Question 1

Rearranging plain-text messages by a mathematical process is known as ________.

Accepted Answer

A) password 
B) phishing 
C) encryption 
D) virus 
A) password 
B) phishing 
C) encryption 
D) virus

Question 2

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Accepted Answer

A) True 
 B)False

Question 3

A petty cash fund was established with a $600 balance.It currently has cash of $25 and petty cash tickets as shown below.   Which of the following would be the journal entry to replenish the Petty Cash account?

Accepted Answer

A) debit to Cash Short & Over for $55 
B) credit Cash Short & Over for $55 
C) debit Petty Cash $55 
D) credit Petty Cash $55 
A) debit to Cash Short & Over for $55 
B) credit Cash Short & Over for $55 
C) debit Petty Cash $55 
D) credit Petty Cash $55

Question 4

A company's cash ledger shows an ending balance of $4,000.Reconciling items included a bookkeeper error of $100 (a $500 check recorded as $600),two outstanding checks totaling $820,a service charge of $25,a deposit in transit of $280,and interest revenue of $31.What is the adjusted book balance?

Accepted Answer

A) $3,894 
B) $3,460 
C) $4,106 
D) $4,540 
A) $3,894 
B) $3,460 
C) $4,106 
D) $4,540

Question 5

Which of the following illustrates the internal control procedure "separation of duties"?

Accepted Answer

A) Cashiers must not have access to accounting records. 
B) External auditors will monitor internal controls. 
C) Electronic devices must be installed to reduce theft. 
D) The invoices and other documents must be pre-numbered. 
A) Cashiers must not have access to accounting records. 
B) External auditors will monitor internal controls. 
C) Electronic devices must be installed to reduce theft. 
D) The invoices and other documents must be pre-numbered.

Question 6

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 7

The data of Franklin Brothers Corp.for two years are given below.   Based on the above information,which of the following statements is true?

Accepted Answer

A) Cash ratio has increased from 0.02 in 2014 to 0.03 in 2015. 
B) Cash ratio has increased from 0.05 in 2014 to 0.08 in 2015. 
C) Cash ratio has increased from 0.417 in 2014 to 0.225 in 2015. 
D) Cash ratio has increased from 0.225 in 2014 to 0.417 in 2015. 
A) Cash ratio has increased from 0.02 in 2014 to 0.03 in 2015. 
B) Cash ratio has increased from 0.05 in 2014 to 0.08 in 2015. 
C) Cash ratio has increased from 0.417 in 2014 to 0.225 in 2015. 
D) Cash ratio has increased from 0.225 in 2014 to 0.417 in 2015.

Question 8

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account,supported by the fund,cash plus payment tickets,totaling the same amount.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an issue 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 10

The bank made an EFT payment of a telephone bill of $5,000.How would this information be included on the bank reconciliation?

Accepted Answer

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

Question 11

The difference that arises between the balance on the bank statement and the balance on the company's books because of a time lag in recording transactions is known as a permanent difference.

Accepted Answer

A) True 
 B)False

Question 12

A petty cash fund was established with a $500 balance.It currently has cash of $19 and petty cash tickets as shown below.   Which of the following would be the journal entry to replenish the Petty Cash account?

Accepted Answer

A) debit to Cash Short & Over for $1 
B) credit Cash Short & Over for $1 
C) debit Petty Cash $1 
D) credit Petty Cash $1 
A) debit to Cash Short & Over for $1 
B) credit Cash Short & Over for $1 
C) debit Petty Cash $1 
D) credit Petty Cash $1

Question 13

Reducing expenses to increase operating profit is representative of ________.

Accepted Answer

A) safeguarding assets 
B) following company policies 
C) promoting operational efficiency 
D) ensuring accurate,reliable accounting records 
A) safeguarding assets 
B) following company policies 
C) promoting operational efficiency 
D) ensuring accurate,reliable accounting records

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements describes a purchase order?

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 a 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 a payment to a supplier.

Question 16

Which of the following items are reconciling items on the book side of the reconciliation?

Accepted Answer

A) outstanding checks and correction of book error 
B) deposit in transit and NSF check 
C) bank service charge and outstanding checks 
D) bank service charge and correction of book error 
A) outstanding checks and correction of book error 
B) deposit in transit and NSF check 
C) bank service charge and outstanding checks 
D) bank service charge and correction of book error

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A check was written by a business for $507,but was recorded in the cash payments journal as $705.How would this error be included on the bank reconciliation?

Accepted Answer

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

Question 19

The following information is needed to reconcile the cash balance for Fire Steel Inc.
   Based on this information,prepare a bank reconciliation for Fire Steel Inc.as of February 28,2013.

Accepted Answer

The answer of The following information is needed to reconcile...

Question 20

The cash ratios of four companies are listed below.   Which company has the maximum ability to repay its short-term debts?

Accepted Answer

A) Juan Corp. 
B) Rose Inc. 
C) Freelance Inc. 
D) Pioneer Corp. 
A) Juan Corp. 
B) Rose Inc. 
C) Freelance Inc. 
D) Pioneer Corp.

Exam 7: Internal Control and Cash

Rearranging plain-text messages by a mathematical process is known as ________.

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

A petty cash fund was established with a $600 balance.It currently has cash of $25 and petty cash tickets as shown below. Which of the following would be the journal entry to replenish the Petty Cash account?

A company's cash ledger shows an ending balance of $4,000.Reconciling items included a bookkeeper error of $100 (a $500 check recorded as $600),two outstanding checks totaling $820,a service charge of $25,a deposit in transit of $280,and interest revenue of $31.What is the adjusted book balance?

Which of the following illustrates the internal control procedure "separation of duties"?

Which of the following is true of the bank reconciliation?

The data of Franklin Brothers Corp.for two years are given below. Based on the above information,which of the following statements is true?

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account,supported by the fund,cash plus payment tickets,totaling the same amount.

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

The bank made an EFT payment of a telephone bill of $5,000.How would this information be included on the bank reconciliation?

The difference that arises between the balance on the bank statement and the balance on the company's books because of a time lag in recording transactions is known as a permanent difference.

A petty cash fund was established with a $500 balance.It currently has cash of $19 and petty cash tickets as shown below. Which of the following would be the journal entry to replenish the Petty Cash account?

Reducing expenses to increase operating profit is representative of ________.

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

Which of the following statements describes a purchase order?

Which of the following items are reconciling items on the book side of the reconciliation?

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

A check was written by a business for $507,but was recorded in the cash payments journal as $705.How would this error be included on the bank reconciliation?

The following information is needed to reconcile the cash balance for Fire Steel Inc. Based on this information,prepare a bank reconciliation for Fire Steel Inc.as of February 28,2013.

The cash ratios of four companies are listed below. Which company has the maximum ability to repay its short-term debts?

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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