Question 1

Which of the following is an administrative control?

Accepted Answer

A)  Performance evaluation 
B)  Accuracy of the recording procedures 
C)  Keeping cash in a safe 
D)  Maintenance of accurate inventory records 
A)  Performance evaluation 
B)  Accuracy of the recording procedures 
C)  Keeping cash in a safe 
D)  Maintenance of accurate inventory records

Question 2

The purpose of a petty cash fund is to eliminate the need for control over a business's small cash disbursements.

Accepted Answer

A) True 
 B)False

Question 3

The Securities and Exchange Commission is authorized to establish and enforce the accounting rules for public companies.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a common feature of an internal control system?

Accepted Answer

A)  Segregating duties 
B)  Performance evaluation 
C)  Bonding employees 
D)  Implementing the most effective marketing plan 
A)  Segregating duties 
B)  Performance evaluation 
C)  Bonding employees 
D)  Implementing the most effective marketing plan

Question 5

While preparing its bank reconciliation,Maynard Company determined that its bank had collected a $650 account receivable for the company and deducted a $25 collection fee.Which of the following shows the effect of this transaction on the financial statements?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 6

A bank statement debit memo describes a transaction that increases a customer's account balance.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements regarding the Securities and Exchange Commission (SEC)is not true?

Accepted Answer

A)  SEC rules frequently require disclosures in addition to those required by GAAP. 
B)  The SEC has the authority to establish and enforce accounting rules for public companies. 
C)  The SEC is a private professional organization. 
D)  Public companies must register with the SEC. 
A)  SEC rules frequently require disclosures in addition to those required by GAAP. 
B)  The SEC has the authority to establish and enforce accounting rules for public companies. 
C)  The SEC is a private professional organization. 
D)  Public companies must register with the SEC.

Question 8

Internal controls designed to evaluate performance and the degree of compliance with company policies and public laws are classified as administrative controls.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements accurately describes a fidelity bond?

Accepted Answer

A)  Procedures to provide reasonable assurance that the objectives of a company are accomplished. 
B)  Proper procedures for processing transactions. 
C)  Insurance that the company buys to protect itself from loss due to employee dishonesty. 
D)  Guidelines or policies that limit the actions of different levels of management. 
A)  Procedures to provide reasonable assurance that the objectives of a company are accomplished. 
B)  Proper procedures for processing transactions. 
C)  Insurance that the company buys to protect itself from loss due to employee dishonesty. 
D)  Guidelines or policies that limit the actions of different levels of management.

Question 10

How are cash overages reported on the financial statements?

Accepted Answer

A)  Petty Cash Payable 
B)  Petty Cash Receivable 
C)  Petty Cash Expense 
D)  Miscellaneous revenue 
A)  Petty Cash Payable 
B)  Petty Cash Receivable 
C)  Petty Cash Expense 
D)  Miscellaneous revenue

Question 11

At March 31,Cummins Co.had an unadjusted balance in its cash account of $10,400.At the end of March,the company determined that it had outstanding checks of $900,deposits in transit of $600,a bank service charge of $20,and an NSF check from a customer for $200.What is the true cash balance at March 31?

Accepted Answer

A)  $10,100 
B)  $10,180 
C)  $10,380 
D)  $9,880 
A)  $10,100 
B)  $10,180 
C)  $10,380 
D)  $9,880

Question 12

Typical adjustments to the unadjusted book balance on a bank reconciliation include bank service charges,customer NSF checks,and certified checks.

Accepted Answer

A) True 
 B)False

Question 13

Rainey Company's true cash balance at October 31 is $5,710.The following information is available for the bank reconciliation:
(1)Outstanding checks,$600
(2)Deposits in transit,$450
(3)Bank service charges,$90
(4)The bank had collected an account receivable for Rainey Company,$1,000
(5)The bank statement included an NSF check written by one of Ramsey's customers for $600.
What was the unadjusted book balance at October 31?

