Question 1

All of the following are true regarding bank statements except

Accepted Answer

A)  the bank statement will show a credit for deposits received from a company. 
B)  the bank statement balance will always agree with the company recorded balance. 
C)  the bank statement is a copy of the bank's records sent to the customer for periodic review. 
D)  the bank statement will show a debit if a check is paid for a company issuing the check. 
A)  the bank statement will show a credit for deposits received from a company. 
B)  the bank statement balance will always agree with the company recorded balance. 
C)  the bank statement is a copy of the bank's records sent to the customer for periodic review. 
D)  the bank statement will show a debit if a check is paid for a company issuing the check.

Question 2

Which one of the following is not an objective of a system of internal controls?

Accepted Answer

A)  Safeguard company assets. 
B)  Overstate liabilities in order to be conservative. 
C)  Enhance the accuracy and reliability of accounting records. 
D)  Reduce the risks of errors. 
A)  Safeguard company assets. 
B)  Overstate liabilities in order to be conservative. 
C)  Enhance the accuracy and reliability of accounting records. 
D)  Reduce the risks of errors.

Question 3

Internal control over cash disbursements is more effective when payments are made by ______________, rather than by ______________.

Accepted Answer

The answer of Internal control over cash disbursements is more...

Question 4

Cash restricted in use should be separately reported on the balance sheet.

Accepted Answer

A) True 
 B)False

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

Which of the following is not included in the cash disbursements section of a cash budget?

Accepted Answer

A)  Payments for materials. 
B)  Payments for income taxes. 
C)  Repayments of borrowed funds. 
D)  All of these answer choices are included. 
A)  Payments for materials. 
B)  Payments for income taxes. 
C)  Repayments of borrowed funds. 
D)  All of these answer choices are included.

Question 7

At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash receipts?

Accepted Answer

A)  Physical controls. 
B)  Documentation procedures. 
C)  Segregation of duties. 
D)  Mechanical controls. 
A)  Physical controls. 
B)  Documentation procedures. 
C)  Segregation of duties. 
D)  Mechanical controls.

Question 8

In the month of November Gavin Company Inc. wrote checks in the amount of $27,750. In December, checks in the amount of $37,974 were written. In November, $25,404 of these checks were presented to the bank for payment, and $32,649 in December. What is the amount of outstanding checks at the end of December?

Accepted Answer

A)  $5,325. 
B)  $2,346. 
C)  $7,671. 
D)  $10,650. 
A)  $5,325. 
B)  $2,346. 
C)  $7,671. 
D)  $10,650.

Question 9

On a bank statement, paid checks are shown as

Accepted Answer

A)  credits. 
B)  debits 
C)  assets. 
D)  liabilities. 
A)  credits. 
B)  debits 
C)  assets. 
D)  liabilities.

Question 10

A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: $$\begin{array} { l r } 
\text { July } & \$ 240,000 \
\text { August } & 144,000 \
\text { September } & 360,000
\end{array}$$ The cash inflow in the month of September is expected to be

Accepted Answer

A)  $271,200. 
B)  $205,200. 
C)  $216,000. 
D)  $259,200. 
A)  $271,200. 
B)  $205,200. 
C)  $216,000. 
D)  $259,200.

Question 11

Expected direct materials purchases in Wade Company are $525,000 in the first quarter and $675,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are:

Accepted Answer

A)  $720,000. 
B)  $675,000. 
C)  $585,000. 
D)  $540,000. 
A)  $720,000. 
B)  $675,000. 
C)  $585,000. 
D)  $540,000.

Question 12

An adjusting entry is not required for

Accepted Answer

A)  outstanding checks. 
B)  collection of a note by the bank. 
C)  NSF checks. 
D)  bank service charges. 
A)  outstanding checks. 
B)  collection of a note by the bank. 
C)  NSF checks. 
D)  bank service charges.

Question 13

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A)  Check for $63 recorded as $36. 
B)  Deposit of $600 recorded by bank as $60. 
C)  A returned $300 check recorded by bank as $30. 
D)  Check for $75 recorded as $57. 
A)  Check for $63 recorded as $36. 
B)  Deposit of $600 recorded by bank as $60. 
C)  A returned $300 check recorded by bank as $30. 
D)  Check for $75 recorded as $57.

Question 14

Management of cash is the responsibility of the company

Accepted Answer

A)  accountant. 
B)  president. 
C)  treasurer. 
D)  vice-president. 
A)  accountant. 
B)  president. 
C)  treasurer. 
D)  vice-president.

Question 15

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

Accepted Answer

A)  Accounts Receivable Cash 
B)  Cash Accounts Receivable 
C)  Miscellaneous Expense Accounts Receivable 
D)  No adjusting entry is necessary. 
A)  Accounts Receivable Cash 
B)  Cash Accounts Receivable 
C)  Miscellaneous Expense Accounts Receivable 
D)  No adjusting entry is necessary.

Question 16

Schwinn Company assembled the following information in completing its March bank reconciliation: $$\begin{array} { l r } 
\text { Balance per bank } & \$ 15,280 \
\text { Outstanding checks } & \$ 3,100 \
\text { Deposits in transit } & \$ 5,000 \
\text { NSF check } & \$ 320 \
\text { Bank service charge } & \$ 100 \
\text { Cash balance per books } & \$ 17,600
\end{array}$$ As a result of this reconciliation, Schwinn will

Accepted Answer

A)  reduce its cash account by $1,900. 
B)  reduce its cash account by $100. 
C)  increase its cash account by $220. 
D)  reduce its cash account by $420. 
A)  reduce its cash account by $1,900. 
B)  reduce its cash account by $100. 
C)  increase its cash account by $220. 
D)  reduce its cash account by $420.

Question 17

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not one of the main factors that contribute to fraudulent activity?

Accepted Answer

A)  Opportunity. 
B)  Incompatible duties. 
C)  Financial pressure. 
D)  Rationalization. 
A)  Opportunity. 
B)  Incompatible duties. 
C)  Financial pressure. 
D)  Rationalization.

Question 19

Important objectives of a system of internal controls are to safeguard assets and to enhance the accuracy and reliability of the accounting records. Briefly discuss how (1) cost-benefit considerations, (2) the human element, and (3) the size of the business affect the implementation of a system of internal controls.

Accepted Answer

The implementation of a system of intern

Question 20

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 activities that 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 activities that increased or decreased the depositor's account balance.

All of the following are true regarding bank statements except

Which one of the following is not an objective of a system of internal controls?

Internal control over cash disbursements is more effective when payments are made by , rather than by .

Cash restricted in use should be separately reported on the balance sheet.

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

Which of the following is not included in the cash disbursements section of a cash budget?

At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash receipts?

On a bank statement, paid checks are shown as

Expected direct materials purchases in Wade Company are $525,000 in the first quarter and $675,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are:

An adjusting entry is not required for

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Management of cash is the responsibility of the company

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

Schwinn Company assembled the following information in completing its March bank reconciliation: Balance per bank \ 15,280 Outstanding checks \ 3,100 Deposits in transit \ 5,000 NSF check \ 320 Bank service charge \ 100 Cash balance per books \ 17,600 As a result of this reconciliation, Schwinn will

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Which of the following is not one of the main factors that contribute to fraudulent activity?

A bank statement

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 and Acquisitions in Accounting

Filters

Exam 7: Fraud, Internal Control, and Cash

All of the following are true regarding bank statements except

Which one of the following is not an objective of a system of internal controls?

Internal control over cash disbursements is more effective when payments are made by ______________, rather than by ______________.

Cash restricted in use should be separately reported on the balance sheet.

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

Which of the following is not included in the cash disbursements section of a cash budget?

At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash receipts?

On a bank statement, paid checks are shown as

An adjusting entry is not required for

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Management of cash is the responsibility of the company

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Which of the following is not one of the main factors that contribute to fraudulent activity?

A bank statement

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 and Acquisitions in Accounting

Filters

Internal control over cash disbursements is more effective when payments are made by , rather than by .