Question 1

A $100 petty cash fund has cash of $10 and receipts of $80. The journal entry to replenish the account would include a credit to

Accepted Answer

A)  Cash for $90. 
B)  Petty Cash for $90. 
C)  Cash Over and Short for $10. 
D)  Cash for $80. 
A)  Cash for $90. 
B)  Petty Cash for $90. 
C)  Cash Over and Short for $10. 
D)  Cash for $80.

Question 2

Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described.

Accepted Answer

1. B 4. B

Question 3

Blank checks

Accepted Answer

A)  should be safeguarded. 
B)  should be pre-signed. 
C)  do not need to be safeguarded since they must be signed to be valid. 
D)  should not be pre-numbered. 
A)  should be safeguarded. 
B)  should be pre-signed. 
C)  do not need to be safeguarded since they must be signed to be valid. 
D)  should not be pre-numbered.

Question 4

Given the following information, determine the adjusted cash balance per books; $\begin{array}{lr}
\text { Balance per books as of June 30 } & \$ 8,800 \
\text { Outstanding checks } & \$ 600 \
\text { NSF check returned with bank statement } & \$ 130 \
\text { Deposit mailed the afternoon of June } 30 & \$ 300 \
\text { Check printing charges } & \$ 30 \
\text { Interest earned on checking account } & \$ 40
\end{array}$

Accepted Answer

$8680: (88

Question 5

Which one of the following items would never appear on a cash budget?

Accepted Answer

A)  Office salaries expense. 
B)  Interest expense. 
C)  Depreciation expense. 
D)  Travel expense. 
A)  Office salaries expense. 
B)  Interest expense. 
C)  Depreciation expense. 
D)  Travel expense.

Question 6

The following information was taken from Hurlbert Company cash budget for the month June $\begin{array}{lr}
\text { Beginning cash balance } & \$ 46,000 \
\text { Cash receipts } & 62,000 \
\text { Cash disbursements } & 78,000
\end{array}$ If the company has a policy of maintaining end of the month cash balance of $40,000, the amount the company would have to borrow is

Accepted Answer

A)  $24,000. 
B)  $10,000. 
C)  $16,000. 
D)  $0. 
A)  $24,000. 
B)  $10,000. 
C)  $16,000. 
D)  $0.

Question 7

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

Accepted Answer

A)  Increasing the speed of receivables collection. 
B)  Planning the timing of major expenditures. 
C)  Keeping inventory levels low. 
D)  Delaying the payment of liabilities. 
A)  Increasing the speed of receivables collection. 
B)  Planning the timing of major expenditures. 
C)  Keeping inventory levels low. 
D)  Delaying the payment of liabilities.

Question 8

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

Accepted Answer

safeguard

Question 9

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item.   
9. Bank charged a check against the company, which should have been charged to
another company.
10. A check for $236 was correctly paid by the bank but was incorrectly entered in the cash payments journal for $263

Accepted Answer

1. D 6. A
2. B 7. B

Question 10

The Hartman Boat Company's bank statement for the month of November showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $5,659 at November 30. Other information is as follows:
(1) Cash receipts for November 30 recorded on the company's books were $6,000 but this amount does not appear on the bank statement.
(2) The bank statement shows a debit memorandum for $40 for check printing charges.
(3) Check No. 119 payable to Maris Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Maris Company and that the payment to them should have been for $284.
(4) The total amount of checks still outstanding at November 30 amounted to $5,800.
(5) Check No. 138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $490.
(6) The bank returned an NSF check from a customer for $560.
(7) The bank included a credit memorandum for $2,060 which represents collection of a customer's note by the bank for the company; principal amount of the note was $2,000 and interest was $60. Interest has not been accrued.
Instructions
(a) Prepare a bank reconciliation for the Hartman Boat Company at November 30.
(b) Prepare any adjusting entries necessary as a result of the bank reconciliation.

Accepted Answer

(a) @#IMG-DLM& Note:

Question 11

In preparing a bank reconciliation, outstanding checks are

Accepted Answer

A)  added to the balance per bank. 
B)  deducted from the balance per books. 
C)  added to the balance per books. 
D)  deducted from the balance per bank. 
A)  added to the balance per bank. 
B)  deducted from the balance per books. 
C)  added to the balance per books. 
D)  deducted from the balance per bank.

Question 12

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: $$\begin{array} { l r } 
\text { April } & \$ 200,000 \
\text { May } & 120,000 \
\text { June } & 300,000
\end{array}$$ The cash inflow in the month of June is expected to be

Accepted Answer

A)  $226,000. 
B)  $171,000. 
C)  $180,000. 
D)  $216,000. 
A)  $226,000. 
B)  $171,000. 
C)  $180,000. 
D)  $216,000.

