Question 1

In the reconciliation of a bank statement,how should deposits in transit be treated?

Accepted Answer

A)  Add them to the unadjusted balance per the company's records. 
B)  Subtract them from the unadjusted balance per the company's records. 
C)  Add them to the unadjusted bank statement balance. 
D)  Subtract them from the unadjusted bank statement balance. 
A)  Add them to the unadjusted balance per the company's records. 
B)  Subtract them from the unadjusted balance per the company's records. 
C)  Add them to the unadjusted bank statement balance. 
D)  Subtract them from the unadjusted bank statement balance.

Question 2

Dance Town Academy
The items listed below were identified while preparing a bank reconciliation for the company's chequing account as of March 31.
 $\begin{array}{lr}
\text { Cash balance according to the general ledger } &?\
\text { Bank statement balance } & \$ 18,500 \
\text { Outstanding cheques } & 2,700\ 
\text { Customer's bounced cheque } & 350 \
\text { Bank service charges } & 100 \
\text { Deposits in transit } & 1,000 \
\text { Interest earned on the chequing account } & 60
\end{array}$
-Refer to the figure Dance Town Academy.How will the outstanding cheques be handled on a bank reconciliation?

Accepted Answer

A)  They will be added to the balance from the company records. 
B)  They will be subtracted from the balance from the company records. 
C)  They will be added to the bank statement balance. 
D)  They will be subtracted from the bank statement balance. 
A)  They will be added to the balance from the company records. 
B)  They will be subtracted from the balance from the company records. 
C)  They will be added to the bank statement balance. 
D)  They will be subtracted from the bank statement balance.

Question 3

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list.
-safeguards over assets and records

Accepted Answer

A) One employee or department should verify the work of another. 
B) Specific approval is given by management for the performance of activities. 
C) Accounting and cash collections should be properly separated. 
D) Blank cheques should be stored in a locked location. 
E) Initial entry into the accounting system should be from a consistent source with complete information. 
A) One employee or department should verify the work of another. 
B) Specific approval is given by management for the performance of activities. 
C) Accounting and cash collections should be properly separated. 
D) Blank cheques should be stored in a locked location. 
E) Initial entry into the accounting system should be from a consistent source with complete information.

Question 4

The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.)
-Although department supervisors can request a preferred supplier or vendor,the purchasing department is responsibile for making the final decisions on a vendor.

Accepted Answer

A) adheres to sound internal controls 
B) violates sound internal controls 
C) neither strengthens nor violates internal control 
A) adheres to sound internal controls 
B) violates sound internal controls 
C) neither strengthens nor violates internal control

Question 5

MATCHING
The accountant for a local manufacturing company is reconciling the company's bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.)
-cheque written on the company's account in May,paid by the bank,and returned with the bank statement

Accepted Answer

A) addition to bank balance 
B) subtraction from bank balance 
C) addition to company balance 
D) subtraction from company balance 
E) not included on the reconciliation 
A) addition to bank balance 
B) subtraction from bank balance 
C) addition to company balance 
D) subtraction from company balance 
E) not included on the reconciliation

Question 6

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list.
-clearly defined authority and responsibility

Accepted Answer

A) One employee or department should verify the work of another. 
B) Specific approval is given by management for the performance of activities. 
C) Accounting and cash collections should be properly separated. 
D) Blank cheques should be stored in a locked location. 
E) .Initial entry into the accounting system should be from a consistent source with complete information. 
A) One employee or department should verify the work of another. 
B) Specific approval is given by management for the performance of activities. 
C) Accounting and cash collections should be properly separated. 
D) Blank cheques should be stored in a locked location. 
E) .Initial entry into the accounting system should be from a consistent source with complete information.

Question 7

Which of the following areas is NOT provided assurance through the internal control system?

Accepted Answer

A)  effectiveness and efficiency of the company's operations 
B)  compliance with applicable laws and regulations 
C)  consolidation of departments within the accounting function 
D)  reliability of financial reporting 
A)  effectiveness and efficiency of the company's operations 
B)  compliance with applicable laws and regulations 
C)  consolidation of departments within the accounting function 
D)  reliability of financial reporting

Question 8

The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.)
-All supporting documents attached to an invoice are cancelled when the cheque is signed.

