Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Using the code letters below indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item.
Code
A Add to cash balance per books
B Deduct from cash balance per books
C Add to cash balance per bank
D Deduct from cash balance per bank
E Does not affect the bank reconciliation

Accepted Answer

The answer of Using the code letters below indicate how...

Question 3

When making a payment from the petty cash fund for postage stamps the following journal entry is made. a.
$\begin{array}{lrr}
  \text {Supplies.  } &\text { XXXX }\
 \text { Petty Cash
 } &&\text { XXXX }\
\end{array}$

b.
$\begin{array}{lrr}
  \text {Postage Expense.  } &\text { XXXX }\
 \text {Petty Cash
  } &&\text { XXXX }\
\end{array}$

c.
$\begin{array}{lrr}
  \text {Miscellaneous Expense  } &\text { XXXX }\
 \text { Petty Cash } &&\text { XXXX }\
\end{array}$

d. $\begin{array}{lrr}
  \text {No entry is made  } &\
\end{array}$

Accepted Answer

The answer of When making a payment from the petty...

Question 4

Personnel who handle cash receipts should have the option of taking a vacation or not.

Accepted Answer

A) True 
 B)False

Question 5

A company maintains the asset account Cash on its books while the bank maintains a reciprocal account which is

Accepted Answer

A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  an owner's equity account. 
A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  an owner's equity account.

Question 6

Match between columns
                        Premises: An employee steals the cash collected from a customer for an account receivable and conceals this theft by issuing a credit memorandum indicating that the customer returned the merchandise.
A small fire destroys 3 days of cash receipts.
The official designated to sign checks is able to steal blank checks and issue them without fear of detection.
A salesclerk in serving customers often rings up a sale for less than the actual amount and then keeps the additional cash collected from the customer.
Three cashiers use one cash register drawer and the cash in the drawer is often short of the balance kept on hand.
Each cashier counts his own register drawer each day and verbally reports the results to the supervisor.
Cashiers with over 5 years’ experience are not bonded.

Accepted Answer

The Answer of Establishment of responsibility and Segregation of duties is...

Question 7

In the month of May Kayak Company Inc. wrote checks in the amount of $81000. In June checks in the amount of $112000 were written. In May $77000 of these checks were presented to the bank for payment and $96000 in June. What is the amount of outstanding checks at the end of May?

Accepted Answer

A)  $4000 
B)  $16000 
C)  $19000 
D)  $31000 
A)  $4000 
B)  $16000 
C)  $19000 
D)  $31000

Question 8

Computer facilities with pass key access or fingerprint scans are

Accepted Answer

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

Question 9

A voucher system is a series of prescribed control procedures

Accepted Answer

A)  to check the credit worthiness of customers. 
B)  designed to assure that disbursements by check are proper. 
C)  which eliminates the need for a sales journal. 
D)  specifically designed for small firms who may not have checking accounts. 
A)  to check the credit worthiness of customers. 
B)  designed to assure that disbursements by check are proper. 
C)  which eliminates the need for a sales journal. 
D)  specifically designed for small firms who may not have checking accounts.

Question 10

A. Ladd Company gathered the following reconciling information in preparing its April bank reconciliation: $$\begin{array} { l r } 
\text { Cash balance per books, 4/30 } & \$ 18,900 \
\text { Deposits in transit } & 2,700 \
\text { Notes receivable and interest collected by bank } & 6,600 \
\text { Bank charge for check printing } & 130 \
\text { Outstanding checks } & 13,500 \
\text { NSF check } & 1,620
\end{array}$$ The adjusted cash balance per books on April 30 is

Accepted Answer

A)  $12950. 
B)  $14050. 
C)  $22490. 
D)  $23750. 
A)  $12950. 
B)  $14050. 
C)  $22490. 
D)  $23750.

