Question 1

In a bank reconciliation,a deposit in transit will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False  True

Question 2

Check payment for $658 was incorrectly entered in the cash account as $856.Which of the following adjustments needs to be made?

Accepted Answer

A) decrease the book balance 
B) decrease the bank statement balance 
C) increase the book balance 
D) increase the bank statement balance 
A) decrease the book balance 
B) decrease the bank statement balance 
C) increase the book balance 
D) increase the bank statement balance C

Question 3

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

Accepted Answer

A) True 
 B)False  True

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is representative of safeguarding assets?

Accepted Answer

A) keeping office supplies under lock and key 
B) reducing expense to increase operating profit 
C) increasing operating profit to increase net income 
D) ensuring maximum use of resources 
A) keeping office supplies under lock and key 
B) reducing expense to increase operating profit 
C) increasing operating profit to increase net income 
D) ensuring maximum use of resources

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The Fingertips Inc.had the following financial data for the year ended December 31,2015.   What is the cash ratio as of December 31,2015,for Fingertips Inc.?

Accepted Answer

A) 0.30 
B) 0.40 
C) 0.53 
D) 0.83 
A) 0.30 
B) 0.40 
C) 0.53 
D) 0.83

Question 8

A company received a bank statement with a balance of $6,350.Reconciling items included a bookkeeper error of $300-a $300 check recorded as $600-two outstanding checks totaling $820,a service charge of $25,a deposit in transit of $280,and interest revenue of $21.What is the adjusted bank balance?

Accepted Answer

A) $5,636 
B) $5,610 
C) $5,016 
D) $5,810 
A) $5,636 
B) $5,610 
C) $5,016 
D) $5,810

Question 9

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Accepted Answer

A) a credit to Petty Cash 
B) a debit to Accounts Receivable 
C) a credit to Cash 
D) a credit to Miscellaneous Expense 
A) a credit to Petty Cash 
B) a debit to Accounts Receivable 
C) a credit to Cash 
D) a credit to Miscellaneous Expense

Question 10

On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 11

No journal entries are required for the reconciling items on the bank side because ________.

Accepted Answer

A) those transactions have already been recorded in the company ledger 
B) the adjusted balances on both sides are the same amounts 
C) the amounts are immaterial 
D) those transactions are already included in the bank balance. 
A) those transactions have already been recorded in the company ledger 
B) the adjusted balances on both sides are the same amounts 
C) the amounts are immaterial 
D) those transactions are already included in the bank balance.

Question 12

A document authorizing a cash payment is a(n)________.

Accepted Answer

A) check 
B) invoice 
C) voucher 
D) bill of lading 
A) check 
B) invoice 
C) voucher 
D) bill of lading

Question 13

Which of the following items require an adjustment on the bank side of the bank reconciliation?

Accepted Answer

A) interest earned 
B) a bank service charge 
C) a note collected by the bank 
D) deposits in transit 
A) interest earned 
B) a bank service charge 
C) a note collected by the bank 
D) deposits in transit

Question 14

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 15

A company has the cash ratio of 2.3.What does this imply?

Accepted Answer

A) The company has an unnecessarily large amount of cash supply. 
B) The company does not have enough cash supply. 
C) The company is not in a position to pay off its long term liabilities. 
D) The company is not in a position to pay off its current liabilities. 
A) The company has an unnecessarily large amount of cash supply. 
B) The company does not have enough cash supply. 
C) The company is not in a position to pay off its long term liabilities. 
D) The company is not in a position to pay off its current liabilities.

Question 16

A basic principle of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following items must be examined by the controller or treasurer before signing a check?

Accepted Answer

A) the ledger 
B) the purchase order 
C) the confirmation report 
D) the journal entry 
A) the ledger 
B) the purchase order 
C) the confirmation report 
D) the journal entry

Question 18

A strong computer firewall is an essential element of good internal controls for e-commerce.

Accepted Answer

A) True 
 B)False

Question 19

Separating the custody of assets from accounting implies that the accountants must not handle cash,and the cashier must not have access to the accounting records.

Accepted Answer

A) True 
 B)False

Question 20

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?

Exam 7: Internal Control and Cash

In a bank reconciliation,a deposit in transit will be shown on the bank side of the reconciliation.

Check payment for $658 was incorrectly entered in the cash account as $856.Which of the following adjustments needs to be made?

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

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

Which of the following is representative of safeguarding assets?

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

The Fingertips Inc.had the following financial data for the year ended December 31,2015. What is the cash ratio as of December 31,2015,for Fingertips Inc.?

A company received a bank statement with a balance of $6,350.Reconciling items included a bookkeeper error of $300-a $300 check recorded as $600-two outstanding checks totaling $820,a service charge of $25,a deposit in transit of $280,and interest revenue of $21.What is the adjusted bank balance?

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.

No journal entries are required for the reconciling items on the bank side because ________.

A document authorizing a cash payment is a(n)________.

Which of the following items require an adjustment on the bank side of the bank reconciliation?

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

A company has the cash ratio of 2.3.What does this imply?

A basic principle of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated.

Which of the following items must be examined by the controller or treasurer before signing a check?

A strong computer firewall is an essential element of good internal controls for e-commerce.

Separating the custody of assets from accounting implies that the accountants must not handle cash,and the cashier must not have access to the accounting records.

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

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Receivables

Plant Assets, natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Accounting Information Systems

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