Question 1

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. A

Question 2

The petty cash fund of $200 for Vernon Company appeared as follows on December 31, 2010:   
Instructions
1. Briefly describe when the petty cash fund should be replenished. Because there is cash on hand, is there a need to replenish the fund at year end on December 31? Explain.
2. Prepare in general journal form the entry to replenish the fund.
3. On December 31, the office manager gives instructions to increase the petty cash fund by $100. Make the appropriate journal entry.

Accepted Answer

1. Petty cash should be replenished on a periodic basis or when the cash is low. It must be replenished on the balance sheet date so that the expenses represented by the petty cash vouchers can be recorded in the proper accounting period.
2.
   3.

Question 3

The custodian of a company asset should

Accepted Answer

A)  have access to the accounting records for that asset. 
B)  be someone outside the company. 
C)  not have access to the accounting records for that asset. 
D)  be an accountant. 
A)  have access to the accounting records for that asset. 
B)  be someone outside the company. 
C)  not have access to the accounting records for that asset. 
D)  be an accountant. C

Question 4

A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account would include a credit to

Accepted Answer

A)  Cash for $85. 
B)  Petty Cash for $85. 
C)  Cash Over and Short for $5. 
D)  Cash for $80. 
A)  Cash for $85. 
B)  Petty Cash for $85. 
C)  Cash Over and Short for $5. 
D)  Cash for $80.

Question 5

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 6

On April 30, the bank reconciliation of Baxter Company shows three outstanding checks: no. 354, $650, no. 355, $820, and no. 357, $615. The May bank statement and the May cash payments journal show the following.   
Instructions
Using step 2 in the reconciliation procedure, list the outstanding checks at May 31.

Accepted Answer

The outsta

Question 7

Nolan Company had checks outstanding totaling $5,400 on its June bank reconciliation. In July, Nolan Company issued checks totaling $38,900. The July bank statement shows that $24,300 in checks cleared the bank in July. A check from one of Nolan Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Nolan Company's July bank reconciliation should be

Accepted Answer

A)  $14,600. 
B)  $20,000. 
C)  $19,700. 
D)  $9,200. 
A)  $14,600. 
B)  $20,000. 
C)  $19,700. 
D)  $9,200.

Question 8

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

Accepted Answer

electronic

Question 9

A bank statement

Accepted Answer

A)  lets a depositor know the financial position of the bank as of a certain date. 
B)  is a credit reference letter written by the depositor's bank. 
C)  is a bill from the bank for services rendered. 
D)  shows the activity which increased or decreased the depositor's account balance. 
A)  lets a depositor know the financial position of the bank as of a certain date. 
B)  is a credit reference letter written by the depositor's bank. 
C)  is a bill from the bank for services rendered. 
D)  shows the activity which increased or decreased the depositor's account balance.

Question 10

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

Accepted Answer

A)  1 month or less when purchased. 
B)  3 months or less when purchased. 
C)  6 months or less when purchased. 
D)  1 year or less when purchased. 
A)  1 month or less when purchased. 
B)  3 months or less when purchased. 
C)  6 months or less when purchased. 
D)  1 year or less when purchased.

Question 11

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 $9,800, but the bank statement indicates that only $9,240 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 $11,070 of checks were issued, yet the bank statement showed that $11,100 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 12

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Accepted Answer

A)  prepaid insurance. 
B)  cash. 
C)  buildings. 
D)  land. 
A)  prepaid insurance. 
B)  cash. 
C)  buildings. 
D)  land.

Question 13

Two individuals at a retail store work the same cash register. You evaluate this situation as

Accepted Answer

A)  a violation of establishment of responsibility. 
B)  a violation of segregation of duties. 
C)  supporting the establishment of responsibility. 
D)  supporting internal independent verification. 
A)  a violation of establishment of responsibility. 
B)  a violation of segregation of duties. 
C)  supporting the establishment of responsibility. 
D)  supporting internal independent verification.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The daily cash count of cash register receipts made by department supervisors is an example of

Accepted Answer

A)  other controls. 
B)  independent internal verification. 
C)  establishment of responsibility. 
D)  segregation of duties. 
A)  other controls. 
B)  independent internal verification. 
C)  establishment of responsibility. 
D)  segregation of duties.

Question 16

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 17

Dillman Food Store developed the following information in recording its bank statement for the month of March.   
-------------------------------------------
(1) Checks written in March but still outstanding $7,000.
(2) Checks written in February but still outstanding $2,800.
(3) Deposits of March 30 and 31 not yet recorded by bank $5,200.
(4) NSF check of customer returned by bank $1,200.
(5) Check No. 210 for $594 was correctly issued and paid by bank but incorrectly entered in the cash payments journal as payment on account for $549.
(6) Bank service charge for March was $50.
(7) A payment on account was incorrectly entered in the cash payments journal and posted to the accounts payable subsidiary ledger for $824 when Check No. 318 was correctly prepared for $284. The check cleared the bank in March.
(8) The bank collected a note receivable for the company for $4,000 plus $150 interest revenue.
Instructions
Prepare a bank reconciliation at March 31.

Accepted Answer

The answer of Dillman Food Store developed the following information...

Question 18

The following reconciling items are applicable to the bank reconciliation for the Hunsicker Company. Indicate how each item should be shown on a bank reconciliation.
a. Outstanding checks.
b. Bank credit memorandum for collecting a note for the depositor.
c. Bank debit memorandum for service charge.
d. Deposit in transit.

Accepted Answer

a. Outstanding checks should be deducted

Question 19

A $100 petty cash fund has cash of $17 and receipts of $80. The journal entry to replenish the account would include a

Accepted Answer

A)  debit to Cash for $80. 
B)  credit to Petty Cash for $83. 
C)  debit to Cash Over and Short for $3. 
D)  credit to Cash for $80. 
A)  debit to Cash for $80. 
B)  credit to Petty Cash for $83. 
C)  debit to Cash Over and Short for $3. 
D)  credit to Cash for $80.

Question 20

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

Accepted Answer

A) True 
 B)False

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

The custodian of a company asset should

A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account would include a credit to

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

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

A bank statement

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Two individuals at a retail store work the same cash register. You evaluate this situation as

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

The daily cash count of cash register receipts made by department supervisors is an example of

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

A $100 petty cash fund has cash of $17 and receipts of $80. The journal entry to replenish the account would include a

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

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

Exam 8: Fraud, Internal Control, and Cash

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

The custodian of a company asset should

A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account would include a credit to

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

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

A bank statement

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Two individuals at a retail store work the same cash register. You evaluate this situation as

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

The daily cash count of cash register receipts made by department supervisors is an example of

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

A $100 petty cash fund has cash of $17 and receipts of $80. The journal entry to replenish the account would include a

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

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

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