Question 1

Evaluated receipts settlement (ERS)compresses the payment approval process into a single step.

Accepted Answer

A) True 
 B)False  True

Question 2

A petty cash fund was established with a $300 balance.It currently has cash of $73 and petty cash tickets totaling $222 for travel expense.Prepare the journal entry to record the replenishment of the fund.Omit explanation.

Accepted Answer

Journal entry
 $\begin{array}{|l|r|r|}
\hline \text { Travel Expense } & 227 \
\hline \text { Cash Short \& Over } & 5 & \
\hline \text { Cash } & & 227 \
\hline
\end{array}$

Question 3

A petty cash fund was established with a $400 balance.It currently has cash of $43 and petty cash tickets totaling $357.Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A)  a credit to Petty Cash for $357 
B)  a debit to Petty Cash for $43 
C)  a credit to Cash for $43 
D)  a debit to various expenses for $357 
A)  a credit to Petty Cash for $357 
B)  a debit to Petty Cash for $43 
C)  a credit to Cash for $43 
D)  a debit to various expenses for $357 D

Question 4

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 5

If the amount of the petty cash fund is decreased,the Petty Cash Fund account should be credited.

Accepted Answer

A) True 
 B)False

Question 6

All cash receipts should be deposited in the bank at the end of each week.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following items will NOT appear as deductions on a bank statement?

Accepted Answer

A)  NSF checks 
B)  EFT 
C)  Service Charge 
D)  Deposits 
A)  NSF checks 
B)  EFT 
C)  Service Charge 
D)  Deposits

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Violators of the Sarbanes-Oxley Act may be sentenced to prison for making false sworn statements.

Accepted Answer

A) True 
 B)False

Question 11

A customer's check for $1,200 was returned for nonsufficient funds.Which of the following journal entries is needed to adjust for the NSF check?

Accepted Answer

A)  $$\begin{array} { | l | l | l | } 
\hline \text { Accounts Receivable } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | } 
\hline \text { Cash } & 1,200 & \
\hline \text { Sales Revenue } & & 1,200 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | } 
\hline \text { NSF Check } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$$ 
D)  $\begin{array}{|l|l|l|}
\hline\text { Accounts Payable } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$ 
A)  $$\begin{array} { | l | l | l | } 
\hline \text { Accounts Receivable } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | } 
\hline \text { Cash } & 1,200 & \
\hline \text { Sales Revenue } & & 1,200 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | } 
\hline \text { NSF Check } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$$ 
D)  $\begin{array}{|l|l|l|}
\hline\text { Accounts Payable } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$

Question 12

A company has a petty cash fund amount of $300.When replenished,it has petty cash tickets of $30 for gas expense,$33 for postage expense,$16 for supplies expense,and $12 for miscellaneous expenses.Assume the cash balance is not over or short.In the journal entry,Cash would be credited for ________.

Accepted Answer

A)  $91 
B)  $75 
C)  $63 
D)  $79 
A)  $91 
B)  $75 
C)  $63 
D)  $79

Question 13

Which one of the following is TRUE of a signature card?

Accepted Answer

A)  It shows each authorized person's signature for a bank account. 
B)  It is the same as a deposit receipt and acts as a proof of the deposit transaction. 
C)  It can be used as a debit card. 
D)  It can only be used for bank accounts of individuals, not for the bank accounts of businesses. 
A)  It shows each authorized person's signature for a bank account. 
B)  It is the same as a deposit receipt and acts as a proof of the deposit transaction. 
C)  It can be used as a debit card. 
D)  It can only be used for bank accounts of individuals, not for the bank accounts of businesses.

Question 14

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?

Question 15

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Under the Sarbanes-Oxley Act,accounting firms are allowed to audit a public company and provide certain consulting services for the same client.

Accepted Answer

A) True 
 B)False

Question 18

Controlling operations is a key responsibility of a business manager.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an objective of internal control?

Accepted Answer

A)  to encourage employees to follow company policies 
B)  to ensure timely payment of accounts payable 
C)  to ensure timely collection of accounts receivable 
D)  to guarantee that a business makes a profit 
A)  to encourage employees to follow company policies 
B)  to ensure timely payment of accounts payable 
C)  to ensure timely collection of accounts receivable 
D)  to guarantee that a business makes a profit

Question 20

For each petty cash payment,the custodian prepares a petty cash ticket.

Accepted Answer

A) True 
 B)False

Exam 8: Internal Control and Cash

Evaluated receipts settlement (ERS)compresses the payment approval process into a single step.

A petty cash fund was established with a $300 balance.It currently has cash of $73 and petty cash tickets totaling $222 for travel expense.Prepare the journal entry to record the replenishment of the fund.Omit explanation.

A petty cash fund was established with a $400 balance.It currently has cash of $43 and petty cash tickets totaling $357.Which of the following would be included in the entry to replenish the fund?

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?

If the amount of the petty cash fund is decreased,the Petty Cash Fund account should be credited.

All cash receipts should be deposited in the bank at the end of each week.

Which of the following items will NOT appear as deductions on a bank statement?

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

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

Violators of the Sarbanes-Oxley Act may be sentenced to prison for making false sworn statements.

A customer's check for $1,200 was returned for nonsufficient funds.Which of the following journal entries is needed to adjust for the NSF check?

A company has a petty cash fund amount of $300.When replenished,it has petty cash tickets of $30 for gas expense,$33 for postage expense,$16 for supplies expense,and $12 for miscellaneous expenses.Assume the cash balance is not over or short.In the journal entry,Cash would be credited for ________.

Which one of the following is TRUE of a signature card?

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

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

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

Under the Sarbanes-Oxley Act,accounting firms are allowed to audit a public company and provide certain consulting services for the same client.

Controlling operations is a key responsibility of a business manager.

Which of the following is an objective of internal control?

For each petty cash payment,the custodian prepares a petty cash ticket.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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