Question 1

A $100 petty cash fund has cash of $12 and receipts of $85. The journal entry to replenish the account would include a credit to

Accepted Answer

A)  Cash for $88. 
B)  Petty Cash for $88. 
C)  Cash Over and Short for $2. 
D)  Cash for $85. 
A)  Cash for $88. 
B)  Petty Cash for $88. 
C)  Cash Over and Short for $2. 
D)  Cash for $85.

Question 2

Bacher 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 Bacher Company.

Accepted Answer

A)  $2,834 
B)  $5,480 
C)  $8,148 
D)  $8,828 
A)  $2,834 
B)  $5,480 
C)  $8,148 
D)  $8,828

Question 3

Ernest Company uses an imprest petty cash system. The fund was established on March 1 with a balance of $200. During March the following petty cash receipts were found in the petty cash box.    
The fund was replenished on March 15 when the fund contained $9 in cash. On March 20, the amount in the fund was increased to $300.
Instructions
Journalize the entries in March that pertain to the operation of the petty cash fund.

Accepted Answer

The answer of Ernest Company uses an imprest petty cash...

Question 4

A petty cash fund should not be used for

Accepted Answer

A)  postage due. 
B)  loans to the petty cash custodian. 
C)  taxi fares. 
D)  customer lunches. 
A)  postage due. 
B)  loans to the petty cash custodian. 
C)  taxi fares. 
D)  customer lunches.

Question 5

In a voucher system, vouchers are prepared in the accounts receivable department.

Accepted Answer

A) True 
 B)False

Question 6

Prepare the entry to replenish the $200 petty cash fund of Erin Company, assuming the fund has receipts for: freight-out $60, postage $105, and miscellaneous expense $25. The fund contains $8 in cash.

Accepted Answer

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

Question 7

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A)  Petty Cash, $84. 
B)  Petty Cash, $81. 
C)  Cash, $81; Cash Over and Short, $3. 
D)  Cash, $84. 
A)  Petty Cash, $84. 
B)  Petty Cash, $81. 
C)  Cash, $81; Cash Over and Short, $3. 
D)  Cash, $84.

Question 8

Postage stamps on hand are considered to be

Accepted Answer

A)  cash. 
B)  petty cash. 
C)  cash equivalents. 
D)  a prepaid expense. 
A)  cash. 
B)  petty cash. 
C)  cash equivalents. 
D)  a prepaid expense.

Question 9

Match the internal control principle below with the appropriate cash receipts procedure described.
a. Documentation procedures
b. Establishment of responsibility
c. Independent internal verification
d. Human resource controls
e. Physical controls
f. Segregation of duties
_____ 1. Only designated personnel are authorized to handle cash receipts.
_____ 2. Different individuals receive cash and record cash receipts.
_____ 3. Use remittance advice and cash register tapes.
_____ 4. Store cash in safes and bank vaults.
_____ 5. Treasurer compares total receipts to bank deposits daily.
_____ 6. Bonding of employees that handle cash.

Accepted Answer

1. b 3. a

Question 10

The information below relates to the Cash account in the ledger of Lee Company.
Balance September 1-$25,725; Cash deposited-$96,000.
Balance September 30-$22,225; Checks written-$99,500.
The September bank statement shows a balance of $24,635 on September 30 and the following memoranda.   
At September 30, deposits in transit were $4,695, and outstanding checks totaled $3,575.
Instructions
Prepare the bank reconciliation at September 30.

Accepted Answer

The answer of The information below relates to the Cash...

Question 11

If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in transit at month end, and a check for $900 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Accepted Answer

A)  $44,100. 
B)  $45,000. 
C)  $45,900. 
D)  $62,100. 
A)  $44,100. 
B)  $45,000. 
C)  $45,900. 
D)  $62,100.

Question 12

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 13

The following reconciling items are applicable to the bank reconciliation for the Spahn 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 14

Internal control consists of the related methods and measures adopted to ____________ its assets and enhance the ______________ and ______________ of its accounting records.

Accepted Answer

safeguard,

Question 15

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 16

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

Accepted Answer

A) True 
 B)False

Question 17

If a check correctly written and paid by the bank for $427 is incorrectly recorded on the company's books for $472, the appropriate treatment on the bank reconciliation would be to

Accepted Answer

A)  add $45 to the bank's balance. 
B)  add $45 to the book's balance. 
C)  deduct $45 from the bank's balance. 
D)  deduct $427 from the book's balance. 
A)  add $45 to the bank's balance. 
B)  add $45 to the book's balance. 
C)  deduct $45 from the bank's balance. 
D)  deduct $427 from the book's balance.

Question 18

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Accepted Answer

A) True 
 B)False

Question 19

Employees who handle cash should be ______________ in order to protect against misappropriation of assets by dishonest employees.

Accepted Answer

The answer of Employees who handle cash should be ______________...

Question 20

Internal controls are not designed to safeguard assets from

Accepted Answer

A)  natural disasters. 
B)  employee theft. 
C)  robbery. 
D)  unauthorized use. 
A)  natural disasters. 
B)  employee theft. 
C)  robbery. 
D)  unauthorized use.

Exam 7: Fraud, Internal Control, and Cash

A $100 petty cash fund has cash of $12 and receipts of $85. The journal entry to replenish the account would include a credit to

Bacher 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 Bacher Company.

A petty cash fund should not be used for

In a voucher system, vouchers are prepared in the accounts receivable department.

Prepare the entry to replenish the $200 petty cash fund of Erin Company, assuming the fund has receipts for: freight-out $60, postage $105, and miscellaneous expense $25. The fund contains $8 in cash.

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Postage stamps on hand are considered to be

If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in transit at month end, and a check for $900 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

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

Internal control consists of the related methods and measures adopted to ____________ its assets and enhance the ______________ and ______________ of its accounting records.

An application of good internal control over cash disbursements is

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

If a check correctly written and paid by the bank for $427 is incorrectly recorded on the company's books for $472, the appropriate treatment on the bank reconciliation would be to

An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.

Employees who handle cash should be ______________ in order to protect against misappropriation of assets by dishonest employees.

Internal controls are not designed to safeguard assets from

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

Filters

Internal control consists of the related methods and measures adopted to its assets and enhance the and ____ of its accounting records.