Question 1

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 2

In reconciling a bank statement,the bank balance is $1,500,and the checkbook balance is $2,105,Which of the following is the most probable reason for the checkbook balance being larger than the bank balance?

Accepted Answer

A) The bank has not cleared certain outstanding checks. 
B) The bank has added interest revenue to the account balance. 
C) A deposit in transit was made at the end of the month. 
D) The bank received an EFT from a customer. 
A) The bank has not cleared certain outstanding checks. 
B) The bank has added interest revenue to the account balance. 
C) A deposit in transit was made at the end of the month. 
D) The bank received an EFT from a customer.

Question 3

External auditors evaluate company controls to ensure the financial statements are presented fairly,in accordance with Generally Accepted Accounting Principles.

Accepted Answer

A) True 
 B)False

Question 4

A system cannot be overcome or broken into if its internal controls are properly designed and structured.

Accepted Answer

A) True 
 B)False

Question 5

Cash in the bank is more liquid than a petty cash fund.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

Which of the following statements describes a receiving report?

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 8

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 9

Which of the following is not an appropriate internal control for cash receipts over the counter?

Accepted Answer

A) A receipt is issued for each transaction to ensure that each sale is recorded. 
B) The store clerk deposits the cash in the bank. 
C) At the end of the day,the manager proves the cash by comparing the cash in the drawer against the machine's record of cash sales. 
D) The cash draw opens after the store clerk enters a transaction. 
A) A receipt is issued for each transaction to ensure that each sale is recorded. 
B) The store clerk deposits the cash in the bank. 
C) At the end of the day,the manager proves the cash by comparing the cash in the drawer against the machine's record of cash sales. 
D) The cash draw opens after the store clerk enters a transaction.

Question 10

Which of the following is representative of safeguarding assets?

Accepted Answer

A) attaching electronic sensors to merchandise inventory 
B) reducing expense to increase operating profit 
C) increasing operating profit to increase net income 
D) allowing company accountants to handle cash 
A) attaching electronic sensors to merchandise inventory 
B) reducing expense to increase operating profit 
C) increasing operating profit to increase net income 
D) allowing company accountants to handle cash

Question 11

Which of the following statements is true of the Sarbanes-Oxley Act?

Accepted Answer

A) Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients. 
B) Those who commit securities fraud must be sentenced to 10 years in prison. 
C) All private and foreign companies must issue an internal control report evaluated by an outside auditor. 
D) The Public Company Accounting Oversight Board oversees the work of auditors of public companies. 
A) Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients. 
B) Those who commit securities fraud must be sentenced to 10 years in prison. 
C) All private and foreign companies must issue an internal control report evaluated by an outside auditor. 
D) The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Question 12

A petty cash fund was established with a $600 balance.It currently has cash of $19 and petty cash tickets as shown below: $$\begin{array} { | l | r | } 
\hline \text { Travel expense } & \$ 102 \
\hline \text { Office supplies expense } & 285 \
\hline \text { Equipment rental expense } & 79 \
\hline
\end{array}$$ Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Accepted Answer

A) debit to Cash Short & Over for $115 
B) credit to Cash Short & Over for $115 
C) debit to Petty Cash for $115 
D) credit to Petty Cash for $115 
A) debit to Cash Short & Over for $115 
B) credit to Cash Short & Over for $115 
C) debit to Petty Cash for $115 
D) credit to Petty Cash for $115

Question 13

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 14

When calculating the cash ratio,the numerator includes cash equivalents.

Accepted Answer

A) True 
 B)False

Question 15

The ________ is a measure of a company's ability to pay its current liabilities from cash and cash equivalents.

Accepted Answer

A) cash conversion cycle 
B) cash ratio 
C) gross profit 
D) debt equity ratio 
A) cash conversion cycle 
B) cash ratio 
C) gross profit 
D) debt equity ratio

Question 16

A company's Cash account shows an ending balance of $4,600.Reconciling items included a bookkeeper error of $105 (a $525 check recorded as $630),two outstanding checks totaling $830,a service charge of $20,a deposit in transit of $260,and interest revenue of $33.What is the adjusted book balance?

Accepted Answer

A) $4,482 
B) $4,030 
C) $4,718 
D) $5,170 
A) $4,482 
B) $4,030 
C) $4,718 
D) $5,170

Question 17

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer.
-
The bookkeeper opens the mail,makes the deposit,and makes the journal entries to record receipt of the cash and checks.

Accepted Answer

Weakness
Separation of duties

Question 18

Which of the following is true of the internal control component-information system?

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) Control procedures are designed to ensure that the business's goals are achieved. 
C) Only authorized users have access to various parts of the information system. 
D) The information system is the "tone at the top" or the culture of the business. 
A) Internal auditors monitor company controls to safeguard assets,and external auditors monitor the controls to ensure that the accounting records are accurate. 
B) Control procedures are designed to ensure that the business's goals are achieved. 
C) Only authorized users have access to various parts of the information system. 
D) The information system is the "tone at the top" or the culture of the business.

Question 19

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Accepted Answer

The bank reconciliation is an accountant

Question 20

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

Exam 7: Internal Control and Cash

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

In reconciling a bank statement,the bank balance is $1,500,and the checkbook balance is $2,105,Which of the following is the most probable reason for the checkbook balance being larger than the bank balance?

External auditors evaluate company controls to ensure the financial statements are presented fairly,in accordance with Generally Accepted Accounting Principles.

A system cannot be overcome or broken into if its internal controls are properly designed and structured.

Cash in the bank is more liquid than a petty cash fund.

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

Which of the following statements describes a receiving report?

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

Which of the following is not an appropriate internal control for cash receipts over the counter?

Which of the following is representative of safeguarding assets?

Which of the following statements is true of the Sarbanes-Oxley Act?

A petty cash fund was established with a $600 balance.It currently has cash of $19 and petty cash tickets as shown below: Travel expense \ 102 Office supplies expense 285 Equipment rental expense 79 Which of the following would be included in the journal entry to replenish the Petty Cash fund?

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.

When calculating the cash ratio,the numerator includes cash equivalents.

The ________ is a measure of a company's ability to pay its current liabilities from cash and cash equivalents.

A company's Cash account shows an ending balance of $4,600.Reconciling items included a bookkeeper error of $105 (a $525 check recorded as $630),two outstanding checks totaling $830,a service charge of $20,a deposit in transit of $260,and interest revenue of $33.What is the adjusted book balance?

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer. - The bookkeeper opens the mail,makes the deposit,and makes the journal entries to record receipt of the cash and checks.

Which of the following is true of the internal control component-information system?

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

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.

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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