Question 1

Mandatory vacations and job rotation improve internal control.

Accepted Answer

A) True 
 B)False  True

Question 2

Cash is the most liquid of all company assets.

Accepted Answer

A) True 
 B)False  True

Question 3

If the bank reconciliation includes a bank service charge,a journal entry is required that debits Cash and credits Miscellaneous expense.

Accepted Answer

A) True 
 B)False  False

Question 4

A cheque was written by a business for $205,but was recorded in the cash payments journal as $502.How would this error be included on the bank reconciliation?

Accepted Answer

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

Question 5

A petty cash fund was established with a $500 balance.It currently has cash of $40 and petty cash tickets as shown below.
$$\begin{array} { | l | l | } 
\hline \text { Travel expense } & \$ 120 \
\hline \text { Office supplies expense } & 310 \
\hline \text { Equipment rental expense } & 30\
\hline
\end{array}$$
Which of the following would be the journal entry to replenish the Petty cash account?

Accepted Answer

A)  debit various expenses $460; credit Petty cash $460 
B)  credit Petty cash $460; debit Cash $460 
C)  debit Cash $40; credit various expenses $40 
D)  debit various expenses $460; credit Cash $460 
A)  debit various expenses $460; credit Petty cash $460 
B)  credit Petty cash $460; debit Cash $460 
C)  debit Cash $40; credit various expenses $40 
D)  debit various expenses $460; credit Cash $460

Question 6

Daily cash shorts and cash overs should cancel each other out over time.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following describes collusion?

Accepted Answer

A)  When a company defrauds its suppliers by making false claims 
B)  When bogus websites acquire passwords and account numbers fraudulently 
C)  When two or more people cooperate together to defraud a company 
D)  When one employee steals from a company 
A)  When a company defrauds its suppliers by making false claims 
B)  When bogus websites acquire passwords and account numbers fraudulently 
C)  When two or more people cooperate together to defraud a company 
D)  When one employee steals from a company

Question 8

A petty cash fund was established with a $360 balance.It currently has cash of $41 and petty cash tickets totalling $319.Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A)  A credit to Cash for $319 
B)  A credit to Cash for $41 
C)  A credit to Petty cash for $319 
D)  A debit to Petty cash for $41 
A)  A credit to Cash for $319 
B)  A credit to Cash for $41 
C)  A credit to Petty cash for $319 
D)  A debit to Petty cash for $41

Question 9

A pharmaceutical company testing drugs to determine possible side effects is a part of:

Accepted Answer

A)  information systems. 
B)  risk assessment. 
C)  control procedures. 
D)  monitoring of controls. 
A)  information systems. 
B)  risk assessment. 
C)  control procedures. 
D)  monitoring of controls.

Question 10

The following information is needed to reconcile the cash balance for Fire Steel Ltd:
∙ A deposit of $5500 is in transit.
∙ Outstanding cheques total $1500.
∙ The book balance is $6500 at 28 February 2017.
∙ The bookkeeper recorded a $1800 cheque as $17,100 in payment of the current month's rent.
∙ The bank balance at 28 February 2017 was $19,040.
∙ A deposit of $500 was credited by the bank for $5000.
∙ A dishonoured cheque from a customer for $3200 was returned by the bank.
∙ The bank service charge is $60.
What was the adjusted bank balance?

Accepted Answer

A)  $19,100 
B)  $18,540 
C)  $18,660 
D)  $18,600 
A)  $19,100 
B)  $18,540 
C)  $18,660 
D)  $18,600

Question 11

In a voucher system,the vouchers are prepared by:

Accepted Answer

A)  the outside supplier. 
B)  the accounting department. 
C)  the sales department. 
D)  the purchasing department. 
A)  the outside supplier. 
B)  the accounting department. 
C)  the sales department. 
D)  the purchasing department.

Question 12

A 'cash short' situation exists where the cash register tape total is less than the cash on hand.

Accepted Answer

A) True 
 B)False

Question 13

If the bank reconciliation includes a deposit in transit,a journal entry is required that includes a debit to cash.

Accepted Answer

A) True 
 B)False

Question 14

The control environment is one of the five components by which a company can achieve its internal control objectives.

Accepted Answer

A) True 
 B)False

Question 15

The remittance advice or copy of a cheque provides details of a transaction that may be recorded in the cash receipts journal.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  A firewall system 
B)  A bank direct deposit system 
C)  An encryption system 
D)  An imprest system 
A)  A firewall system 
B)  A bank direct deposit system 
C)  An encryption system 
D)  An imprest system

Question 17

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account,supported by the fund (cash plus petty cash slips)totalling the same amount.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following items is NOT required to be examined by the controller or treasurer before signing a cheque?

Accepted Answer

A)  The journal entry 
B)  The receiving report 
C)  The purchase order 
D)  The invoice 
A)  The journal entry 
B)  The receiving report 
C)  The purchase order 
D)  The invoice

Question 19

The following information is available for Jade Company for the month ending 30 June 2016.
∙ Balance as per the bank statement is $11,700.
∙ Balance as per books is $10,400.
∙ Cheque #506 for $1300 and cheque #510 for $800 were not shown on the 30 June bank statement.
∙ A deposit in transit of $3000 had not been received by the bank when the bank statement was generated.
∙ A bank debit memo indicated a dishonoured cheque for $70 written by Jane Smith to Jade Company on 13 June.
∙ A bank credit memo indicated bank collections of $2200 and interest revenue of $52 on 20 June.
∙ The bank statement indicated service charges of $20.
What is the adjusted book balance?

Accepted Answer

A)  $8352 
B)  $8300 
C)  $12,562 
D)  $12,582 
A)  $8352 
B)  $8300 
C)  $12,562 
D)  $12,582

Question 20

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

Accepted Answer

A) True 
 B)False

Exam 8: Internal Control and Cash

Mandatory vacations and job rotation improve internal control.

Cash is the most liquid of all company assets.

If the bank reconciliation includes a bank service charge,a journal entry is required that debits Cash and credits Miscellaneous expense.

A cheque was written by a business for $205,but was recorded in the cash payments journal as $502.How would this error be included on the bank reconciliation?

A petty cash fund was established with a $500 balance.It currently has cash of $40 and petty cash tickets as shown below. Travel expense \ 120 Office supplies expense 310 Equipment rental expense 30 Which of the following would be the journal entry to replenish the Petty cash account?

Daily cash shorts and cash overs should cancel each other out over time.

Which of the following describes collusion?

A petty cash fund was established with a $360 balance.It currently has cash of $41 and petty cash tickets totalling $319.Which of the following would be included in the entry to replenish the fund?

A pharmaceutical company testing drugs to determine possible side effects is a part of:

In a voucher system,the vouchers are prepared by:

A 'cash short' situation exists where the cash register tape total is less than the cash on hand.

If the bank reconciliation includes a deposit in transit,a journal entry is required that includes a debit to cash.

The control environment is one of the five components by which a company can achieve its internal control objectives.

The remittance advice or copy of a cheque provides details of a transaction that may be recorded in the cash receipts journal.

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

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account,supported by the fund (cash plus petty cash slips)totalling the same amount.

Which of the following items is NOT required to be examined by the controller or treasurer before signing a cheque?

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Receivables

Non-Current Assets: Property, plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities,debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

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