Accepted Answer

A)  $5,870 
B)  $5,400 
C)  $6,400 
D)  $5,490 
A)  $5,870 
B)  $5,400 
C)  $6,400 
D)  $5,490

Question 14

A cash shortage is treated as an expense.

Accepted Answer

A) True 
 B)False

Question 15

[The following information applies to the questions displayed below.]
A review of the bank statement and accounting records of Blake Company revealed the following items:
 $\begin{array}{|c|l|}
\hline \text { Item No. } & \text { Description } \
\hline \text { 1) } & \text { Three outstanding checks } \
\hline \text { 2) } & \text { A debit memo showing a bank service charge } \
\hline \text { 3) } & \text { A deposit in transit } \
\hline \text { 4) } & \text { An NSF check written by one of Blake's customers } \
\hline \text { 5) } & \text { A certified check written by Blake that remains outstanding } \
\hline \text { 6) } & \text { A credit memo reflecting interest revenue earned by Blake } \
\hline
\end{array}$
-Which of the item(s)would be added to the unadjusted bank balance to determine the true cash balance?

Accepted Answer

A)  Item numbers 2 and 3 
B)  Item number 2 
C)  Item numbers 3, 4, and 6 
D)  Item number 3 
A)  Item numbers 2 and 3 
B)  Item number 2 
C)  Item numbers 3, 4, and 6 
D)  Item number 3

Question 16

The accountant for Ye Olde Bookstore balanced out the cash register for the day.The company began the day with $125 and ended the day with $1,150.25 in the cash drawer.That day's cash register tape shows $1,031.50 in cash sales.What is the effect on the financial statements of recording the day's sales and any related overage or shortage?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Which of the following is an administrative control?

The purpose of a petty cash fund is to eliminate the need for control over a business's small cash disbursements.

The Securities and Exchange Commission is authorized to establish and enforce the accounting rules for public companies.

Which of the following is not a common feature of an internal control system?

While preparing its bank reconciliation,Maynard Company determined that its bank had collected a $650 account receivable for the company and deducted a $25 collection fee.Which of the following shows the effect of this transaction on the financial statements?

A bank statement debit memo describes a transaction that increases a customer's account balance.

Which of the following statements regarding the Securities and Exchange Commission (SEC)is not true?

Internal controls designed to evaluate performance and the degree of compliance with company policies and public laws are classified as administrative controls.

Which of the following statements accurately describes a fidelity bond?

How are cash overages reported on the financial statements?

Typical adjustments to the unadjusted book balance on a bank reconciliation include bank service charges,customer NSF checks,and certified checks.

A cash shortage is treated as an expense.

An Introduction to Accounting

Accounting for Accruals

Accounting for Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships, partnerships, and Corporations

Statement of Cash Flows

The Double-Entry Accounting System

Financial Statement Analysis

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Exam 6: Internal Control and Accounting for Cash

Which of the following is an administrative control?

The purpose of a petty cash fund is to eliminate the need for control over a business's small cash disbursements.

The Securities and Exchange Commission is authorized to establish and enforce the accounting rules for public companies.

Which of the following is not a common feature of an internal control system?

While preparing its bank reconciliation,Maynard Company determined that its bank had collected a $650 account receivable for the company and deducted a $25 collection fee.Which of the following shows the effect of this transaction on the financial statements?

A bank statement debit memo describes a transaction that increases a customer's account balance.

Which of the following statements regarding the Securities and Exchange Commission (SEC)is not true?

Internal controls designed to evaluate performance and the degree of compliance with company policies and public laws are classified as administrative controls.

Which of the following statements accurately describes a fidelity bond?

How are cash overages reported on the financial statements?

Typical adjustments to the unadjusted book balance on a bank reconciliation include bank service charges,customer NSF checks,and certified checks.

A cash shortage is treated as an expense.

An Introduction to Accounting

Accounting for Accruals

Accounting for Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships, partnerships, and Corporations

Statement of Cash Flows

The Double-Entry Accounting System

Financial Statement Analysis

Filters