Accepted Answer

A) adheres to sound internal controls 
B) violates sound internal controls 
C) neither strengthens nor violates internal control 
A) adheres to sound internal controls 
B) violates sound internal controls 
C) neither strengthens nor violates internal control

Question 9

Match the following terms with their correct definitions.
-risks associated with how the company allocates its resources to meet its objectives

Accepted Answer

A) accounting system 
B) business process risks 
C) control activities 
D) control environment 
E) internal control system
F)safeguarding
G)segregation of duties
H)strategic risks 
A) accounting system 
B) business process risks 
C) control activities 
D) control environment 
E) internal control system
F)safeguarding
G)segregation of duties
H)strategic risks

Question 10

Dance Town Academy
The items listed below were identified while preparing a bank reconciliation for the company's chequing account as of March 31.
 $\begin{array}{lr}
\text { Cash balance according to the general ledger } &?\
\text { Bank statement balance } & \$ 18,500 \
\text { Outstanding cheques } & 2,700\ 
\text { Customer's bounced cheque } & 350 \
\text { Bank service charges } & 100 \
\text { Deposits in transit } & 1,000 \
\text { Interest earned on the chequing account } & 60
\end{array}$
-Refer to the figure Dance Town Academy.What is the company's cash balance before adjustment?

Accepted Answer

A)  $16,410 
B)  $16,900 
C)  $17,190 
D)  $17,310 
A)  $16,410 
B)  $16,900 
C)  $17,190 
D)  $17,310

Question 11

Dinah Corp.prepares monthly bank reconciliations of its chequing account balance.The bank statement for June Year 1 indicated the following:
 $\begin{array}{llr}
  \text {  Balance, June 30, Year 1} &\$63,400\
 \text {Bank service charges for June  } &160\
 \text { Interest earned during June } &100\
 \text { NSF cheque from a customer which had been previously deposited by Dinah } &1,150\
 \text {  Collection of note $ (\$ 3,000) $ and the related interest (\$80) from Dinah's} &\
 \text { customer } &3,080\
\end{array}$
 
An analysis of cancelled cheques and deposits and the records of Dinah revealed the following items:
 $\begin{array}{llr}
  \text {  Chequing account balance per Dinah's accounting records} &\$58,770\
 \text { Outstanding cheques as of June 30 } &4,630\
 \text {Deposits in transit on June 30  } &1,780\
 \text { Error in recording cheque \# 3549 issued by Dinah } &90\
\end{array}$
 
The correct amount of cheque # 3549 is $760,but it was recorded as a cash disbursement of $670.The cheque was issued to pay for merchandise purchased.The cheque was written correctly and appeared on the bank statement correctly.
 A) Prepare a bank reconculiation in proper form for June 30, Year 1.

B) What amount should be reported as the cash balance on the June 30, Year 1 balance sheet?

Accepted Answer

None

Question 12

The accounting records for Durden Rentals shows a cash balance of $13,676 on March 31,Year 1.On the evening of March 31,company receipts of $3,250 were placed in the bank's night deposit drop box; this deposit was processed by the bank on April 1.The March 31 bank statement shows balance of $9,866,including a service charge of $45,an NSF cheque from a customer for $210,and a $650 debit memo for the payment of the company's utility bill.All of the cheques that the company had written during March were listed on the bank statement except for cheque #2156 in the amount of $345.
Prepare a bank reconciliation to calculate the company's adjusted cash balance at March 31,Year 1.

Accepted Answer

None

Question 13

Strategic risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as competitors,customers,suppliers,and PEST factors.

Accepted Answer

The answer of Strategic risk assessment is designed to identify,analyze,and...

Question 14

A company's bank statement balance shows that there is $4,190 in the chequing account at the end of the month.Comparing the company's records with the bank statement reveals several additional items,such as outstanding cheques of $1,860,deposits in transit of $2,080,an NSF cheque of $209,interest earned of $21.52,a bank service charge of $40,and a cheque for $120 recorded twice by the company.Calculate the adjusted cash balance for this chequing account.

Accepted Answer

4,190 bank balance +

Question 15

Which of the following documents is NOT used in the control of cash disbursements?

Accepted Answer

A)  cancelled cheques 
B)  outstanding cheques 
C)  bank credit memos 
D)  bank debit memos 
A)  cancelled cheques 
B)  outstanding cheques 
C)  bank credit memos 
D)  bank debit memos

Question 16

A-Day Spa accepted a cheque from a customer as payment for services.The customer's cheque bounced.What is the treatment required on the company's books as a result of this item?

Accepted Answer

A)  a decrease of total assets 
B)  no net impact on shareholders' equity 
C)  a decrease of total liabilities 
D)  no net impact on total assets 
A)  a decrease of total assets 
B)  no net impact on shareholders' equity 
C)  a decrease of total liabilities 
D)  no net impact on total assets

Question 17

A company's records indicate the balance in its chequing account at the end of the month is $3,918.Comparing the company's records with the monthly bank statement reveals several additional cash transactions,such as deposits in transit of $4,022,three outstanding cheques totalling $497,a $30 bank service charge,a $1,000 note receivable collected by the bank plus interest earned of $35,and an NSF cheque for $150.Determine the company's adjusted cash balance and prepare the journal entries necessary to adjust the account balance.

Accepted Answer

3,918 book balance + 1,000 note + 35 int

Question 18

The operating cycle is the elapsed time between what two procedures?

Accepted Answer

A)  the purchase of goods or services and the ultimate collection of cash from customers related to the sale of those goods 
B)  the sale of goods or services to customers and the payment to suppliers for those goods 
C)  the purchase of goods from suppliers and the performance of the related services for customers. 
D)  the sale of goods and the delivery of those goods to customers 
A)  the purchase of goods or services and the ultimate collection of cash from customers related to the sale of those goods 
B)  the sale of goods or services to customers and the payment to suppliers for those goods 
C)  the purchase of goods from suppliers and the performance of the related services for customers. 
D)  the sale of goods and the delivery of those goods to customers

Question 19

Which of the following is a transposition error?

Accepted Answer

A)  writing $89 as $98 
B)  writing $10 as $100 
C)  debiting or crediting an amount to the wrong account 
D)  debiting or crediting the right account with the wrong amount 
A)  writing $89 as $98 
B)  writing $10 as $100 
C)  debiting or crediting an amount to the wrong account 
D)  debiting or crediting the right account with the wrong amount

Question 20

If the bank credits a customer's account,then that customer's cash account balance increases.

Accepted Answer

A) True 
 B)False

In the reconciliation of a bank statement,how should deposits in transit be treated?

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. -safeguards over assets and records

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. -clearly defined authority and responsibility

Which of the following areas is NOT provided assurance through the internal control system?

Match the following terms with their correct definitions. -risks associated with how the company allocates its resources to meet its objectives

Strategic risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as competitors,customers,suppliers,and PEST factors.

Which of the following documents is NOT used in the control of cash disbursements?

A-Day Spa accepted a cheque from a customer as payment for services.The customer's cheque bounced.What is the treatment required on the company's books as a result of this item?

The operating cycle is the elapsed time between what two procedures?

Which of the following is a transposition error?

If the bank credits a customer's account,then that customer's cash account balance increases.

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Revenue and Receivables

Cost of Goods Sold and Inventory

Property plant and Equipment Intangibles and Natural Resources

Current Liabilities

Long-Term Liabilities

The Statement of Cash Flows

Investments

Financial Statement Analysis

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Exam 2: Internal Control and Cash

In the reconciliation of a bank statement,how should deposits in transit be treated?

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. -safeguards over assets and records

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. -clearly defined authority and responsibility

Which of the following areas is NOT provided assurance through the internal control system?

Match the following terms with their correct definitions. -risks associated with how the company allocates its resources to meet its objectives

Strategic risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as competitors,customers,suppliers,and PEST factors.

Which of the following documents is NOT used in the control of cash disbursements?

A-Day Spa accepted a cheque from a customer as payment for services.The customer's cheque bounced.What is the treatment required on the company's books as a result of this item?

The operating cycle is the elapsed time between what two procedures?

Which of the following is a transposition error?

If the bank credits a customer's account,then that customer's cash account balance increases.

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Revenue and Receivables

Cost of Goods Sold and Inventory

Property plant and Equipment Intangibles and Natural Resources

Current Liabilities

Long-Term Liabilities

The Statement of Cash Flows

Investments

Financial Statement Analysis

Filters