controls 
C)  FASB controls 
D)  GAAP controls

Question 19

In the normal operation of business, you receive a check from a customer and deposit it into your checking account. With your bank statement, you are advised that this check for $775 is "NSF." The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will

Accepted Answer

A)  subtract both values from balance according to bank 
B)  add both values to balance according to books 
C)  add both values to balance according to bank 
D)  subtract both values from balance according to books 
A)  subtract both values from balance according to bank 
B)  add both values to balance according to books 
C)  add both values to balance according to bank 
D)  subtract both values from balance according to books

Question 20

Credit memos from the bank

Accepted Answer

A)  decrease a bank customer's account 
B)  are used to show a bank service charge 
C)  show that a company has deposited a customer's NSF check 
D)  show that the bank has collected a note receivable for the customer 
A)  decrease a bank customer's account 
B)  are used to show a bank service charge 
C)  show that a company has deposited a customer's NSF check 
D)  show that the bank has collected a note receivable for the customer

Exam 8: Internal Control and Cash

The debit balance in Cash Short and Over at the end of an accounting period is reported as

During a bank reconciliation process,

A petty cash fund is used to pay relatively large amounts.

The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator.

For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

The following data were gathered to use in reconciling the bank account of Savannah Company:? Balance per bank \ 16,750 Balance per company records 16,125 Bank service charges 80 Deposit in transit 2,195 NSF check 950 Outstanding checks 3,850 What is the adjusted balance on the bank reconciliation?

In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

Money orders are considered cash.

A voucher is a written authorization to make a cash payment.

In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.

Match each item to a bank statement adjustment, a company books adjustment, or either. -Error in recording a check

Match each item to a bank statement adjustment, a company books adjustment, or either. -NSF check

Cash equivalents

Match each item to a bank statement adjustment, a company books adjustment, or either. -Deposit in transit

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

Credit memos from the bank

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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