Question 1

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 2

Which of the following is an attribute of the internal control procedure-competent,reliable,and ethical personnel?

Accepted Answer

A)  providing cross training to allow sales personnel to record revenue transactions 
B)  the need to train and supervise employees 
C)  monitoring of internal controls by external auditors 
D)  purchase of burglar alarms 
A)  providing cross training to allow sales personnel to record revenue transactions 
B)  the need to train and supervise employees 
C)  monitoring of internal controls by external auditors 
D)  purchase of burglar alarms

Question 3

The bank statement ________.

Accepted Answer

A)  must include physical copies of canceled checks 
B)  must be mailed to customers each month 
C)  does not include an ending balance of the customer's account because the bank cannot determine which checks have been cashed during the statement period 
D)  may show service charges, EFT collections from customers, and EFT withdrawals 
A)  must include physical copies of canceled checks 
B)  must be mailed to customers each month 
C)  does not include an ending balance of the customer's account because the bank cannot determine which checks have been cashed during the statement period 
D)  may show service charges, EFT collections from customers, and EFT withdrawals

Question 4

It is important for a business to identify policies which ensure that all customers are treated similarly and that results can be measured effectively.

Accepted Answer

A) True 
 B)False

Question 5

Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.

Accepted Answer

A) True 
 B)False

Question 6

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 7

With cash receipts by mail,the person who is responsible for comparing the cash debit from the accounting department and the bank deposit amount is the ________.

Accepted Answer

A)  CEO 
B)  CFO 
C)  controller 
D)  treasurer 
A)  CEO 
B)  CFO 
C)  controller 
D)  treasurer

Question 8

Bank errors are posting errors made by the bank that either incorrectly increase or decrease the depositor's bank balance.

Accepted Answer

A) True 
 B)False

Question 9

Before sending the check for payment of goods,the controller should examine the payment pack.List the documents that are included in the payment pack and describe the information provided by each document.

Accepted Answer

Purchase Order - This document shows the

Question 10

As long as the same person deposits customer checks and makes the journal entry to customer accounts,there will be good internal control over cash receipts.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is the first step in the purchasing and payment process?

Accepted Answer

A)  The purchaser receives an invoice for the goods shipped by the supplier. 
B)  The purchaser sends a check to the supplier. 
C)  The purchaser sends a purchase order to the supplier. 
D)  The purchase receives the inventory and prepares a receiving report. 
A)  The purchaser receives an invoice for the goods shipped by the supplier. 
B)  The purchaser sends a check to the supplier. 
C)  The purchaser sends a purchase order to the supplier. 
D)  The purchase receives the inventory and prepares a receiving report.

Question 12

Prepare the journal entries for the following petty cash transactions of Williamson Dental Supplies.Omit explanations.
 $$\begin{array} { | r | r | } 
\hline \text { Aug. 1 } & \text { Established a petty cash fund with a } \$ 200 \text { balance } \
\hline & \text { The petty cash fund has } \$ 43 \text { in cash and } \$ 154 \text { in } \
& \text { petty cash tickets there were issued to pay for Office } \
&\text { Expense } ( \$ 75 ) \text { and Repair Expense } ( \$ 79 ) \
\text { Aug. 31 } & \text { Replenished the fund and recorded the expenditures } \
\hline \text { Oct. 15 } & \text { Increased the balance of the petty cash fund to } \$ 250 \
\hline
\end{array}$$

Accepted Answer

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

Question 13

Collusion involves two or more people working together to circumvent internal controls and defraud a company.

Accepted Answer

A) True 
 B)False

Question 14

Electronic funds transfers ________.

Accepted Answer

A)  are more expensive than mailing a check to make a payment 
B)  are a way of moving cash by paper documents 
C)  include direct deposits and debit card transactions 
D)  do not appear on the bank statement 
A)  are more expensive than mailing a check to make a payment 
B)  are a way of moving cash by paper documents 
C)  include direct deposits and debit card transactions 
D)  do not appear on the bank statement

Question 15

The following information is available for Ellen's Fashions Company for the current month. $$\begin{array} { | l | r | } 
\hline \text { Book balance end of month } & \$ 7,000 \
\hline \text { Outstanding checks } & 725 \
\hline \text { Deposits in transit } & 4,000 \
\hline \text { Service charges } & 80 \
\hline \text { Interest revenue } & 45 \
\hline
\end{array}$$ What is the adjusted book balance on the bank reconciliation?

Accepted Answer

A)  $10,150 
B)  $7,690 
C)  $6,875 
D)  $6,965 
A)  $10,150 
B)  $7,690 
C)  $6,875 
D)  $6,965

Question 16

A deposit ticket is a document that instructs a bank to pay the designated person a specified amount of money.

Accepted Answer

A) True 
 B)False

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 mailroom employee opens all incoming mail.Customers' checks are sent to the treasurer,and remittance advices are sent to the accounting department.The controller compares the daily bank deposit amount from the treasurer and the daily debit to cash from the accounting department.

Accepted Answer

This is a strength.The accounting depart

Question 18

A check for which a maker's bank account has inadequate money to pay the check is known as a ________.

Accepted Answer

A)  nonsufficient funds check 
B)  outstanding check 
C)  restrictive check 
D)  canceled check 
A)  nonsufficient funds check 
B)  outstanding check 
C)  restrictive check 
D)  canceled check

Question 19

Checking accounts and money market accounts are examples of cash equivalents.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about internal control is TRUE?

Accepted Answer

A)  Internal auditors ensure that the employees follow company policies. 
B)  The treasurer and controller have the same responsibilities. 
C)  External auditors are employees of the company they audit. 
D)  The internal control procedures are known as the "tone at the top." 
A)  Internal auditors ensure that the employees follow company policies. 
B)  The treasurer and controller have the same responsibilities. 
C)  External auditors are employees of the company they audit. 
D)  The internal control procedures are known as the "tone at the top."

Exam 8: Internal Control and Cash

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

Which of the following is an attribute of the internal control procedure-competent,reliable,and ethical personnel?

The bank statement ________.

It is important for a business to identify policies which ensure that all customers are treated similarly and that results can be measured effectively.

Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.

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

With cash receipts by mail,the person who is responsible for comparing the cash debit from the accounting department and the bank deposit amount is the ________.

Bank errors are posting errors made by the bank that either incorrectly increase or decrease the depositor's bank balance.

Before sending the check for payment of goods,the controller should examine the payment pack.List the documents that are included in the payment pack and describe the information provided by each document.

As long as the same person deposits customer checks and makes the journal entry to customer accounts,there will be good internal control over cash receipts.

Which of the following is the first step in the purchasing and payment process?

Collusion involves two or more people working together to circumvent internal controls and defraud a company.

Electronic funds transfers ________.

The following information is available for Ellen's Fashions Company for the current month. Book balance end of month \ 7,000 Outstanding checks 725 Deposits in transit 4,000 Service charges 80 Interest revenue 45 What is the adjusted book balance on the bank reconciliation?

A deposit ticket is a document that instructs a bank to pay the designated person a specified amount of money.

A check for which a maker's bank account has inadequate money to pay the check is known as a ________.

Checking accounts and money market accounts are examples of cash equivalents.

Which of the following statements about internal control is TRUE?

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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