Question 1

Which of the following is an attribute of the internal control procedure-competent, reliable, and ethical personnel?

Accepted Answer

A)  providing cross training to allow sales personnel to record revenue transactions 
B)  the need to train and supervise employees 
C)  monitoring of internal controls by external auditors 
D)  purchase of burglar alarms 
A)  providing cross training to allow sales personnel to record revenue transactions 
B)  the need to train and supervise employees 
C)  monitoring of internal controls by external auditors 
D)  purchase of burglar alarms B

Question 2

At Radiant, Inc., the sales department is also responsible for recording cash transactions as it does not have a separate accounting department. In the above situation, which internal control procedure needs strengthening?

Accepted Answer

A)  assignment of responsibilities 
B)  competent, reliable, and ethical personnel 
C)  separation of duties 
D)  documents 
A)  assignment of responsibilities 
B)  competent, reliable, and ethical personnel 
C)  separation of duties 
D)  documents C

Question 3

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Accepted Answer

A) True 
 B)False  True

Question 4

Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following items must be examined by the controller or treasurer before signing a check?

Accepted Answer

A)  the ledger 
B)  the purchase order 
C)  the confirmation report 
D)  the journal entry 
A)  the ledger 
B)  the purchase order 
C)  the confirmation report 
D)  the journal entry

Question 6

The following information is needed to reconcile the cash balance for Johnson Catering Services. * A deposit of $5,800 is in transit.
* Outstanding checks total $1,000.
* The book balance is $6,000 at February 28, 2017.
* The bookkeeper recorded a $1,600 check as $17,100 in payment of the current month's rent.
* The bank balance at February 28, 2017 was $17,720.
* A deposit of $500 was credited by the bank for $5,000.
* A customer's check for $3,400 was returned for nonsufficient funds.
* The bank service charge is $80.
What was the adjusted book balance?

Accepted Answer

A)  $18,100 
B)  $18,020 
C)  $18,180 
D)  $17,800 
A)  $18,100 
B)  $18,020 
C)  $18,180 
D)  $17,800

Question 7

In a good internal control system, which of the following sets of documents is required for proper approval of a payment to a supplier?

Accepted Answer

A)  a journal entry, a supplier invoice, and a description of the goods being purchased 
B)  a receiving report, an invoice, and a purchase order 
C)  a purchase order, a journal entry, and a price catalog 
D)  a supplier invoice, a bill of lading, and the supplier's financial statements 
A)  a journal entry, a supplier invoice, and a description of the goods being purchased 
B)  a receiving report, an invoice, and a purchase order 
C)  a purchase order, a journal entry, and a price catalog 
D)  a supplier invoice, a bill of lading, and the supplier's financial statements

Question 8

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger. How would this information be included on the bank reconciliation?

Accepted Answer

A)  an addition on the bank side 
B)  a deduction on the bank side 
C)  a deduction on the book side 
D)  an addition on the book side 
A)  an addition on the bank side 
B)  a deduction on the bank side 
C)  a deduction on the book side 
D)  an addition on the book side

Question 9

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Accepted Answer

The bank reconciliation is an accountant

Question 10

A deposit ticket is a document that instructs a bank to pay the designated person a specified amount of money.

Accepted Answer

A) True 
 B)False

Question 11

The party who issues a check is the maker.

Accepted Answer

A) True 
 B)False

Question 12

The only time the Petty Cash account is used in a journal entry is when the account is established, increased, or decreased.

Accepted Answer

A) True 
 B)False

Question 13

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is correct?

Accepted Answer

A)  A bank statement is a document from the bank that reports the activity in the customer's account. 
B)  A bank statement must be mailed to customers each month. 
C)  The bank statement does not include an ending balance of the customer's account because the bank cannot determine which checks have been cashed during the statement period. 
D)  Physical copies of canceled checks must be included in the monthly bank statement. 
A)  A bank statement is a document from the bank that reports the activity in the customer's account. 
B)  A bank statement must be mailed to customers each month. 
C)  The bank statement does not include an ending balance of the customer's account because the bank cannot determine which checks have been cashed during the statement period. 
D)  Physical copies of canceled checks must be included in the monthly bank statement.

Question 15

The data of Franklin Brothers Corp. for two years are given below.   Based on the above information, which of the following statements is true?

