Question 1

Match the following terms with their correct definition.
-fund used to pay for small amounts to avoid the time and expense of paying by cheque

Accepted Answer

A) cash equivalents 
B) cash over and short 
C) operating cycle 
D) petty cash 
A) cash equivalents 
B) cash over and short 
C) operating cycle 
D) petty cash

Question 2

Figure C
The accountant preparing the January bank reconciliation identified the following items:
 $\begin{array}{llr}
  \text { Cash balance per company records } &\$35,900\
 \text {Outstanding cheques  } &12,050\
 \text {Interest earned on the chequing account  } &75\
 \text {Customer's NSF cheque returned by the bank  } &325\
\end{array}$
 There was also an error in the accounting records whereby a customer's cheque for $101 was recorded as $110.
-Refer to Figure C.What is the company's adjusted cash balance at January 31?

Accepted Answer

A)  $23,591 
B)  $35,641 
C)  $35,659 
D)  $47,691 
A)  $23,591 
B)  $35,641 
C)  $35,659 
D)  $47,691

Question 3

Money market accounts with original maturities of less than 90 days are cash equivalents.

Accepted Answer

A) True 
 B)False

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.)
-Monthly statements are mailed to customers to indicate the current balance due.

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

Which of the following documents is used in the control of cash receipts?

Accepted Answer

A)  cancelled cheques 
B)  outstanding cheques 
C)  bank deposit slips 
D)  bank debit memos 
A)  cancelled cheques 
B)  outstanding cheques 
C)  bank deposit slips 
D)  bank debit memos

Question 6

Deal Corp.prepares monthly bank reconciliations of its chequing account balance.The bank statement for December Year 1 indicated the following:
 $\begin{array}{llr}
  \text {Balance, December 31, Year 1  } &\$7,920\
 \text {  Bank service charges for December} &20\
 \text { Interest earned during December } &30\
 \text { NSF cheque from a customer which had been previously deposited by Deal } &32\
 \text {   Collection of note $ (\$ 1,000) $ and the related interest $ (\$ 40) $ from Deal's customer} &1040\
\end{array}$
 
An analysis of cancelled cheques and deposits and the records of Deal revealed the following items:
 $\begin{array}{llr}
  \text {Chequing account balance per Deal's accounting records  } &\$7,170\
 \text { Outstanding cheques as of December 31 } &952\
 \text {  Deposits in transit on December 31} &1,310\
 \text { Error in recording cheque \# 267 issued by Deal } &90\
\end{array}$
 
The correct amount of cheque # 267 is $340,but it was recorded as a cash disbursement of $430.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 reconciliation in proper form for December 31, Year 1.

B) What amount would Deal report as its cash balance an its December 31, Year 1. balance sheet?

C) What adjusting entries will Deal record as a result of this bank reconciliation process?

Accepted Answer

None

Question 7

Diamond Corp.prepares monthly bank reconciliations of its chequing account balance.The bank statement for October Year 1 indicated the following:
 $\begin{array}{llr}
  \text { Balance, October 31 , Year 1 } &\$29,700\
 \text {Bank service charges for October  } &80\
 \text { Interest earned during October } &120\
 \text {  
NSF cheque from a customer which had been previously deposited by Diamond} &230\
 \text { Collection of note $ (\$ 4,000) $ and the related interest $ (\$ 100) $ from Diamond's  } &\
 \text { customer } &4,100\
\end{array}$
 
An analysis of cancelled cheques and deposits and the records of Diamond revealed the following items:
 $\begin{array}{llr}
  \text { Chequing account balance per Diamond's accounting records  } &\$26,040\
 \text { Outstanding cheques as of October 31 } &2,950\
 \text {  Deposits in transit on October 31} &3,110\
 \text {  Error in recording cheque \# 627 issued by Diamond} &90\
\end{array}$
 
The correct amount of cheque # 627 is $980,but it was recorded as a cash disbursement of $890.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 reconciliation in proper form for October 31. Year 1.

B) What amount would Diamand report as its cash balance on its October 31, Year 1, balance sheet?

Accepted Answer

None

Question 8

A cheque written by a company but NOT yet presented to the bank for payment is called a cheque in transit.

Accepted Answer

A) True 
 B)False

Question 9

Discount Muffler Company is preparing its bank reconciliation for June 30,Year 1.Its bank statement and general ledger T-account for its chequing account are presented below:

A) Prepare a bank reconcilation in proper form for June. Note that the begnning balance was correctly reconciled at the end of the previous month and that all outstanding cheques (numbered 1983, 1984, and 1985) and deposits in transit from the previous month cleared the bank during May.

B) How much cash will the company report on its June 30 balance sheet?

C) What adjusting entries will the company record as a result of this bank reconciliation process? Assume that the bank correctly recorded all transactions, and that any errors noted in the reconciliation process involve transactions on credit.

Accepted Answer

@#IMG-DLM&_TB5500_00

Question 10

A petty cash fund for $300 was established on May 1.By the end of the month,the petty cash custodian requested reimbursement of $222 for the following expenditures from the fund:
 
$\begin{array}{llr}
  \text {Office supplies  } &\$68\
 \text {Deliveries  } &30\
 \text { Fuel } &56\
 \text { Postage } &68
\end{array}$
 
Record the entries to a)establish the petty cash fund; b)replenish the fund as of the end of May; and c)increase the fund balance to $500.

