Question 1

All of the following are true of the number of days' sales uncollected ratio except:

Accepted Answer

A) Can be used for comparisons to other companies in the same industry. 
B) Is most effective in evaluating the cash sales of a company. 
C) Can be used for comparisons between current and prior periods. 
D) Reflects the liquidity of receivables. 
E) Measures how much time is likely to pass before the current amount of accounts receivable is received in cash. 
A) Can be used for comparisons to other companies in the same industry. 
B) Is most effective in evaluating the cash sales of a company. 
C) Can be used for comparisons between current and prior periods. 
D) Reflects the liquidity of receivables. 
E) Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.

Question 2

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Accepted Answer

A) True 
 B)False

Question 3

Money orders, cashier's checks, and certified checks are all examples of cash.

Accepted Answer

A) True 
 B)False

Question 4

The Petty Cash account is a separate bank account used for small amounts.

Accepted Answer

A) True 
 B)False

Question 5

On March 1, a company established a $75 petty cash fund. On March 12, the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25; postage, $19.50; and office supplies, $36. Give the general journal entry to reimburse the fund and to increase its amount to $150 on March 12.

Accepted Answer

The answer of On March 1, a company established a...

Question 6

Describe the net method of accounting for purchases. Why might companies use the net method?

Accepted Answer

The net method of accounting for purchas

Question 7

Approved vouchers are recorded in a journal called the voucher register.

Accepted Answer

A) True 
 B)False

Question 8

Basic bank services do not include:

Accepted Answer

A) Petty cash management. 
B) Bank accounts. 
C) Bank deposits. 
D) Electronic funds transfer. 
E) Checking. 
A) Petty cash management. 
B) Bank accounts. 
C) Bank deposits. 
D) Electronic funds transfer. 
E) Checking.

Question 9

The number of days' sales uncollected:

Accepted Answer

A) Is calculated by dividing sales by accounts receivable. 
B) Measures a company's ability to pay its bills on time. 
C) Is used to evaluate the liquidity of receivables. 
D) Measures a company's debt to income. 
E) Is calculated by dividing accounts receivable by sales. 
A) Is calculated by dividing sales by accounts receivable. 
B) Measures a company's ability to pay its bills on time. 
C) Is used to evaluate the liquidity of receivables. 
D) Measures a company's debt to income. 
E) Is calculated by dividing accounts receivable by sales.

Question 10

After preparing a bank reconciliation, adjustments must be made for items reconciling the book balance.

Accepted Answer

A) True 
 B)False

Question 11

The following information is available for Fenton Manufacturing Company at June 30: $\begin{array}{|l|r|}
\hline\text { Cash in bank account } & \$ 11,455 \
\hline \text { Inventory of postage stamps } & \$ 74 \
\hline \text { Money market fund balance } & \$ 10,400 \
\hline \text { Petty cash balance } & \$ 350 \
\hline \text { NSF checks from customers returned by bank } & \$ 867 \
\hline \text { Postdated checks received from customers } & \$ 791 \
\hline \text { Money orders } & \$ 290 \
\hline \text { A nine-month certificate of deposit maturing on December 31 of } & \$ 6,000 \\text { current year }\\hline
\end{array}$ Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Accepted Answer

A) $12,095 
B) $22,495 
C) $28,495 
D) $23,286 
E) $29,286 
A) $12,095 
B) $22,495 
C) $28,495 
D) $23,286 
E) $29,286

Question 12

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010. The proper entry to account for this excess is:

Accepted Answer

A) Debit Cash $1,010; credit Sales $1,000; credit Cash Over and Short $10. 
B) Debit Cash Over and Short $10; credit Cash $10. 
C) Debit Cash $1,010; credit Sales $1,010. 
D) Debit Cash $1,000; credit Sales $1,000. 
E) Debit Cash $1,000; debit Cash Over and Short for $10; credit Sales $1,010. 
A) Debit Cash $1,010; credit Sales $1,000; credit Cash Over and Short $10. 
B) Debit Cash Over and Short $10; credit Cash $10. 
C) Debit Cash $1,010; credit Sales $1,010. 
D) Debit Cash $1,000; credit Sales $1,000. 
E) Debit Cash $1,000; debit Cash Over and Short for $10; credit Sales $1,010.

