Question 1

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Accepted Answer

A) True 
 B)False

Question 2

A petty cash fund was established with a $299 balance. It currently has cash of $76 and petty cash tickets totaling $222 for travel expense. Provide the journal entry to record the replenishment of the fund.

Accepted Answer

\[\begin{array} { | c | r | r

Question 3

Which of the following is true of the bank reconciliation?

Accepted Answer

A)  It should not be prepared by an employee who handles cash transactions. 
B)  It is prepared in place of the cash ledger. 
C)  It is a financial statement. 
D)  It guarantees that no errors have been made. 
A)  It should not be prepared by an employee who handles cash transactions. 
B)  It is prepared in place of the cash ledger. 
C)  It is a financial statement. 
D)  It guarantees that no errors have been made.

Question 4

A pharmaceutical company testing drugs to determine possible side effects is a part of:

Accepted Answer

A)  monitoring controls. 
B)  information systems. 
C)  control procedures. 
D)  risk assessment. 
A)  monitoring controls. 
B)  information systems. 
C)  control procedures. 
D)  risk assessment.

Question 5

The bank charged a service fee of $55. How would this information be included on the bank reconciliation?

Accepted Answer

A)  a deduction on the bank side 
B)  an addition on the book side 
C)  a deduction on the book side 
D)  an addition on the bank side 
A)  a deduction on the bank side 
B)  an addition on the book side 
C)  a deduction on the book side 
D)  an addition on the bank side

Question 6

In the following situation, which internal control procedure needs strengthening? At Syria Services, the accounting clerk fills out unnumbered purchase order forms for purchases of supplies. An operations engineer completes the form with a detailed description of the supplies being ordered, and the operations manager approves the purchase and passes the purchase order back to the accountant for processing.

Accepted Answer

A)  assignment of responsibilities 
B)  competent, reliable, and ethical personnel 
C)  separation of duties 
D)  documents 
A)  assignment of responsibilities 
B)  competent, reliable, and ethical personnel 
C)  separation of duties 
D)  documents

Question 7

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

Accepted Answer

A) True 
 B)False

Question 8

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

Accepted Answer

A) True 
 B)False

Question 9

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the following bank reconciliation:
  
-According to  the bank reconciliation above,Journalize the adjusting entry for the fourth reconciling item: bank service charge.

Accepted Answer

\[\begin{array} { | c | r | r

Question 11

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements describes a voucher?

Accepted Answer

A)  It is an order to purchase goods from a supplier. 
B)  It is a statement from the supplier showing the goods purchased, and the amount due. 
C)  It is a report showing that the goods have been received in good condition, as ordered. 
D)  It is a document authorizing payment to a supplier. 
A)  It is an order to purchase goods from a supplier. 
B)  It is a statement from the supplier showing the goods purchased, and the amount due. 
C)  It is a report showing that the goods have been received in good condition, as ordered. 
D)  It is a document authorizing payment to a supplier.

Question 13

The following information is available for Jade Company for the month ending June 30, 2014. • Balance as per the bank statement is $11,240.
• Balance as per books is $10,200.
• Check #506 for $1,200 and check #510 for $900 were not shown on the June 30, bank statement.
• A deposit in transit of $3,110 had not been received by the bank when the bank statement was generated.
• A bank debit memo indicated an NSF check for $85 written by Jane Smith to Jade Company on June 13.
• A bank credit memo indicated a note collected by the bank of $2,100 and interest revenue of $55 on June 20.
• The bank statement indicated service charges of $20.
What is the adjusted book balance?

Accepted Answer

A)  $12,740 
B)  $12,250 
C)  $8,150 
D)  $8,200 
A)  $12,740 
B)  $12,250 
C)  $8,150 
D)  $8,200

Question 14

Which of the following is a problem that must be addressed in the internal controls for e-commerce?

Accepted Answer

A)  encryption 
B)  firewall 
C)  phishing expeditions 
D)  separation of duties 
A)  encryption 
B)  firewall 
C)  phishing expeditions 
D)  separation of duties

Question 15

Which of the following led to the passage of the Sarbanes-Oxley Act?

Accepted Answer

A)  the stock market crash of 2002 
B)  the savings and loan bailout 
C)  the accounting scandals of WorldCom and Enron 
D)  the mounting government deficit 
A)  the stock market crash of 2002 
B)  the savings and loan bailout 
C)  the accounting scandals of WorldCom and Enron 
D)  the mounting government deficit

Question 16

Before any internal control procedure is initiated, which of the following questions must be primarily addressed by a company?

Accepted Answer

A)  Will this put an end to theft? 
B)  Is this the best security, money can buy? 
C)  How much benefit will be derived from the cost of the procedure? 
D)  Will this prevent accounting errors? 
A)  Will this put an end to theft? 
B)  Is this the best security, money can buy? 
C)  How much benefit will be derived from the cost of the procedure? 
D)  Will this prevent accounting errors?

Question 17

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger. How would this information be included on the bank reconciliation?

Accepted Answer

A)  an addition on the bank side 
B)  a deduction on the bank side 
C)  a deduction on the book side 
D)  an addition on the book side 
A)  an addition on the bank side 
B)  a deduction on the bank side 
C)  a deduction on the book side 
D)  an addition on the book side

Question 18

A customer's check for $1,280 was returned for nonsufficient funds. Which of the following journal entries is needed to adjust for the NSF check?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts receivable } & 1,280 & \
\hline \text { Cash } & & 1,280 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,280 & \
\hline \text { Sales revenue } & & 1,280 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { NSFcheck } & 1,280 & \
\hline \text { Cash } & & 1,280 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts payable } & 1,280 & \
\hline \text { Cash } & & 1,280 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts receivable } & 1,280 & \
\hline \text { Cash } & & 1,280 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,280 & \
\hline \text { Sales revenue } & & 1,280 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { NSFcheck } & 1,280 & \
\hline \text { Cash } & & 1,280 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts payable } & 1,280 & \
\hline \text { Cash } & & 1,280 \
\hline
\end{array}$$

Question 19

Burglar alarms, fire alarms, and security cameras improve internal control.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a benefit of online banking to a business?

Accepted Answer

A)  The business can reconcile to the bank's balance at any time. 
B)  The bank reconciliation is not necessary. 
C)  The business can reduce their internal controls over cash receipts. 
D)  A company's book balance will always equal the bank's balance. 
A)  The business can reconcile to the bank's balance at any time. 
B)  The bank reconciliation is not necessary. 
C)  The business can reduce their internal controls over cash receipts. 
D)  A company's book balance will always equal the bank's balance.

Exam 8: Internal Control and Cash

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

A petty cash fund was established with a $299 balance. It currently has cash of $76 and petty cash tickets totaling $222 for travel expense. Provide the journal entry to record the replenishment of the fund.

Which of the following is true of the bank reconciliation?

A pharmaceutical company testing drugs to determine possible side effects is a part of:

The bank charged a service fee of $55. How would this information be included on the bank reconciliation?

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

Refer to the following bank reconciliation: -According to the bank reconciliation above,Journalize the adjusting entry for the fourth reconciling item: bank service charge.

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

Which of the following statements describes a voucher?

Which of the following is a problem that must be addressed in the internal controls for e-commerce?

Which of the following led to the passage of the Sarbanes-Oxley Act?

Before any internal control procedure is initiated, which of the following questions must be primarily addressed by a company?

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger. How would this information be included on the bank reconciliation?

A customer's check for $1,280 was returned for nonsufficient funds. Which of the following journal entries is needed to adjust for the NSF check?

Burglar alarms, fire alarms, and security cameras improve internal control.

Which of the following is a benefit of online banking to a business?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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