Question 1

Deposits in transit

Accepted Answer

A) have been recorded on the company's books but not yet by the bank. 
B) have been recorded by the bank but not yet by the company. 
C) have not been recorded by the bank or the company. 
D) are checks from customers which have not yet been received by the company. 
A) have been recorded on the company's books but not yet by the bank. 
B) have been recorded by the bank but not yet by the company. 
C) have not been recorded by the bank or the company. 
D) are checks from customers which have not yet been received by the company.

Question 2

In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

Accepted Answer

A) True 
 B)False

Question 3

Related selling activities do not include

Accepted Answer

A) ordering the merchandise. 
B) making a sale. 
C) shipping the goods. 
D) billing the customer. 
A) ordering the merchandise. 
B) making a sale. 
C) shipping the goods. 
D) billing the customer.

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

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Accepted Answer

A) True 
 B)False

Question 6

Firms use physical controls primarily to safeguard their assets.

Accepted Answer

A) True 
 B)False

Question 7

The safeguarding of assets is an objective of a company's system of internal control.

Accepted Answer

A) True 
 B)False

Question 8

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 9

The size of the petty cash fund is dependent on

Accepted Answer

A) the wishes of the custodian of the fund. 
B) anticipated disbursements for the year. 
C) anticipated disbursements for a three- to four-week period. 
D) the size of the regular cash account. 
A) the wishes of the custodian of the fund. 
B) anticipated disbursements for the year. 
C) anticipated disbursements for a three- to four-week period. 
D) the size of the regular cash account.

Question 10

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

Accepted Answer

A) True 
 B)False

Question 11

A bank reconciliation should be prepared

Accepted Answer

A) whenever the bank refuses to lend the company money. 
B) when an employee is suspected of fraud. 
C) to explain any difference between the depositor's balance per books and the balance per bank. 
D) by the person who is authorized to sign checks. 
A) whenever the bank refuses to lend the company money. 
B) when an employee is suspected of fraud. 
C) to explain any difference between the depositor's balance per books and the balance per bank. 
D) by the person who is authorized to sign checks.

Question 12

A debit memorandum would not be issued by the bank for

Accepted Answer

A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable. 
A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable.

Question 13

Nolan Company had checks outstanding totaling $7,200 on its June bank reconciliation.In July, Nolan Company issued checks totaling $51,900.The July bank statement shows that $32,400 in checks cleared the bank in July.A check from one of Nolan Company's customers in the amount of $400 was also returned marked "NSF." The amount of outstanding checks on Nolan Company's July bank reconciliation should be

Accepted Answer

A) $19,500. 
B) $26,700. 
C) $26,300. 
D) $12,300. 
A) $19,500. 
B) $26,700. 
C) $26,300. 
D) $12,300.

Question 14

Checks received through the mail should

Accepted Answer

A) immediately be endorsed "For Deposit Only." 
B) be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C) be cashed at the bank as soon as possible. 
D) be "rung up" on a cash register immediately. 
A) immediately be endorsed "For Deposit Only." 
B) be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. 
C) be cashed at the bank as soon as possible. 
D) be "rung up" on a cash register immediately.

Question 15

Allowing only designated personnel to handle cash receipts is an example of

Accepted Answer

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

Question 16

The control principle related to not having the same person authorize and pay for goods is known as

Accepted Answer

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

Question 17

Entries are made to the Petty Cash account when

Accepted Answer

A) establishing the fund. 
B) making payments out of the fund. 
C) recording shortages in the fund. 
D) replenishing the fund. 
A) establishing the fund. 
B) making payments out of the fund. 
C) recording shortages in the fund. 
D) replenishing the fund.

Question 18

The entry to replenish a petty cash fund includes a credit to

Accepted Answer

A) Petty Cash. 
B) Cash. 
C) Freight-in. 
D) Postage Expense. 
A) Petty Cash. 
B) Cash. 
C) Freight-in. 
D) Postage Expense.

Question 19

Checks from customers who pay their accounts promptly are called outstanding checks.

Accepted Answer

A) True 
 B)False

Question 20

A deposit made by a company will appear on the bank statement as a

Accepted Answer

A) debit. 
B) credit. 
C) debit memorandum. 
D) credit memorandum. 
A) debit. 
B) credit. 
C) debit memorandum. 
D) credit memorandum.

Deposits in transit

In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

Related selling activities do not include

A petty cash fund should not be used for

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Firms use physical controls primarily to safeguard their assets.

The safeguarding of assets is an objective of a company's system of internal control.

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

The size of the petty cash fund is dependent on

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

A bank reconciliation should be prepared

A debit memorandum would not be issued by the bank for

Checks received through the mail should

Allowing only designated personnel to handle cash receipts is an example of

The control principle related to not having the same person authorize and pay for goods is known as

Entries are made to the Petty Cash account when

The entry to replenish a petty cash fund includes a credit to

Checks from customers who pay their accounts promptly are called outstanding checks.

A deposit made by a company will appear on the bank statement as a

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Fraud, Internal Control, and Cash

Deposits in transit

In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

Related selling activities do not include

A petty cash fund should not be used for

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Firms use physical controls primarily to safeguard their assets.

The safeguarding of assets is an objective of a company's system of internal control.

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

The size of the petty cash fund is dependent on

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

A bank reconciliation should be prepared

A debit memorandum would not be issued by the bank for

Checks received through the mail should

Allowing only designated personnel to handle cash receipts is an example of

The control principle related to not having the same person authorize and pay for goods is known as

Entries are made to the Petty Cash account when

The entry to replenish a petty cash fund includes a credit to

Checks from customers who pay their accounts promptly are called outstanding checks.

A deposit made by a company will appear on the bank statement as a

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters