Question 1

Which of the following is a requirement of the Sarbanes-Oxley Act?

Accepted Answer

A) An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report. 
B) The Public Company Oversight Board must conduct audits of public companies. 
C) The accounting firm that audits a public client must also provide consulting services for the same client. 
D) The Public Company Oversight Board must create new accounting standards. 
A) An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report. 
B) The Public Company Oversight Board must conduct audits of public companies. 
C) The accounting firm that audits a public client must also provide consulting services for the same client. 
D) The Public Company Oversight Board must create new accounting standards.

Question 2

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 3

A petty cash fund was established with a $370 balance.It currently has cash of $40 and petty cash tickets totaling $330.Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A) a credit to Petty Cash for $330 
B) a debit to Petty Cash for $40 
C) a credit to Cash for $40 
D) a debit to various expenses for $330 
A) a credit to Petty Cash for $330 
B) a debit to Petty Cash for $40 
C) a credit to Cash for $40 
D) a debit to various expenses for $330

Question 4

A customer's check for $1,290 was returned for nonsufficient funds.Which of the following journal entries is needed to adjust for the NSF check?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 5

Journal entries are required if the bank reconciliation includes outstanding checks.

Accepted Answer

A) True 
 B)False

Question 6

In a large company,the person who is responsible for comparing cash and the bank balance is the ________.

Accepted Answer

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

Question 7

An electronic funds transfer system ________.

Accepted Answer

A) does not include debit card transactions 
B) is seldom used by businesses 
C) transfers cash by electronic communication rather than by paper documents 
D) uses forms such as checks and deposit tickets to transfer cash 
A) does not include debit card transactions 
B) is seldom used by businesses 
C) transfers cash by electronic communication rather than by paper documents 
D) uses forms such as checks and deposit tickets to transfer cash

Question 8

In a bank reconciliation,a NSF check will be shown on the book side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 9

No journal entries are required for the reconciling items on the bank side because ________.

Accepted Answer

A) those transactions have already been recorded in the company's ledger 
B) the adjusted balances on both sides are the same amounts 
C) the amounts are immaterial 
D) those transactions are already included in the bank balance 
A) those transactions have already been recorded in the company's ledger 
B) the adjusted balances on both sides are the same amounts 
C) the amounts are immaterial 
D) those transactions are already included in the bank balance

Question 10

As a part of the internal control over cash receipts by mail,the mailroom sends both the customer checks and the remittance advices to the accounting department.

Accepted Answer

A) True 
 B)False

Question 11

A petty cash fund was established with a $380 balance.It currently has cash of $41 and petty cash tickets totaling $339.Which of the following would be included in the entry to replenish the fund?

Accepted Answer

A) a credit to Petty Cash for $339 
B) a debit to Petty Cash for $41 
C) a credit to Cash for $41 
D) a credit to Cash for $339 
A) a credit to Petty Cash for $339 
B) a debit to Petty Cash for $41 
C) a credit to Cash for $41 
D) a credit to Cash for $339

Question 12

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 13

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 14

The petty cash fund at Bryan Company has a designated balance of $300.The fund currently holds $133 in cash and $172 in petty cash tickets.Based on this information,which of the following statements is correct?

Accepted Answer

A) The total of the cash on hand plus petty cash tickets is more than the designated fund balance. 
B) A shortage of $5 exists. 
C) To replenish the petty cash fund,the company must write a check,payable to Petty Cash,for $172. 
D) The petty cash fund custodian must locate the $5 discrepancy. 
A) The total of the cash on hand plus petty cash tickets is more than the designated fund balance. 
B) A shortage of $5 exists. 
C) To replenish the petty cash fund,the company must write a check,payable to Petty Cash,for $172. 
D) The petty cash fund custodian must locate the $5 discrepancy.

Question 15

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.Provide the journal entry to record the replenishment of the fund.

Accepted Answer

The answer of A petty cash fund was established with...

Question 16

The following information is needed to reconcile the cash balance for Jackson Lawn Services.
   
Based on this information,prepare a bank reconciliation for Jackson Lawn Services as of February 28,2017.

Accepted Answer

The answer of The following information is needed to reconcile...

Question 17

Banks must return physical copies of the maker's canceled checks.

Accepted Answer

A) True 
 B)False

Question 18

The bank statement reports the activity in the customer's account and issued on an annual basis.

Accepted Answer

A) True 
 B)False

Question 19

A point-of-sale terminal provides control over cash receipts over the counter.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is true of the bank reconciliation?

Accepted Answer

A) It should not be prepared by an employee who handles cash transactions. 
B) It is prepared in place of the cash ledger. 
C) It is a financial statement. 
D) It guarantees that no errors have been made. 
A) It should not be prepared by an employee who handles cash transactions. 
B) It is prepared in place of the cash ledger. 
C) It is a financial statement. 
D) It guarantees that no errors have been made.

Exam 8: Internal Control and Cash

Which of the following is a requirement of the Sarbanes-Oxley Act?

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.

A petty cash fund was established with a $370 balance.It currently has cash of $40 and petty cash tickets totaling $330.Which of the following would be included in the entry to replenish the fund?

A customer's check for $1,290 was returned for nonsufficient funds.Which of the following journal entries is needed to adjust for the NSF check?

Journal entries are required if the bank reconciliation includes outstanding checks.

In a large company,the person who is responsible for comparing cash and the bank balance is the ________.

An electronic funds transfer system ________.

In a bank reconciliation,a NSF check will be shown on the book side of the reconciliation.

No journal entries are required for the reconciling items on the bank side because ________.

As a part of the internal control over cash receipts by mail,the mailroom sends both the customer checks and the remittance advices to the accounting department.

A petty cash fund was established with a $380 balance.It currently has cash of $41 and petty cash tickets totaling $339.Which of the following would be included in the entry to replenish the fund?

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

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?

The petty cash fund at Bryan Company has a designated balance of $300.The fund currently holds $133 in cash and $172 in petty cash tickets.Based on this information,which of the following statements is correct?

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.Provide the journal entry to record the replenishment of the fund.

The following information is needed to reconcile the cash balance for Jackson Lawn Services. Based on this information,prepare a bank reconciliation for Jackson Lawn Services as of February 28,2017.

Banks must return physical copies of the maker's canceled checks.

The bank statement reports the activity in the customer's account and issued on an annual basis.

A point-of-sale terminal provides control over cash receipts over the counter.

Which one of the following is true of the bank reconciliation?

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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