Question 11

On October 1 2016 Ellis Company establishes an imprest petty cash fund by issuing a check for $150 to Pat Harmon the custodian of the petty cash fund. On October 31 2016 Pat Harmon submitted the following paid petty cash receipts for replenishment of the petty cash fund when there is $12 cash in the fund: $$\begin{array} { l r } 
\text { Freight-In } & \$ 25 \
\text { Supplies Expense } & 32 \
\text { Entertainment of Clients } & 55 \
\text { Postage Expense } & 24
\end{array}$$ Instructions
Prepare the journal entries required to establish the petty cash fund on October 1 and the replenishment of the fund on October 31.

Accepted Answer

The answer of On October 1 2016 Ellis Company establishes...

Question 12

Allowing only designated personnel to handle cash receipts 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 13

There are three parties to a check: (1)_______________ (2)______________ and the (3)______________.

Accepted Answer

The answer of There are three parties to a check:...

Question 14

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 15

An employee authorized to sign checks should not record

Accepted Answer

A)  owner cash contributions. 
B)  mail receipts. 
C)  cash disbursement transactions. 
D)  sales transactions. 
A)  owner cash contributions. 
B)  mail receipts. 
C)  cash disbursement transactions. 
D)  sales transactions.

Question 16

The safeguarding of assets is an objective of a company's system of internal control.

Accepted Answer

A) True 
 B)False

Question 17

Soft Water Company gathered the following reconciling information in preparing its July bank reconciliation: $\begin{array}{lr}
\text { Cash balance per books, } 7 / 31 & \$ 23,500 \
\text { Deposits in transit } & 1,200 \
\text { Notes receivable and interest collected by bank } & 4,800 \
\text { Bank charge for check printing } & 80 \
\text { Outstanding checks } & 8,000 \
\text { NSF check } & 860
\end{array}$ The adjusted cash balance per books on July 31 is

Accepted Answer

A)  $19360. 
B)  $20560. 
C)  $27360. 
D)  $28560. 
A)  $19360. 
B)  $20560. 
C)  $27360. 
D)  $28560.

Question 18

Match the internal control principle below with the appropriate cash disbursements procedure described.

Accepted Answer

The answer of Match the internal control principle below with...

Question 19

GAAP's accounting and internal control procedures related to cash and the definition of cash equivalents as compared to IFRS are: $\begin{array} { lll } 
\text { Accounting and internal control procedures } & \text { Definition of cash equivalents } \\end{array}$
A)$\begin{array} { l l }  \text {  essentially similar } &&&&&&&&&&& \text { essentially similar } \\end{array}$
B)$\begin{array} { l l } \text { essentially different } &&&&&&&&&& \text { essentially similar } \\end{array}$
C)$\begin{array} { l l } \text {  essentially similar } &&&&&&&&&&& \text { essentially different } \\end{array}$
D)$\begin{array} { l l } \text {  essentially different } &&&&&&&&&& \text { essentially different }\end{array}$

Accepted Answer

The answer of GAAP's accounting and internal control procedures related...

Question 20

Management is responsible for establishing a system of internal control.

Accepted Answer

A) True 
 B)False

Exam 8: Fraud, Internal Control, and Cash

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

When making a payment from the petty cash fund for postage stamps the following journal entry is made. a. Supplies. XXXX Petty Cash XXXX b. Postage Expense. XXXX Petty Cash XXXX c. Miscellaneous Expense XXXX Petty Cash XXXX d. No entry is made

Personnel who handle cash receipts should have the option of taking a vacation or not.

A company maintains the asset account Cash on its books while the bank maintains a reciprocal account which is

In the month of May Kayak Company Inc. wrote checks in the amount of $81000. In June checks in the amount of $112000 were written. In May $77000 of these checks were presented to the bank for payment and $96000 in June. What is the amount of outstanding checks at the end of May?

Computer facilities with pass key access or fingerprint scans are

A voucher system is a series of prescribed control procedures

Allowing only designated personnel to handle cash receipts is an example of

There are three parties to a check: (1)_______________ (2)______________ and the (3)______________.

A debit memorandum would not be issued by the bank for

An employee authorized to sign checks should not record

The safeguarding of assets is an objective of a company's system of internal control.

Match the internal control principle below with the appropriate cash disbursements procedure described.

Management is responsible for establishing a system of internal control.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

There are three parties to a check: (1)_ (2) and the (3)__.