Question 13

While preparing the bank reconciliation, you notice that a check, written by the company for $750, has been outstanding for 5 months. What is the best action for you to take?

Accepted Answer

A)  Void the check. If it has not been cashed in 5 months, it will never be cashed. 
B)  Issue a replacement check because you assume the original check has been lost. 
C)  Wait 3 more months to give the bank more time to clear the check. 
D)  Investigate to determine why the check has not cleared. 
A)  Void the check. If it has not been cashed in 5 months, it will never be cashed. 
B)  Issue a replacement check because you assume the original check has been lost. 
C)  Wait 3 more months to give the bank more time to clear the check. 
D)  Investigate to determine why the check has not cleared.

Question 14

A petty cash fund of $200 is replenished when the fund contains $12 in cash and receipts for $184. The entry to replenish the fund would

Accepted Answer

A)  credit Cash Over and Short for $4. 
B)  credit Miscellaneous Revenue for $4. 
C)  debit Cash Over and Short for $4. 
D)  debit Miscellaneous Expense for $4. 
A)  credit Cash Over and Short for $4. 
B)  credit Miscellaneous Revenue for $4. 
C)  debit Cash Over and Short for $4. 
D)  debit Miscellaneous Expense for $4.

Question 15

The cash balance per books for Wellmeyer Company on November 30, 2014, is $10,740.93. The following checks and receipts were recorded for the month of December 2014:   In addition, the bank statement for the month of December is presented below:   Check No. 18 was correctly written for $708.62 for a payment on account. The NSF check was from S. Gill, a customer, in settlement of an account receivable. An entry has not been made for the NSF check. The credit memo is for the collection of a note receivable including interest of $60 that has not been accrued. The bank service charge is $15.00.
Instructions
(a) Prepare a bank reconciliation at December 31.
(b) Prepare the adjusting journal entries required by the bank reconciliation.

Accepted Answer

(a) Seaver Company must add th

Question 16

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

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

Accepted Answer

reasonable

Question 19

The following information was taken from Niland Company cash budget for the month of April $$\begin{array} { l r } 
\text { Beginning cash balance } & \$ 90,000 \
\text { Cash receipts } & 81,000 \
\text { Cash disbursements } & 102,000
\end{array}$$ If the company has a policy of maintaining end of the month cash balance of $75,000, the amount the company would have to borrow is

Accepted Answer

A)  $87,000. 
B)  $21,000. 
C)  $6,000. 
D)  $0. 
A)  $87,000. 
B)  $21,000. 
C)  $6,000. 
D)  $0.

Question 20

Cash equivalents are defined by IFRS as

Accepted Answer

A)  cash on hand. 
B)  demand deposits. 
C)  cash on hand and demand deposits. 
D)  short-term, highly liquid investments that are readily convertible into known amounts of cash. 
A)  cash on hand. 
B)  demand deposits. 
C)  cash on hand and demand deposits. 
D)  short-term, highly liquid investments that are readily convertible into known amounts of cash.

A $100 petty cash fund has cash of $10 and receipts of $80. The journal entry to replenish the account would include a credit to

Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described.

Blank checks

Which one of the following items would never appear on a cash budget?

The following information was taken from Hurlbert Company cash budget for the month June Beginning cash balance \ 46,000 Cash receipts 62,000 Cash disbursements 78,000 If the company has a policy of maintaining end of the month cash balance of $40,000, the amount the company would have to borrow is

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

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

In preparing a bank reconciliation, outstanding checks are

While preparing the bank reconciliation, you notice that a check, written by the company for $750, has been outstanding for 5 months. What is the best action for you to take?

A petty cash fund of $200 is replenished when the fund contains $12 in cash and receipts for $184. The entry to replenish the fund would

For efficiency of operations and better control over cash, a company should maintain only one bank account.

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

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

Cash equivalents are defined by IFRS as

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

A $100 petty cash fund has cash of $10 and receipts of $80. The journal entry to replenish the account would include a credit to

Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described.

Blank checks

Which one of the following items would never appear on a cash budget?

The following information was taken from Hurlbert Company cash budget for the month June Beginning cash balance \ 46,000 Cash receipts 62,000 Cash disbursements 78,000 If the company has a policy of maintaining end of the month cash balance of $40,000, the amount the company would have to borrow is

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

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

In preparing a bank reconciliation, outstanding checks are

While preparing the bank reconciliation, you notice that a check, written by the company for $750, has been outstanding for 5 months. What is the best action for you to take?

A petty cash fund of $200 is replenished when the fund contains $12 in cash and receipts for $184. The entry to replenish the fund would

For efficiency of operations and better control over cash, a company should maintain only one bank account.

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

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

Cash equivalents are defined by IFRS as

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 consists of the related methods and measures adopted within a business to its assets and enhance the and ____ of its accounting records.

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