Question 1

Match the items below by choosing the appropriate code letter :
-Document indicating the purpose of a petty cash expenditure.

Accepted Answer

A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents 
A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents

Question 2

Given the following information, determine the adjusted cash balance per books from the following information:
a. Balance per books as of 30 June, $7,600.
b. Outstanding cheques, $600.
c. NSF cheque returned with bank statement, $120.
d. Deposit mailed the afternoon of 30 June, $300.
e. Cheque printing charges, $15.
f. Interest earned on cheque account, $40.

Accepted Answer

$7,505 (7,

Question 3

Interpreting financial statements - a global focus: NAB saw its share price fall by more than 12% after it announced provisions for a potential loss of $830 million on debt-related investments due to the global credit crisis and fall in the US housing market. The $830 million was in addition to the $181 million NAB had already provided for to cover risky investments. NAB chief executive John Stewart said that the losses were likely due to rapidly increasing mortgage defaults, stating, 'Unfortunately the behaviour of the housing market in the US leads us to believe that the worst case scenario may not be too far away from the most likely scenario'. Numbers indicating US home sales have fallen to a 10-year low and Ford booking a record loss of $US9.1 billion in its latest quarterly results sparked a steep decline on the US share market.
Required:
(a) Viewing the most recent annual report available on its website (www.nab.com.au), identify how NAB determines impaired receivables.
(b) Compare NAB's policy with Barclays'. (You can access Barclays' most recent annual report via www.barclays.com.)

Accepted Answer

(a) National Australia Bank does not spe

Question 4

Receivables turnover is used to assess the liquidity of the:

Accepted Answer

A)  customer. 
B)  receivables. 
C)  business. 
D)  assets. 
A)  customer. 
B)  receivables. 
C)  business. 
D)  assets.

Question 5

Match the items below by choosing the appropriate code letter :
-Cheques which have been returned by the maker's bank for lack of funds.

Accepted Answer

A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents 
A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents

Question 6

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply.
Possible errors or problems:
-Each cashier counts their own register drawer each day and verbally reports the results to the supervisor.

Accepted Answer

A)  Establishment of responsibility 
B)  Segregation of duties 
C)  Physical, mechanical and electronic control devices 
D)  Documentation procedures 
E)  Independent internal verification
F) Other controls 
A)  Establishment of responsibility 
B)  Segregation of duties 
C)  Physical, mechanical and electronic control devices 
D)  Documentation procedures 
E)  Independent internal verification
F) Other controls

Question 7

Receivables are claims that are expected to be met in:

Accepted Answer

A)  cash. 
B)  inventory. 
C)  liabilities. 
D)  shares. 
A)  cash. 
B)  inventory. 
C)  liabilities. 
D)  shares.

Question 8

Match the items below by choosing the appropriate code letter :
-A method of accounting for bad debts that involves expensing accounts receivable at the time they are determined to be uncollectible.

Accepted Answer

A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents 
A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents

Question 9

If a cheque correctly written and paid by the bank for $354 is incorrectly recorded on the company's books for $345, the appropriate treatment on the bank reconciliation would be to:

Accepted Answer

A)  add $9 to the bank's balance. 
B)  add $9 to the cash at bank book balance. 
C)  deduct $9 from the bank's balance. 
D)  deduct $9 from the cash at bank book balance. 
A)  add $9 to the bank's balance. 
B)  add $9 to the cash at bank book balance. 
C)  deduct $9 from the bank's balance. 
D)  deduct $9 from the cash at bank book balance.

Question 10

Under the direct write-off method, when a particular account is considered to be uncollectible, the loss is charged to:

Accepted Answer

A)  revenue. 
B)  accounts receivable. 
C)  allowance for doubtful debts. 
D)  bad debts expense. 
A)  revenue. 
B)  accounts receivable. 
C)  allowance for doubtful debts. 
D)  bad debts expense.

Question 11

A cheque for $157 is incorrectly recorded by a company as $175. On the bank reconciliation, the $18 error should be:

Accepted Answer

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

Question 12

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.
-Bank debit memorandum for cheque printing fees

Accepted Answer

A)  Add to cash balance per books 
B)  Deduct from cash balance per books 
C) Add to cash balance per bank 
D)  Deduct from cash balance per bank 
E)  Does not affect the bank reconciliation 
A)  Add to cash balance per books 
B)  Deduct from cash balance per books 
C) Add to cash balance per bank 
D)  Deduct from cash balance per bank 
E)  Does not affect the bank reconciliation

Question 13

The recoverable amount of trade receivables is shown in the:

Accepted Answer

A)  income statement. 
B)  statement of financial position. 
C)  statement of changes in equity. 
D)  statement of cash flows. 
A)  income statement. 
B)  statement of financial position. 
C)  statement of changes in equity. 
D)  statement of cash flows.

Question 14

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.
-A cheque for $236 was correctly paid by the bank but was incorrectly entered in the cash payments journal for $263

Accepted Answer

A)  Add to cash balance per books 
B)  Deduct from cash balance per books 
C) Add to cash balance per bank 
D)  Deduct from cash balance per bank 
E)  Does not affect the bank reconciliation 
A)  Add to cash balance per books 
B)  Deduct from cash balance per books 
C) Add to cash balance per bank 
D)  Deduct from cash balance per bank 
E)  Does not affect the bank reconciliation

Question 15

The cash records of the Kilimanjaro Ltd show the following:
1. The 30 June bank reconciliation indicated that deposits in transit totalled $390. During July the general ledger account, Cash shows deposits of $9,700, but the bank statement indicates that only $9,540 in deposits were received during the month.
2. The 30 June bank reconciliation also reported outstanding cheques of $800. During the month of July, Kilimanjaro's books show that $11,170 of cheques were issued, yet the bank statement showed that $11,500 of cheques cleared the bank in July.
There were no bank debit or credit memoranda and no errors were made by either the bank or Kilimanjaro Ltd.
Answer the following questions:
(a) What were the outstanding deposits (deposits in transit) at 31 July?
(b) What were the outstanding cheques at 31 July?

Accepted Answer

The answer of The cash records of the Kilimanjaro Ltd...

Question 16

Match the items below by choosing the appropriate code letter :
-Highly liquid investments.

Accepted Answer

A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents 
A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents

Question 17

Match the items below by choosing the appropriate code letter :
-A measure that computes the allowance for doubtful debts.

Accepted Answer

A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents 
A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents

Question 18

Match the items below by choosing the appropriate code letter :
-A basic principle of cash management.

Accepted Answer

A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents 
A)  Direct write-off method 
B)  Cash 
C)  Receivables turnover 
D)  Aged accounts receivable 
E)  Invest idle cash
F) Cancelled cheques
G) NSF cheques
H) Outstanding cheques
I) Petty cash receipt
J) Cash equivalents

Question 19

Which of the following would be added to the balance per bank on a bank reconciliation?

Accepted Answer

A)  Outstanding cheques. 
B)  Outstanding deposits. 
C)  Notes collected by the bank 
D)  Service charges. 
A)  Outstanding cheques. 
B)  Outstanding deposits. 
C)  Notes collected by the bank 
D)  Service charges.

Question 20

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply.
Possible errors or problems:
-The official designated to sign cheques is able to steal blank cheques and issue them without fear of detection.

Accepted Answer

A)  Establishment of responsibility 
B)  Segregation of duties 
C)  Physical, mechanical and electronic control devices 
D)  Documentation procedures 
E)  Independent internal verification
F) Other controls 
A)  Establishment of responsibility 
B)  Segregation of duties 
C)  Physical, mechanical and electronic control devices 
D)  Documentation procedures 
E)  Independent internal verification
F) Other controls

Match the items below by choosing the appropriate code letter : -Document indicating the purpose of a petty cash expenditure.

Receivables turnover is used to assess the liquidity of the:

Match the items below by choosing the appropriate code letter : -Cheques which have been returned by the maker's bank for lack of funds.

Receivables are claims that are expected to be met in:

Match the items below by choosing the appropriate code letter : -A method of accounting for bad debts that involves expensing accounts receivable at the time they are determined to be uncollectible.

If a cheque correctly written and paid by the bank for $354 is incorrectly recorded on the company's books for $345, the appropriate treatment on the bank reconciliation would be to:

Under the direct write-off method, when a particular account is considered to be uncollectible, the loss is charged to:

A cheque for $157 is incorrectly recorded by a company as $175. On the bank reconciliation, the $18 error should be:

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. -Bank debit memorandum for cheque printing fees

The recoverable amount of trade receivables is shown in the:

Match the items below by choosing the appropriate code letter : -Highly liquid investments.

Match the items below by choosing the appropriate code letter : -A measure that computes the allowance for doubtful debts.

Match the items below by choosing the appropriate code letter : -A basic principle of cash management.

Which of the following would be added to the balance per bank on a bank reconciliation?

An Introduction to Accounting

The Recording Process

Accrual Accounting Concepts

Inventories

Reporting and Analysing Inventory

Accounting Information Systems

Reporting and Analysing Non-Current Assets

Reporting and Analysing Liabilities

Reporting and Analysing Equity

Statement of Cash Flows

Financial Statement Analysis and Decision Making

Analysing and Integrating Gaap

Technology Concepts

Introduction to Management Accounting

Cost Accounting Systems

Costvolumeprofit Relationships

Budgeting

Filters

Exam 7: Reporting and Analysing Cash and Receivables

Match the items below by choosing the appropriate code letter : -Document indicating the purpose of a petty cash expenditure.

Receivables turnover is used to assess the liquidity of the:

Match the items below by choosing the appropriate code letter : -Cheques which have been returned by the maker's bank for lack of funds.

Receivables are claims that are expected to be met in:

Match the items below by choosing the appropriate code letter : -A method of accounting for bad debts that involves expensing accounts receivable at the time they are determined to be uncollectible.

If a cheque correctly written and paid by the bank for $354 is incorrectly recorded on the company's books for $345, the appropriate treatment on the bank reconciliation would be to:

Under the direct write-off method, when a particular account is considered to be uncollectible, the loss is charged to:

A cheque for $157 is incorrectly recorded by a company as $175. On the bank reconciliation, the $18 error should be:

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. -Bank debit memorandum for cheque printing fees

The recoverable amount of trade receivables is shown in the:

Match the items below by choosing the appropriate code letter : -Highly liquid investments.

Match the items below by choosing the appropriate code letter : -A measure that computes the allowance for doubtful debts.

Match the items below by choosing the appropriate code letter : -A basic principle of cash management.

Which of the following would be added to the balance per bank on a bank reconciliation?

An Introduction to Accounting

The Recording Process

Accrual Accounting Concepts

Inventories

Reporting and Analysing Inventory

Accounting Information Systems

Reporting and Analysing Non-Current Assets

Reporting and Analysing Liabilities

Reporting and Analysing Equity

Statement of Cash Flows

Financial Statement Analysis and Decision Making

Analysing and Integrating Gaap

Technology Concepts

Introduction to Management Accounting

Cost Accounting Systems

Costvolumeprofit Relationships

Budgeting

Filters