Question 13

Explain the difference between cash and cash equivalents.

Accepted Answer

Cash includes currency, coins, deposits

Question 14

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

Accepted Answer

A) Deduct the deposit from the bank statement balance. 
B) Add the deposit to the bank statement balance. 
C) Send the bank a debit memorandum. 
D) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
E) Add the deposit to the book balance of cash. 
A) Deduct the deposit from the bank statement balance. 
B) Add the deposit to the bank statement balance. 
C) Send the bank a debit memorandum. 
D) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
E) Add the deposit to the book balance of cash.

Question 15

An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):

Accepted Answer

A) Bank audit. 
B) Internal audit. 
C) Analysis of debits and credits. 
D) Bank reconciliation. 
E) Trial reconciliation. 
A) Bank audit. 
B) Internal audit. 
C) Analysis of debits and credits. 
D) Bank reconciliation. 
E) Trial reconciliation.

Question 16

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation.
_____ 1. Bank service charges
_____ 2. Outstanding checks
_____ 3. Deposits in transit
_____ 4. NSF check
_____ 5. Interest on a checking account
_____ 6. The company properly wrote a check for $95.80 that the bank incorrectly paid as $9.58.
7. The bank printed checks for the depositor for a fee.
_____ 8. Bank debit memorandum
_____ 9. Bank credit memorandum
_____ 10. The bank collected a $1,000 note for the depositor.

Accepted Answer

1. Book; 2. Bank; 3.

Question 17

The entry to record reimbursement of the petty cash fund for postage expense should include:

Accepted Answer

A) A debit to Petty Cash. 
B) A debit to Cash Short and Over. 
C) A debit to Supplies. 
D) A debit to Postage Expense. 
E) A debit to Cash. 
A) A debit to Petty Cash. 
B) A debit to Cash Short and Over. 
C) A debit to Supplies. 
D) A debit to Postage Expense. 
E) A debit to Cash.

Question 18

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Accepted Answer

A) True 
 B)False

Question 19

Internal control policies and procedures have limitations not including:

Accepted Answer

A) Establishing responsibilities. 
B) Human error. 
C) Collusion. 
D) Cost-benefit principle. 
E) Human fraud. 
A) Establishing responsibilities. 
B) Human error. 
C) Collusion. 
D) Cost-benefit principle. 
E) Human fraud.

Question 20

Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

Accepted Answer

A) True 
 B)False

All of the following are true of the number of days' sales uncollected ratio except:

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Money orders, cashier's checks, and certified checks are all examples of cash.

The Petty Cash account is a separate bank account used for small amounts.

Describe the net method of accounting for purchases. Why might companies use the net method?

Approved vouchers are recorded in a journal called the voucher register.

Basic bank services do not include:

The number of days' sales uncollected:

After preparing a bank reconciliation, adjustments must be made for items reconciling the book balance.

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010. The proper entry to account for this excess is:

Explain the difference between cash and cash equivalents.

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):

The entry to record reimbursement of the petty cash fund for postage expense should include:

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Internal control policies and procedures have limitations not including:

Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 8: Cash and Internal Controls

All of the following are true of the number of days' sales uncollected ratio except:

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Money orders, cashier's checks, and certified checks are all examples of cash.

The Petty Cash account is a separate bank account used for small amounts.

Describe the net method of accounting for purchases. Why might companies use the net method?

Approved vouchers are recorded in a journal called the voucher register.

Basic bank services do not include:

The number of days' sales uncollected:

After preparing a bank reconciliation, adjustments must be made for items reconciling the book balance.

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010. The proper entry to account for this excess is:

Explain the difference between cash and cash equivalents.

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):

The entry to record reimbursement of the petty cash fund for postage expense should include:

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Internal control policies and procedures have limitations not including:

Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters