Question 1

The party who issues a check is the maker.

Accepted Answer

A) True 
 B)False

Question 2

The cash ratios of four companies are listed below.
 
Which company has the maximum ability to repay its current liabilities?

Accepted Answer

A) Juan Corp. 
B) Rose,Inc. 
C) Freelance,Inc. 
D) Pioneer Corp. 
A) Juan Corp. 
B) Rose,Inc. 
C) Freelance,Inc. 
D) Pioneer Corp.

Question 3

Which of the following is an attribute of the internal control component-monitoring of controls?

Accepted Answer

A) Internal auditors monitor company controls to safeguard assets,and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B) Monitoring of controls is the "tone at the top" of the business. 
C) Monitoring of controls is designed to ensure that the business's goals are achieved. 
D) Monitoring of controls deals with identification and assessment of business risks. 
A) Internal auditors monitor company controls to safeguard assets,and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B) Monitoring of controls is the "tone at the top" of the business. 
C) Monitoring of controls is designed to ensure that the business's goals are achieved. 
D) Monitoring of controls deals with identification and assessment of business risks.

Question 4

Debit card transactions are considered electronic funds transfer.

Accepted Answer

A) True 
 B)False

Question 5

Rearranging plain-text messages by a mathematical process is known as ________.

Accepted Answer

A) password 
B) phishing 
C) encryption 
D) virus 
A) password 
B) phishing 
C) encryption 
D) virus

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

The payee is the issuer of a check.

Accepted Answer

A) True 
 B)False

Question 9

A company's Cash account shows an ending balance of $4,400.Reconciling items included a bookkeeper error of $100 (a $500 check recorded as $600),two outstanding checks totaling $810,a service charge of $25,a deposit in transit of $250,and interest revenue of $30.What is the adjusted book balance?

Accepted Answer

A) $4,295 
B) $3,840 
C) $4,505 
D) $4,960 
A) $4,295 
B) $3,840 
C) $4,505 
D) $4,960

Question 10

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 11

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 timing difference.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is correct?

Accepted Answer

A) A bank statement is a document from the bank that reports the activity in the customer's account. 
B) A bank statement must be mailed to customers each month. 
C) The bank statement 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) Physical copies of canceled checks must be included in the monthly bank statement. 
A) A bank statement is a document from the bank that reports the activity in the customer's account. 
B) A bank statement must be mailed to customers each month. 
C) The bank statement 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) Physical copies of canceled checks must be included in the monthly bank statement.

Question 16

The data of Franklin Brothers Corp.for two years are given below.
 
Based on the above information,which of the following statements is true?

Accepted Answer

A) Cash ratio has increased from 0.02 in 2016 to 0.03 in 2017. 
B) Cash ratio has increased from 0.05 in 2016 to 0.08 in 2017. 
C) Cash ratio has increased from 0.403 in 2016 to 0.241 in 2017. 
D) Cash ratio has increased from 0.241 in 2016 to 0.403 in 2017. 
A) Cash ratio has increased from 0.02 in 2016 to 0.03 in 2017. 
B) Cash ratio has increased from 0.05 in 2016 to 0.08 in 2017. 
C) Cash ratio has increased from 0.403 in 2016 to 0.241 in 2017. 
D) Cash ratio has increased from 0.241 in 2016 to 0.403 in 2017.

Question 17

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 18

The bookkeeper of Fire Steel,Inc.recorded a $1,596 check as $15,960 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

Accepted Answer

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

Question 19

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

Accepted Answer

A) a journal entry,a supplier invoice,and a description of the goods being purchased 
B) a receiving report,an invoice,and a purchase order 
C) a purchase order,a journal entry,and a price catalog 
D) a supplier invoice,a bill of lading,and the supplier's financial statements 
A) a journal entry,a supplier invoice,and a description of the goods being purchased 
B) a receiving report,an invoice,and a purchase order 
C) a purchase order,a journal entry,and a price catalog 
D) a supplier invoice,a bill of lading,and the supplier's financial statements

Question 20

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

Exam 8: Internal Control and Cash

The party who issues a check is the maker.

The cash ratios of four companies are listed below. Which company has the maximum ability to repay its current liabilities?

Which of the following is an attribute of the internal control component-monitoring of controls?

Debit card transactions are considered electronic funds transfer.

Rearranging plain-text messages by a mathematical process is known as ________.

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

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

The payee is the issuer of a check.

A company's Cash account shows an ending balance of $4,400.Reconciling items included a bookkeeper error of $100 (a $500 check recorded as $600),two outstanding checks totaling $810,a service charge of $25,a deposit in transit of $250,and interest revenue of $30.What is the adjusted book balance?

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

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 timing difference.

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

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

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Which of the following statements is correct?

The data of Franklin Brothers Corp.for two years are given below. Based on the above information,which of the following statements is true?

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

The bookkeeper of Fire Steel,Inc.recorded a $1,596 check as $15,960 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

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?

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

Filters