Question 1

A check was written by a business for $549 but was recorded erroneously in the Cash account as $459.How would this error be included on the bank reconciliation?

Accepted Answer

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

Question 2

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

Accepted Answer

A) Real Time Gross Settlement 
B) Electronic Data Interchange 
C) Electronic Fund Transfer 
D) Evaluated Receipts Settlement 
A) Real Time Gross Settlement 
B) Electronic Data Interchange 
C) Electronic Fund Transfer 
D) Evaluated Receipts Settlement

Question 3

The bookkeeper of Fire Steel,Inc.recorded a $1,503 check as $15,030 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 13,527 & \
\hline \text { Sales Revenue } & & 13,527 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Rent Expense } & 15,030 & \
\hline \text { Cash } & & 15,030 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 13,527 & \
\hline \text { Rent Expense } & & 13,527 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Booking Error } & 1,503 & \
\hline \text { Cash } & & 1,503 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 13,527 & \
\hline \text { Sales Revenue } & & 13,527 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Rent Expense } & 15,030 & \
\hline \text { Cash } & & 15,030 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 13,527 & \
\hline \text { Rent Expense } & & 13,527 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Booking Error } & 1,503 & \
\hline \text { Cash } & & 1,503 \
\hline
\end{array}$$

Question 4

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

Accepted Answer

A) burglar alarms 
B) tone at the top 
C) phishing expeditions 
D) need for outside auditors 
A) burglar alarms 
B) tone at the top 
C) phishing expeditions 
D) need for outside auditors

Question 5

A company received a bank statement showing a balance of $75,000.Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,500.What is the company's adjusted bank balance?

Accepted Answer

A) $63,100 
B) $67,900 
C) $82,100 
D) $65,500 
A) $63,100 
B) $67,900 
C) $82,100 
D) $65,500

Question 6

As proof of the deposit transaction,a customer receives a cancelled check from the bank.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Which of the following describes the risk assessment component of internal control?

Accepted Answer

A) Internal auditors monitor company controls to safeguard assets,and external auditors monitor the controls to ensure that the accounting records are accurate. 
B) Risk assessment is the "tone at the top" of the business. 
C) A company must identify its risks and take necessary steps to minimize them. 
D) Risk assessment is designed to ensure that the business's goals are achieved. 
A) Internal auditors monitor company controls to safeguard assets,and external auditors monitor the controls to ensure that the accounting records are accurate. 
B) Risk assessment is the "tone at the top" of the business. 
C) A company must identify its risks and take necessary steps to minimize them. 
D) Risk assessment is designed to ensure that the business's goals are achieved.

Question 9

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger.How would this information be included on the bank reconciliation?

Accepted Answer

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

Question 10

Which of the following is an attribute of the internal control component-monitoring of controls?

Accepted Answer

A) Internal auditors monitor company controls to safeguard assets,and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B) Monitoring of controls is the "tone at the top" of the business. 
C) Monitoring of controls is designed to ensure that the business's goals are achieved. 
D) Monitoring of controls deals with identification and assessment of business risks. 
A) Internal auditors monitor company controls to safeguard assets,and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B) Monitoring of controls is the "tone at the top" of the business. 
C) Monitoring of controls is designed to ensure that the business's goals are achieved. 
D) Monitoring of controls deals with identification and assessment of business risks.

Question 11

The cash ratios of four companies are listed below. $$\begin{array} { | l | c | } 
\hline \text { Company } & \text { Cash Ratio } \
\hline \text { Juan Corp. } & 0.25 \
\hline \text { Rose, Inc. } & 0.12 \
\hline \text { Freelance, Inc. } & 0.19 \
\hline \text { Pioneer Corp. } & 0.27 \
\hline
\end{array}$$ Which company has the maximum ability to repay its current liabilities?

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.

Question 12

Which of the following is the basic internal control measure for cash?

Accepted Answer

A) keeping money in a bank account 
B) checking for counterfeit bills 
C) counting cash receipts twice 
D) internal audit of cash procedures 
A) keeping money in a bank account 
B) checking for counterfeit bills 
C) counting cash receipts twice 
D) internal audit of cash procedures

Question 13

The party who issues a check is the maker.

