Question 1

An application of good internal control over cash disbursements is

Accepted Answer

A)  following payment, the approved invoice should be stamped PAID. 
B)  blank checks should be stored in the treasurer's desk. 
C)  each check should be compared with the approved invoice after the check is issued. 
D)  check signers should record the cash disbursements. 
A)  following payment, the approved invoice should be stamped PAID. 
B)  blank checks should be stored in the treasurer's desk. 
C)  each check should be compared with the approved invoice after the check is issued. 
D)  check signers should record the cash disbursements.

Question 2

Kline Company had checks outstanding totaling $6,400 on its May bank reconciliation. In June, Kline Company issued checks totaling $39,900. The July bank statement shows that $29,700 in checks cleared the bank in July. A check from one of Kline Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Jones Company's July bank reconciliation should be

Accepted Answer

A)  $19,600. 
B)  $10,200. 
C)  $16,600. 
D)  $3,800. 
A)  $19,600. 
B)  $10,200. 
C)  $16,600. 
D)  $3,800.

Question 3

Two limitations of systems of internal control are the concept of ______________ and the ______________.

Accepted Answer

reasonable

Question 4

If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  add $72 to the book's balance. 
B)  subtract $72 from the book's balance. 
C)  deduct $72 from the bank's balance. 
D)  deduct $491 from the book's balance. 
A)  add $72 to the book's balance. 
B)  subtract $72 from the book's balance. 
C)  deduct $72 from the bank's balance. 
D)  deduct $491 from the book's balance.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A debit memorandum could show the collection of a note receivable by the bank.

Accepted Answer

A) True 
 B)False

Question 7

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

Accepted Answer

A)  establishment of responsibility is violated. 
B)  independent internal verification is violated. 
C)  documentation procedures is violated. 
D)  segregation of duties is violated. 
A)  establishment of responsibility is violated. 
B)  independent internal verification is violated. 
C)  documentation procedures is violated. 
D)  segregation of duties is violated.

Question 8

A bank may issue a credit memorandum for

Accepted Answer

A)  a bank service charge. 
B)  an NSF (not sufficient funds) check from a customer. 
C)  the collection of a note receivable for the depositor by the bank. 
D)  the cost of printing checks. 
A)  a bank service charge. 
B)  an NSF (not sufficient funds) check from a customer. 
C)  the collection of a note receivable for the depositor by the bank. 
D)  the cost of printing checks.

Question 9

A check correctly written for $270 was incorrectly entered in the cash payments journal for $720. In preparing a bank reconciliation, $_____________ must be ______________ the cash balance per ______________.

Accepted Answer

$450, adde

Question 10

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 11

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Accepted Answer

A)  a fraud committee. 
B)  collusion. 
C)  a division of duties. 
D)  bonding of employees. 
A)  a fraud committee. 
B)  collusion. 
C)  a division of duties. 
D)  bonding of employees.

Question 12

The independent internal verification principle involves each of the following except the ______________ of data prepared by other employees.

Accepted Answer

A)  comparison 
B)  reconciliation 
C)  review 
D)  segregation 
A)  comparison 
B)  reconciliation 
C)  review 
D)  segregation

Question 13

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 14

Which one of the following items would not be considered cash?

Accepted Answer

A)  Coins 
B)  Money orders 
C)  Currency 
D)  Postdated checks 
A)  Coins 
B)  Money orders 
C)  Currency 
D)  Postdated checks

Question 15

Each of the following items affect the cash balance per books except

Accepted Answer

A)  bank service charges. 
B)  notes collected by the bank. 
C)  NSF checks. 
D)  outstanding checks. 
A)  bank service charges. 
B)  notes collected by the bank. 
C)  NSF checks. 
D)  outstanding checks.

Question 16

Jeter Company developed the following reconciling information in preparing its September bank reconciliation:   Using the above information, determine the cash balance per books (before adjustments) for the Jeter Company.

Accepted Answer

A)  $13,685 
B)  $21,700 
C)  $2,485 
D)  $21,000 
A)  $13,685 
B)  $21,700 
C)  $2,485 
D)  $21,000

Question 17

Firms use physical controls primarily to safeguard their assets.

Accepted Answer

A) True 
 B)False

Question 18

In the month of November, Coler Company Inc. wrote checks in the amount of $9,250. In December, checks in the amount of $12,658 were written. In November, $8,468 of these checks were presented to the bank for payment, and $10,883 were presented in December. What is the amount of outstanding checks at the end of November?

Accepted Answer

A)  $1,775 
B)  $782 
C)  $2,557 
D)  $3,550 
A)  $1,775 
B)  $782 
C)  $2,557 
D)  $3,550

Question 19

Prepare the entry to replenish the $200 petty cash fund of Kruger Company, assuming the fund has receipts for: freight-out $60, postage $105, and miscellaneous expense $20. The fund contains $10 in cash.

Accepted Answer

The answer of Prepare the entry to replenish the $200...

Question 20

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Accepted Answer

A) True 
 B)False

Exam 8: Fraud, Internal Control, and Cash

An application of good internal control over cash disbursements is

Two limitations of systems of internal control are the concept of ______________ and the ______________.

If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to

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

A debit memorandum could show the collection of a note receivable by the bank.

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

A bank may issue a credit memorandum for

A check correctly written for $270 was incorrectly entered in the cash payments journal for $720. In preparing a bank reconciliation, $_____________ must be ______________ the cash balance per ______________.

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

When two or more people get together for the purpose of circumventing prescribed controls, it is called

The independent internal verification principle involves each of the following except the ______________ of data prepared by other employees.

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

Which one of the following items would not be considered cash?

Each of the following items affect the cash balance per books except

Jeter Company developed the following reconciling information in preparing its September bank reconciliation: Using the above information, determine the cash balance per books (before adjustments) for the Jeter Company.

Firms use physical controls primarily to safeguard their assets.

Prepare the entry to replenish the $200 petty cash fund of Kruger Company, assuming the fund has receipts for: freight-out $60, postage $105, and miscellaneous expense $20. The fund contains $10 in cash.

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

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

Two limitations of systems of internal control are the concept of and the .

A check correctly written for $270 was incorrectly entered in the cash payments journal for $720. In preparing a bank reconciliation, $_ must be the cash balance per ____.