Question 1

Outstanding checks, deposits in transit, and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.

Accepted Answer

A) True 
 B)False

Question 2

Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $13,162. Franklin's August bank statement shows $14,237 on deposit in the bank. Determine the adjusted cash balance using the following information:
$\begin{array}{|l|r|}
\hline \text { Deposit in transit } & \$ 4,500 \
\hline \text { Outstanding checks } & \$ 3,900 \
\hline \text { Bank service fees, not yet recorded by company } & \$ 50 \
\hline \text { The bank collected on a note receivable, not yet recorded by the company } & \$ 1,725\\hline
\end{array}$ The adjusted cash balance should be:

Accepted Answer

A) $10,337 
B) $18,737 
C) $14,887 
D) $14,837 
E) $13,112 
A) $10,337 
B) $18,737 
C) $14,887 
D) $14,837 
E) $13,112

Question 3

A debit memorandum on a bank statement indicates:

Accepted Answer

A) A decrease in the bank's asset account. 
B) An increase in the bank's asset account. 
C) A decrease in the bank's liability account. 
D) An increase in the bank's expense account. 
E) An increase in the bank's liability account. 
A) A decrease in the bank's asset account. 
B) An increase in the bank's asset account. 
C) A decrease in the bank's liability account. 
D) An increase in the bank's expense account. 
E) An increase in the bank's liability account.

Question 4

The days' sales uncollected ratio measures the liquidity of accounts receivable.

Accepted Answer

A) True 
 B)False

Question 5

Liquidity refers to a company's ability to pay its long-term obligations.

Accepted Answer

A) True 
 B)False

Question 6

Petty cash reimbursement requires a journal entry that involves a debit to the appropriate expenses and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 7

A credit memorandum on a bank statement indicates:

Accepted Answer

A) A decrease in the bank's asset account. 
B) A decrease in the bank's liability account. 
C) An increase in the bank's asset account. 
D) An increase in the bank's liability account. 
E) An increase in the bank's expense account. 
A) A decrease in the bank's asset account. 
B) A decrease in the bank's liability account. 
C) An increase in the bank's asset account. 
D) An increase in the bank's liability account. 
E) An increase in the bank's expense account.

Question 8

A seller (or provider)of goods or services to a business organization is known as a:

Accepted Answer

A) Payee. 
B) Vendee. 
C) Creditor. 
D) Debtor. 
E) Vendor. 
A) Payee. 
B) Vendee. 
C) Creditor. 
D) Debtor. 
E) Vendor.

Question 9

All of the following are considered effective cash management principles except:

Accepted Answer

A) Keeping only necessary levels of assets. 
B) Planning expenditures. 
C) Delaying payment of liabilities until the last possible day. 
D) Encouraging collection of receivables by offering discounts for early payments. 
E) Retaining excess cash for unexpected expenditures. 
A) Keeping only necessary levels of assets. 
B) Planning expenditures. 
C) Delaying payment of liabilities until the last possible day. 
D) Encouraging collection of receivables by offering discounts for early payments. 
E) Retaining excess cash for unexpected expenditures.

Question 10

Principles of internal control include all of the following except:

Accepted Answer

A) Apply technological controls. 
B) Maintaining security by having one person track and record assets. 
C) Divide responsibilities for related transactions. 
D) Separate recordkeeping from custody of assets. 
E) Perform regular and independent reviews. 
A) Apply technological controls. 
B) Maintaining security by having one person track and record assets. 
C) Divide responsibilities for related transactions. 
D) Separate recordkeeping from custody of assets. 
E) Perform regular and independent reviews.

Question 11

A bank does not issue a debit memorandum to notify the depositor of which of the following?

Accepted Answer

A) An uncollectible check. 
B) A deposit to their account. 
C) A fee assessed to the depositor's account. 
D) Periodic payments arranged in advance, by a depositor. 
E) All withdrawals through an ATM. 
A) An uncollectible check. 
B) A deposit to their account. 
C) A fee assessed to the depositor's account. 
D) Periodic payments arranged in advance, by a depositor. 
E) All withdrawals through an ATM.

