Question 1

A debit balance in Cash Over and Short is reported as a

Accepted Answer

A) contra asset. 
B) miscellaneous asset. 
C) miscellaneous expense. 
D) miscellaneous revenue. 
A) contra asset. 
B) miscellaneous asset. 
C) miscellaneous expense. 
D) miscellaneous revenue.

Question 2

Internal auditors

Accepted Answer

A) are hired by CPA firms to audit business firms. 
B) are employees of the IRS who evaluate the internal controls of companies filing tax returns. 
C) evaluate the system of internal controls for the companies that employ them. 
D) cannot evaluate the system of internal controls of the company that employs them because they are not independent. 
A) are hired by CPA firms to audit business firms. 
B) are employees of the IRS who evaluate the internal controls of companies filing tax returns. 
C) evaluate the system of internal controls for the companies that employ them. 
D) cannot evaluate the system of internal controls of the company that employs them because they are not independent.

Question 3

In the month of November, Gavin Company Inc.wrote checks in the amount of $46,250.In December, checks in the amount of $63,290 were written.In November, $42,340 of these checks were presented to the bank for payment and $54,415 in December.What is the amount of outstanding checks at the end of December?

Accepted Answer

A) $8,875. 
B) $3,910. 
C) $12,785. 
D) $17,750. 
A) $8,875. 
B) $3,910. 
C) $12,785. 
D) $17,750.

Question 4

Which of the following is not a limitation of internal control?

Accepted Answer

A) Cost of establishing control procedures should not exceed their benefit. 
B) The human element. 
C) Collusion. 
D) The size of the company. 
A) Cost of establishing control procedures should not exceed their benefit. 
B) The human element. 
C) Collusion. 
D) The size of the company.

Question 5

Which of the following is not an internal control activity for cash?

Accepted Answer

A) The number of persons who have access to cash should be limited. 
B) The functions of record keeping and maintaining custody of cash should be combined. 
C) Surprise audits of cash on hand should be made occasionally. 
D) All cash receipts should be recorded promptly. 
A) The number of persons who have access to cash should be limited. 
B) The functions of record keeping and maintaining custody of cash should be combined. 
C) Surprise audits of cash on hand should be made occasionally. 
D) All cash receipts should be recorded promptly.

Question 6

Ferguson Company is preparing a cash budget for September.The company's cash balance on September 1 is $34,800.The company anticipates cash receipts of $167,700 and cash disbursements of $175,980.If Ferguson desires a cash balance of $36,000, it must

Accepted Answer

A) acquire financing of $1,200. 
B) acquire financing of $9,480. 
C) acquire financing of $7,080. 
D) acquire financing of $27,720. 
A) acquire financing of $1,200. 
B) acquire financing of $9,480. 
C) acquire financing of $7,080. 
D) acquire financing of $27,720.

Question 7

Which of the following is not a basic principle of cash management?

Accepted Answer

A) Increase the speed of collection on receivables. 
B) Maintain idle cash. 
C) Keep inventory levels low. 
D) Delay payment of liabilities. 
A) Increase the speed of collection on receivables. 
B) Maintain idle cash. 
C) Keep inventory levels low. 
D) Delay payment of liabilities.

Question 8

The use of prenumbered checks is an example of

Accepted Answer

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

Question 9

Petersen Company is preparing a cash budget for September.The company's cash balance on September 1 is $23,200.The company anticipates cash receipts of $111,800 and cash disbursements of $117,320.If Petersen desires a cash balance of $24,000, it must

Accepted Answer

A) acquire financing of $800. 
B) acquire financing of $6,320. 
C) acquire financing of $4,720. 
D) acquire financing of $18,480. 
A) acquire financing of $800. 
B) acquire financing of $6,320. 
C) acquire financing of $4,720. 
D) acquire financing of $18,480.

Question 10

Dekin Company had checks outstanding totaling $34,000 on its May bank reconciliation.In June, Dekin Company issued checks totaling $212,800.The June bank statement shows that $158,400 in checks cleared the bank in June.A check from one of Dekin Company's customers in the amount of $1,600 was also returned marked "NSF." The amount of outstanding checks on Dekin Company's June bank reconciliation should be

Accepted Answer

A) $86,800. 
B) $54,400. 
C) $88,400. 
D) $20,400. 
A) $86,800. 
B) $54,400. 
C) $88,400. 
D) $20,400.

Question 11

Before a check authorization is issued, the following documents must be in agreement, except for the

Accepted Answer

A) invoice. 
B) remittance advice. 
C) receiving report. 
D) purchase order. 
A) invoice. 
B) remittance advice. 
C) receiving report. 
D) purchase order.

Question 12

A check returned by the bank marked "NSF" means

Accepted Answer

A) no service fee. 
B) no signature found. 
C) not satisfactorily filled out. 
D) not sufficient funds. 
A) no service fee. 
B) no signature found. 
C) not satisfactorily filled out. 
D) not sufficient funds.

Question 13

Cash equivalents do notinclude

Accepted Answer

A) money market accounts. 
B) commercial paper. 
C) U.S.Treasury bills. 
D) long-term investment. 
A) money market accounts. 
B) commercial paper. 
C) U.S.Treasury bills. 
D) long-term investment.

Question 14

Russel Company assembled the following information in completing its March bank reconciliation:   As a result of this reconciliation, Russel will

Accepted Answer

A) reduce its cash account by $2,375. 
B) reduce its cash account by $125. 
C) increase its cash account by $275. 
D) reduce its cash account by $525. 
A) reduce its cash account by $2,375. 
B) reduce its cash account by $125. 
C) increase its cash account by $275. 
D) reduce its cash account by $525.

Question 15

Of the following employees, who should prepare the bank reconciliation?

Accepted Answer

A) Anne, the bookkeeper, because she is aware of all transactions that affected cash. 
B) Michael, the treasurer, because he has control of the checkbook and has taken more accounting courses than any other employee. 
C) Mary, the cashier, because she does not pay bills. 
D) Frank, the purchasing agent, because he does not work in the accounting department. 
A) Anne, the bookkeeper, because she is aware of all transactions that affected cash. 
B) Michael, the treasurer, because he has control of the checkbook and has taken more accounting courses than any other employee. 
C) Mary, the cashier, because she does not pay bills. 
D) Frank, the purchasing agent, because he does not work in the accounting department.

Question 16

In the month of November, Gavin Company Inc.wrote checks in the amount of $55,500.In December, checks in the amount of $75,948 were written.In November, $50,808 of these checks were presented to the bank for payment and $65,298 in December.What is the amount of outstanding checks at the end of December?

Accepted Answer

A) $10,650. 
B) $15,342. 
C) $4,692. 
D) $21,300. 
A) $10,650. 
B) $15,342. 
C) $4,692. 
D) $21,300.

Question 17

The cash receipts section of a cash budget includes all of the following except

Accepted Answer

A) cash sales. 
B) collections from customers. 
C) receipts of interest and dividends. 
D) expected borrowings. 
A) cash sales. 
B) collections from customers. 
C) receipts of interest and dividends. 
D) expected borrowings.

Question 18

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 19

Which of the following is an example of a bank reconciliation item that requires an adjusting entry?

Accepted Answer

A) NSF check. 
B) Deposit in transit. 
C) Bank error. 
D) None of these items requires an adjusting entry. 
A) NSF check. 
B) Deposit in transit. 
C) Bank error. 
D) None of these items requires an adjusting entry.

Question 20

Schwinn Company assembled the following information in completing its March bank reconciliation:   As a result of this reconciliation, Schwinn will

Accepted Answer

A) reduce its cash account by $1,520. 
B) reduce its cash account by $80. 
C) increase its cash account by $176. 
D) reduce its cash account by $336. 
A) reduce its cash account by $1,520. 
B) reduce its cash account by $80. 
C) increase its cash account by $176. 
D) reduce its cash account by $336.

A debit balance in Cash Over and Short is reported as a

Internal auditors

Which of the following is not a limitation of internal control?

Which of the following is not an internal control activity for cash?

Ferguson Company is preparing a cash budget for September.The company's cash balance on September 1 is $34,800.The company anticipates cash receipts of $167,700 and cash disbursements of $175,980.If Ferguson desires a cash balance of $36,000, it must

Which of the following is not a basic principle of cash management?

The use of prenumbered checks is an example of

Petersen Company is preparing a cash budget for September.The company's cash balance on September 1 is $23,200.The company anticipates cash receipts of $111,800 and cash disbursements of $117,320.If Petersen desires a cash balance of $24,000, it must

Before a check authorization is issued, the following documents must be in agreement, except for the

A check returned by the bank marked "NSF" means

Cash equivalents do notinclude

Russel Company assembled the following information in completing its March bank reconciliation: As a result of this reconciliation, Russel will

Of the following employees, who should prepare the bank reconciliation?

The cash receipts section of a cash budget includes all of the following except

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

Which of the following is an example of a bank reconciliation item that requires an adjusting entry?

Schwinn Company assembled the following information in completing its March bank reconciliation: As a result of this reconciliation, Schwinn will

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters

Exam 7: Fraud, Internal Control, and Cash

A debit balance in Cash Over and Short is reported as a

Internal auditors

Which of the following is not a limitation of internal control?

Which of the following is not an internal control activity for cash?

Ferguson Company is preparing a cash budget for September.The company's cash balance on September 1 is $34,800.The company anticipates cash receipts of $167,700 and cash disbursements of $175,980.If Ferguson desires a cash balance of $36,000, it must

Which of the following is not a basic principle of cash management?

The use of prenumbered checks is an example of

Petersen Company is preparing a cash budget for September.The company's cash balance on September 1 is $23,200.The company anticipates cash receipts of $111,800 and cash disbursements of $117,320.If Petersen desires a cash balance of $24,000, it must

Before a check authorization is issued, the following documents must be in agreement, except for the

A check returned by the bank marked "NSF" means

Cash equivalents do notinclude

Russel Company assembled the following information in completing its March bank reconciliation: As a result of this reconciliation, Russel will

Of the following employees, who should prepare the bank reconciliation?

The cash receipts section of a cash budget includes all of the following except

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

Which of the following is an example of a bank reconciliation item that requires an adjusting entry?

Schwinn Company assembled the following information in completing its March bank reconciliation: As a result of this reconciliation, Schwinn will

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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