Accepted Answer

A)  Cash ratio has increased from 0.02 in 2016 to 0.03 in 2017. 
B)  Cash ratio has increased from 0.05 in 2016 to 0.08 in 2017. 
C)  Cash ratio has increased from 0.403 in 2016 to 0.241 in 2017. 
D)  Cash ratio has increased from 0.241 in 2016 to 0.403 in 2017. 
A)  Cash ratio has increased from 0.02 in 2016 to 0.03 in 2017. 
B)  Cash ratio has increased from 0.05 in 2016 to 0.08 in 2017. 
C)  Cash ratio has increased from 0.403 in 2016 to 0.241 in 2017. 
D)  Cash ratio has increased from 0.241 in 2016 to 0.403 in 2017.

Question 16

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

Accepted Answer

A) True 
 B)False

Question 17

A deposit receipt is ________.

Accepted Answer

A)  retained by the customer as proof of a deposit transaction 
B)  the same as a signature card 
C)  used by the bank as an alternative to a remittance advice 
D)  given by the customer to the bank as a proof of deposit 
A)  retained by the customer as proof of a deposit transaction 
B)  the same as a signature card 
C)  used by the bank as an alternative to a remittance advice 
D)  given by the customer to the bank as a proof of deposit

Question 18

Which of the following is true of internal control?

Accepted Answer

A)  A company's outside auditor is responsible for the company's internal control system. 
B)  One of the major purposes of internal control is to ensure that the assets are safeguarded. 
C)  Internal control procedures tend to diminish the importance of operational efficiency. 
D)  Internal controls are only necessary for public companies. 
A)  A company's outside auditor is responsible for the company's internal control system. 
B)  One of the major purposes of internal control is to ensure that the assets are safeguarded. 
C)  Internal control procedures tend to diminish the importance of operational efficiency. 
D)  Internal controls are only necessary for public companies.

Question 19

A petty cash fund was established with a $600 balance. It currently has cash of $150 and petty cash tickets as shown below:   Which of the following would be the journal entry to replenish the Petty Cash account?

Accepted Answer

A)  debit various expenses $450; credit Cash $450 
B)  debit various expenses $450; credit Petty Cash $450 
C)  debit Cash $150; credit various expenses $150 
D)  credit Petty Cash $450; debit Cash $450 
A)  debit various expenses $450; credit Cash $450 
B)  debit various expenses $450; credit Petty Cash $450 
C)  debit Cash $150; credit various expenses $150 
D)  credit Petty Cash $450; debit Cash $450

Question 20

In a bank reconciliation, a deposit in transit will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Which of the following is an attribute of the internal control procedure-competent, reliable, and ethical personnel?

At Radiant, Inc., the sales department is also responsible for recording cash transactions as it does not have a separate accounting department. In the above situation, which internal control procedure needs strengthening?

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Which of the following items must be examined by the controller or treasurer before signing a check?

In a good internal control system, which of the following sets of documents is required for proper approval of a payment to a supplier?

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger. How would this information be included on the bank reconciliation?

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

A deposit ticket is a document that instructs a bank to pay the designated person a specified amount of money.

The party who issues a check is the maker.

The only time the Petty Cash account is used in a journal entry is when the account is established, increased, or decreased.

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Which of the following statements is correct?

The data of Franklin Brothers Corp. for two years are given below. Based on the above information, which of the following statements is true?

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

A deposit receipt is ________.

Which of the following is true of internal control?

A petty cash fund was established with a $600 balance. It currently has cash of $150 and petty cash tickets as shown below: Which of the following would be the journal entry to replenish the Petty Cash account?

In a bank reconciliation, a deposit in transit will be shown on the bank side of the reconciliation.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 8: Internal Control and Cash

Which of the following is an attribute of the internal control procedure-competent, reliable, and ethical personnel?

At Radiant, Inc., the sales department is also responsible for recording cash transactions as it does not have a separate accounting department. In the above situation, which internal control procedure needs strengthening?

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Which of the following items must be examined by the controller or treasurer before signing a check?

In a good internal control system, which of the following sets of documents is required for proper approval of a payment to a supplier?

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger. How would this information be included on the bank reconciliation?

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

A deposit ticket is a document that instructs a bank to pay the designated person a specified amount of money.

The party who issues a check is the maker.

The only time the Petty Cash account is used in a journal entry is when the account is established, increased, or decreased.

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Which of the following statements is correct?

The data of Franklin Brothers Corp. for two years are given below. Based on the above information, which of the following statements is true?

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

A deposit receipt is ________.

Which of the following is true of internal control?

A petty cash fund was established with a $600 balance. It currently has cash of $150 and petty cash tickets as shown below: Which of the following would be the journal entry to replenish the Petty Cash account?

In a bank reconciliation, a deposit in transit will be shown on the bank side of the reconciliation.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Filters