Question 12

The use of internal controls provides a guarantee against losses due to operating activities.

Accepted Answer

A) True 
 B)False

Question 13

Maintaining adequate records is an important internal control principle.

Accepted Answer

A) True 
 B)False

Question 14

What is a voucher system and what are the two areas for which it establishes control procedures?

Accepted Answer

A voucher system is a set of procedures

Question 15

Internal control systems are:

Accepted Answer

A) Developed by the Securities and Exchange Commission for public companies. 
B) Developed by the Small Business Administration for non-public companies. 
C) Required only if a company plans to engage in interstate commerce. 
D) Developed by the Internal Revenue Service for all U.S. companies. 
E) Required by Sarbanes-Oxley (SOX)to be documented and certified if the company's stock is traded on an exchange (a public company). 
A) Developed by the Securities and Exchange Commission for public companies. 
B) Developed by the Small Business Administration for non-public companies. 
C) Required only if a company plans to engage in interstate commerce. 
D) Developed by the Internal Revenue Service for all U.S. companies. 
E) Required by Sarbanes-Oxley (SOX)to be documented and certified if the company's stock is traded on an exchange (a public company).

Question 16

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

Accepted Answer

A) True 
 B)False

Question 17

Internal control systems are subject to limitations that usually arise from either (1)human error or human fraud, or (2)the cost-benefit principle.

Accepted Answer

A) True 
 B)False

Question 18

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

Accepted Answer

A) True 
 B)False

Question 19

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

Accepted Answer

There are four steps that must be comple

Question 20

The treasurer of a company is responsible for cash management. List five cash management principles that are essential for effective cash management.

Accepted Answer

Encourage collection of receivables by s

Outstanding checks, deposits in transit, and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.

A debit memorandum on a bank statement indicates:

The days' sales uncollected ratio measures the liquidity of accounts receivable.

Liquidity refers to a company's ability to pay its long-term obligations.

Petty cash reimbursement requires a journal entry that involves a debit to the appropriate expenses and a credit to Cash.

A credit memorandum on a bank statement indicates:

A seller (or provider)of goods or services to a business organization is known as a:

All of the following are considered effective cash management principles except:

Principles of internal control include all of the following except:

A bank does not issue a debit memorandum to notify the depositor of which of the following?

The use of internal controls provides a guarantee against losses due to operating activities.

Maintaining adequate records is an important internal control principle.

What is a voucher system and what are the two areas for which it establishes control procedures?

Internal control systems are:

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

Internal control systems are subject to limitations that usually arise from either (1)human error or human fraud, or (2)the cost-benefit principle.

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

The treasurer of a company is responsible for cash management. List five cash management principles that are essential for effective cash management.

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

Outstanding checks, deposits in transit, and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.

A debit memorandum on a bank statement indicates:

The days' sales uncollected ratio measures the liquidity of accounts receivable.

Liquidity refers to a company's ability to pay its long-term obligations.

Petty cash reimbursement requires a journal entry that involves a debit to the appropriate expenses and a credit to Cash.

A credit memorandum on a bank statement indicates:

A seller (or provider)of goods or services to a business organization is known as a:

All of the following are considered effective cash management principles except:

Principles of internal control include all of the following except:

A bank does not issue a debit memorandum to notify the depositor of which of the following?

The use of internal controls provides a guarantee against losses due to operating activities.

Maintaining adequate records is an important internal control principle.

What is a voucher system and what are the two areas for which it establishes control procedures?

Internal control systems are:

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

Internal control systems are subject to limitations that usually arise from either (1)human error or human fraud, or (2)the cost-benefit principle.

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

The treasurer of a company is responsible for cash management. List five cash management principles that are essential for effective cash management.

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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