Question 1

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

Accepted Answer

A) a journal entry,a supplier invoice,and a description of the goods being purchased 
B) a receiving report,an invoice,and a purchase order 
C) a purchase order,a journal entry,and a price catalog 
D) a supplier invoice,a bill of lading,and the supplier's financial statements 
A) a journal entry,a supplier invoice,and a description of the goods being purchased 
B) a receiving report,an invoice,and a purchase order 
C) a purchase order,a journal entry,and a price catalog 
D) a supplier invoice,a bill of lading,and the supplier's financial statements B

Question 2

For good controls over cash payments,the company officer approving a payment voucher should be the same as the person who ordered the goods,to ensure that the correct amount of cash is paid.

Accepted Answer

A) True 
 B)False  False

Question 3

The Sarbanes-Oxley Act requires all private companies in the United States to maintain an internal control system.

Accepted Answer

A) True 
 B)False  False

Question 4

A deposit receipt is ________.

Accepted Answer

A) retained by the customer as proof of a deposit transaction 
B) the same as a signature card 
C) used by the bank as an alternative to a remittance advice 
D) given by the customer to the bank as a proof of deposit 
A) retained by the customer as proof of a deposit transaction 
B) the same as a signature card 
C) used by the bank as an alternative to a remittance advice 
D) given by the customer to the bank as a proof of deposit

Question 5

Refer to the following bank reconciliation:
  
- Journalize the adjusting entry for the third reconciling item: NSF check.

Accepted Answer

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

Question 6

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Accepted Answer

A) True 
 B)False

Question 7

Internal control is an organizational plan that ensures that the financial statements are prepared and submitted on time.

Accepted Answer

A) True 
 B)False

Question 8

At Cadmia Services,the cashier collects checks and cash from customers,and the junior accountant records the transactions in the journal.The controller approves the journal entries and bank reconciliations.The treasurer signs checks and approves contracts. Which internal control procedure is exemplified in the above situation?

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 9

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 10

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 11

Prepare the journal entries for the following petty cash transactions of Allen Coffee Shop.
 $\begin{array}{|l|l|}
\hline\text { Sept. 10 }&\text { Established a petty cash fund with a } \$ 300 \text { balance. } \
\hline \
&\text { The petty cash fund has } \$ 105 \text { in cash and } \$ 200 \text { in petty } \
&\text { cash tickets there were issued to pay for Delivery Expense } \
&\$115 \text { ) and Postage Expense ( } \$ 85 \text { ). Replenished the fund } \
\text { Sept. } 31&\text { and recorded the expenditures. }\
\hline \text { Oct. } 1 5&\text { Decreased the balance of the petty cash fund to } \$ 250 \\hline
\end{array}$

Accepted Answer

\[\begin{array} { | r |l | r | r | } 
\h

Question 12

As long as the same person deposits customer checks and records the deposits into the journal,there will be good internal control over cash receipts.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is included in the internal control procedure-documents?

Accepted Answer

A) Mandatory vacations will improve internal control. 
B) Separate the custody of assets from accounting. 
C) The invoices and orders must be pre-numbered. 
D) A company should purchase a fireproof vault to protect legal documents. 
A) Mandatory vacations will improve internal control. 
B) Separate the custody of assets from accounting. 
C) The invoices and orders must be pre-numbered. 
D) A company should purchase a fireproof vault to protect legal documents.

Question 14

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

Question 15

A petty cash fund was established with a $390 balance.It currently has cash of $43 and petty cash tickets totaling $347.Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A) a credit to Petty Cash for $347 
B) a debit to Petty Cash for $43 
C) a credit to Cash for $43 
D) a credit to Cash for $347 
A) a credit to Petty Cash for $347 
B) a debit to Petty Cash for $43 
C) a credit to Cash for $43 
D) a credit to Cash for $347

Question 16

The following information is available for Jack's,Inc.for the current month. $$\begin{array} { | l | r | } 
\hline \text { Book balance end of month } & \$ 7,000 \
\hline \text { Outstanding checks } & 675 \
\hline \text { Deposits in transit } & 4,000 \
\hline \text { Service charges } & 80 \
\hline \text { Interest revenue } & 40 \
\hline
\end{array}$$ What is the adjusted book balance on the bank reconciliation?

Accepted Answer

A) $10,205 
B) $7,635 
C) $6,880 
D) $6,960 
A) $10,205 
B) $7,635 
C) $6,880 
D) $6,960

Question 17

Which of the following is true of internal control?

Accepted Answer

A) A company's outside auditor is responsible for the company's internal control system. 
B) One of the major purposes of internal control is to ensure that the assets are safeguarded. 
C) Internal control procedures tend to diminish the importance of operational efficiency. 
D) Internal controls are only necessary for public companies. 
A) A company's outside auditor is responsible for the company's internal control system. 
B) One of the major purposes of internal control is to ensure that the assets are safeguarded. 
C) Internal control procedures tend to diminish the importance of operational efficiency. 
D) Internal controls are only necessary for public companies.

Question 18

Morris Company established a petty cash fund with a $400 balance.Which of the following statements is incorrect?

Accepted Answer

A) A journal entry is needed to debit the Cash account and credit the Petty Cash account for $400. 
B) There is no net effect on current assets. 
C) The sum of the cash plus the total of the petty cash tickets should equal $400 at all times. 
D) The petty cash custodian cashes a check for $400 and places the currency in the petty cash fund box. 
A) A journal entry is needed to debit the Cash account and credit the Petty Cash account for $400. 
B) There is no net effect on current assets. 
C) The sum of the cash plus the total of the petty cash tickets should equal $400 at all times. 
D) The petty cash custodian cashes a check for $400 and places the currency in the petty cash fund box.

Question 19

The following information is available for Ashland Company for the month ending June 30,2017.
• 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 Maddie Wolfe to Ashland 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.
Prepare bank reconciliation for Ashland Company for June 30,2017.

Accepted Answer

Ashland Company
Bank

Question 20

If the bank reconciliation includes a bank service charge,a journal entry is required,which debits Bank Expense and credits Cash.

Accepted Answer

A) True 
 B)False

Exam 7: Internal Control and Cash

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

For good controls over cash payments,the company officer approving a payment voucher should be the same as the person who ordered the goods,to ensure that the correct amount of cash is paid.

The Sarbanes-Oxley Act requires all private companies in the United States to maintain an internal control system.

A deposit receipt is ________.

Refer to the following bank reconciliation: - Journalize the adjusting entry for the third reconciling item: NSF check.

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Internal control is an organizational plan that ensures that the financial statements are prepared and submitted on time.

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

As long as the same person deposits customer checks and records the deposits into the journal,there will be good internal control over cash receipts.

Which of the following is included in the internal control procedure-documents?

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

A petty cash fund was established with a $390 balance.It currently has cash of $43 and petty cash tickets totaling $347.Which of the following would be included in the entry to replenish the fund?

The following information is available for Jack's,Inc.for the current month. Book balance end of month \ 7,000 Outstanding checks 675 Deposits in transit 4,000 Service charges 80 Interest revenue 40 What is the adjusted book balance on the bank reconciliation?

Which of the following is true of internal control?

Morris Company established a petty cash fund with a $400 balance.Which of the following statements is incorrect?

If the bank reconciliation includes a bank service charge,a journal entry is required,which debits Bank Expense and credits Cash.

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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