Accepted Answer

A) True 
 B)False

Question 14

A receiving report should be matched with the supplier invoice before a payment to the supplier is approved.

Accepted Answer

A) True 
 B)False

Question 15

A way to account for petty cash by maintaining a constant balance in the petty cash account and which at any time requires that cash plus petty cash tickets must total the amount allocated to the petty cash fund,is known as the ________.

Accepted Answer

A) control system 
B) voucher system 
C) balanced system 
D) imprest system 
A) control system 
B) voucher system 
C) balanced system 
D) imprest system

Question 16

Which of the following statements describes an invoice from a supplier?

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 17

Vaughn Services hires a new accountant to maintain its petty cash fund.Although the employee possesses an accounting degree,he/she had been previously convicted of embezzlement. Which internal control procedure needs to be addressed 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 18

Smith Electronics reported the following figures in its 2017 and 2016 financial statements.
 
$$\begin{array} { | l | r | r | } 
\hline & 2017 & 2016 \
\hline \text { Cash } & \$ 38,500 & \$ 25,000 \
\hline \text { Cash Equivalents } & 3,000 & 2,000 \
\hline \text { Total Current Liabilities } & 33,200 & 30,000 \
\hline
\end{array}$$ Compute the cash ratio for 2017 and 2016.What does the cash ratio measure? Use this information to discuss the business performance of Smith Electronics.

Accepted Answer

\[\begin{aligned}
2017 \text { Cash rati

Question 19

Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?

Accepted Answer

A) an encryption system 
B) an imprest system 
C) a lock-box system 
D) a firewall system 
A) an encryption system 
B) an imprest system 
C) a lock-box system 
D) a firewall system

Question 20

The petty cash fund has a current balance of $100.Based on activity in the fund,it is determined that the balance needs to be changed to $700.Which journal entry is needed to make this change?

Accepted Answer

A) Debit the Petty Cash account and credit the Cash account for $700. 
B) No journal entry is needed because this change only involves cash. 
C) Debit the Petty Cash account and credit the Cash account for $600. 
D) Debit the Cash account and credit the Petty Cash account for $600. 
A) Debit the Petty Cash account and credit the Cash account for $700. 
B) No journal entry is needed because this change only involves cash. 
C) Debit the Petty Cash account and credit the Cash account for $600. 
D) Debit the Cash account and credit the Petty Cash account for $600.

Exam 7: Internal Control and Cash

A check was written by a business for $549 but was recorded erroneously in the Cash account as $459.How would this error be included on the bank reconciliation?

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

The bookkeeper of Fire Steel,Inc.recorded a $1,503 check as $15,030 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

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

A company received a bank statement showing a balance of $75,000.Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,500.What is the company's adjusted bank balance?

As proof of the deposit transaction,a customer receives a cancelled check from the bank.

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 describes the risk assessment component of internal control?

The bank statement reveals an EFT payment made to one of the company's suppliers that has not yet been recorded in the ledger.How would this information be included on the bank reconciliation?

Which of the following is an attribute of the internal control component-monitoring of controls?

The cash ratios of four companies are listed below. Company Cash Ratio Juan Corp. 0.25 Rose, Inc. 0.12 Freelance, Inc. 0.19 Pioneer Corp. 0.27 Which company has the maximum ability to repay its current liabilities?

Which of the following is the basic internal control measure for cash?

The party who issues a check is the maker.

A receiving report should be matched with the supplier invoice before a payment to the supplier is approved.

A way to account for petty cash by maintaining a constant balance in the petty cash account and which at any time requires that cash plus petty cash tickets must total the amount allocated to the petty cash fund,is known as the ________.

Which of the following statements describes an invoice from a supplier?

Vaughn Services hires a new accountant to maintain its petty cash fund.Although the employee possesses an accounting degree,he/she had been previously convicted of embezzlement. Which internal control procedure needs to be addressed in the above situation?

Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?

The petty cash fund has a current balance of $100.Based on activity in the fund,it is determined that the balance needs to be changed to $700.Which journal entry is needed to make this change?

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

Filters