Accepted Answer

None

Question 11

Match the following terms with their correct definitions.
-procedure that provides physical protection of the company's assets

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 12

Dreammaker Kitchens
The following information relates to the company's November bank reconciliation:
 $\begin{array}{llr}
  \text {  Bank statement balance} &\$10,700\
 \text { Unadjusted cash balance according to company records } &?\
 \text { Deposit in transit } &2,100\
 \text {  Outstanding cheques} &1,200\
 \text { Bank service charges } &300\
 \text { Interest earned on the bank account } &100\
 \text { Customer's NSF cheque returned by the bank } &400\
\end{array}$

-Refer to the figure Dreammaker Kitchens.What is the company's adjusted cash balance on November 30?

Accepted Answer

A)  $10,100 
B)  $10,700 
C)  $11,600 
D)  $12,200 
A)  $10,100 
B)  $10,700 
C)  $11,600 
D)  $12,200

Question 13

An amount recorded as an increase in the company's cash account at the end of the period,but which has NOT yet been reflected on the bank statement is called a(n)____________________.

Accepted Answer

The answer of An amount recorded as an increase in...

Question 14

What adjustments are often necessary after the reconciliation of a bank account?

Accepted Answer

Adjustments are usually necessary becaus

Question 15

Under the ____________________ Act,management of publicly-traded corporations has increased responsibility for a system of internal controls that ensures reliability of financial statements.

Accepted Answer

The answer of Under the ____________________ Act,management of publicly-traded corporations...

Question 16

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.)
-Cheques are signed by the clerk in the accounting department.

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 17

What is the term for cheques presented for payment and paid by the bank?

Accepted Answer

A)  certified cheques 
B)  NSF cheques 
C)  outstanding cheques 
D)  cancelled cheques 
A)  certified cheques 
B)  NSF cheques 
C)  outstanding cheques 
D)  cancelled cheques

Question 18

Cash equivalents typically appear in the long-term investments section of a balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Designs on You
The following information relates to the company's May bank reconciliation:
 $\begin{array}{llr}
  \text {  Bank statement balance} &\$5,000\
 \text { Unadjusted cash balance according to company records } &?\
 \text { Deposit in transit } &1,000\
 \text {  Outstanding cheques} &500\
 \text { Bank service charges } &50\
 \text { Interest earned on the bank account } &10\
 \text { Customer's NSF cheque returned by the bank } &25\
\end{array}$
 In addition, a cheque was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000.
-Refer to the figure Designs on You.What is the unadjusted cash balance according to the company's records at May 31?

Accepted Answer

A)  $4,865 
B)  $5,000 
C)  $5,365 
D)  $5,500 
A)  $4,865 
B)  $5,000 
C)  $5,365 
D)  $5,500

Question 20

Which of the following is an important duty of the petty cash custodian?

Accepted Answer

A)  signing the cheque that reimburses the petty cash fund 
B)  recording all petty cash expenditures in the company's accounting records 
C)  preparing the bank reconciliation for the petty cash account 
D)  maintaining supporting documentation for all payments made from the petty cash fund 
A)  signing the cheque that reimburses the petty cash fund 
B)  recording all petty cash expenditures in the company's accounting records 
C)  preparing the bank reconciliation for the petty cash account 
D)  maintaining supporting documentation for all payments made from the petty cash fund

Match the following terms with their correct definition. -fund used to pay for small amounts to avoid the time and expense of paying by cheque

Money market accounts with original maturities of less than 90 days are cash equivalents.

Which of the following documents is used in the control of cash receipts?

A cheque written by a company but NOT yet presented to the bank for payment is called a cheque in transit.

Match the following terms with their correct definitions. -procedure that provides physical protection of the company's assets

An amount recorded as an increase in the company's cash account at the end of the period,but which has NOT yet been reflected on the bank statement is called a(n)____________________.

What adjustments are often necessary after the reconciliation of a bank account?

Under the ____________________ Act,management of publicly-traded corporations has increased responsibility for a system of internal controls that ensures reliability of financial statements.

What is the term for cheques presented for payment and paid by the bank?

Cash equivalents typically appear in the long-term investments section of a balance sheet.

Which of the following is an important duty of the petty cash custodian?

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

Match the following terms with their correct definition. -fund used to pay for small amounts to avoid the time and expense of paying by cheque

Money market accounts with original maturities of less than 90 days are cash equivalents.

Which of the following documents is used in the control of cash receipts?

A cheque written by a company but NOT yet presented to the bank for payment is called a cheque in transit.

Match the following terms with their correct definitions. -procedure that provides physical protection of the company's assets

An amount recorded as an increase in the company's cash account at the end of the period,but which has NOT yet been reflected on the bank statement is called a(n)____________________.

What adjustments are often necessary after the reconciliation of a bank account?

Under the ____________________ Act,management of publicly-traded corporations has increased responsibility for a system of internal controls that ensures reliability of financial statements.

What is the term for cheques presented for payment and paid by the bank?

Cash equivalents typically appear in the long-term investments section of a balance sheet.

Which of the following is an important duty of the petty cash custodian?

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