Question 1

The bank made an EFT payment of a telephone bill of $5,000.How would this information be included on the bank reconciliation?

Accepted Answer

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

Question 2

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Accepted Answer

The bank reconciliation is an accountant

Question 3

Which of the following is included in the internal control procedure-documents?

Accepted Answer

A) Mandatory vacations will improve internal control. 
B) Separate the custody of assets from accounting. 
C) The invoices and orders must be pre-numbered. 
D) A company should purchase a fireproof vault to protect legal documents. 
A) Mandatory vacations will improve internal control. 
B) Separate the custody of assets from accounting. 
C) The invoices and orders must be pre-numbered. 
D) A company should purchase a fireproof vault to protect legal documents.

Question 4

Which of the following items are reconciling items on the bank side of the reconciliation?

Accepted Answer

A) outstanding checks and correction of book error 
B) deposit in transit and NSF check 
C) deposit in transit and outstanding checks 
D) bank service charge and correction of book error 
A) outstanding checks and correction of book error 
B) deposit in transit and NSF check 
C) deposit in transit and outstanding checks 
D) bank service charge and correction of book error

Question 5

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Accepted Answer

A) True 
 B)False

Question 6

A company received a bank statement showing a balance of $78,000.Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400.What is the company's adjusted bank balance?

Accepted Answer

A) $66,200 
B) $71,000 
C) $85,000 
D) $68,600 
A) $66,200 
B) $71,000 
C) $85,000 
D) $68,600

Question 7

A ________ is a document explaining the reasons for the difference between a depositor's Cash account in the ledger and the depositor's cash balance in its bank account.

Accepted Answer

A) bank statement 
B) deposit receipt 
C) bank reconciliation 
D) remittance advice 
A) bank statement 
B) deposit receipt 
C) bank reconciliation 
D) remittance advice

Question 8

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 9

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer.
The bookkeeper opens the mail,makes the deposit,and makes the journal entries to record receipt of the cash and checks.

Accepted Answer

Weakness
Separation of duties

Question 10

The following information is needed to reconcile the cash balance for Johnson Catering Services.
 
What was the adjusted book balance?

Accepted Answer

A) $18,100 
B) $18,020 
C) $18,180 
D) $17,800 
A) $18,100 
B) $18,020 
C) $18,180 
D) $17,800

Question 11

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

Accepted Answer

A) Real Time Gross Settlement 
B) Electronic Data Interchange 
C) Electronic Fund Transfer 
D) Evaluated Receipts Settlement 
A) Real Time Gross Settlement 
B) Electronic Data Interchange 
C) Electronic Fund Transfer 
D) Evaluated Receipts Settlement

Question 12

A petty cash fund was established with a $600 balance.It currently has cash of $150 and petty cash tickets as shown below:
 
Which of the following would be the journal entry to replenish the Petty Cash account?

Accepted Answer

A) debit various expenses $450;credit Cash $450 
B) debit various expenses $450;credit Petty Cash $450 
C) debit Cash $150;credit various expenses $150 
D) credit Petty Cash $450;debit Cash $450 
A) debit various expenses $450;credit Cash $450 
B) debit various expenses $450;credit Petty Cash $450 
C) debit Cash $150;credit various expenses $150 
D) credit Petty Cash $450;debit Cash $450

Question 13

Cash and cash equivalents are divided by ________ to determine the cash ratio.

Accepted Answer

A) total current liabilities 
B) fixed assets 
C) equity 
D) total long-term liabilities 
A) total current liabilities 
B) fixed assets 
C) equity 
D) total long-term liabilities

Question 14

Which of the following items must be examined by the controller or treasurer before signing a check?

Accepted Answer

A) the ledger 
B) the purchase order 
C) the confirmation report 
D) the journal entry 
A) the ledger 
B) the purchase order 
C) the confirmation report 
D) the journal entry

Question 15

Jupiter Service Company decides to increase the amount of the petty cash fund from $200 to $700.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $500.

Accepted Answer

A) True 
 B)False

Question 16

When a check is issued,the party who is paying the cash is referred to as the ________.

Accepted Answer

A) payee 
B) maker 
C) bank signatory 
D) depositor 
A) payee 
B) maker 
C) bank signatory 
D) depositor

Question 17

A petty cash fund was established with a $600 balance.It currently has cash of $45 and petty cash tickets as shown below:
 
Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Accepted Answer

A) debit to Cash Short & Over for $85 
B) credit to Cash Short & Over for $85 
C) debit to Petty Cash for $85 
D) credit to Petty Cash for $85 
A) debit to Cash Short & Over for $85 
B) credit to Cash Short & Over for $85 
C) debit to Petty Cash for $85 
D) credit to Petty Cash for $85

Question 18

Which of the following is a benefit provided by internal control?

Accepted Answer

A) It ensures timely collection of accounts receivables. 
B) It ensures that collusion will never happen. 
C) It guarantees that a business makes profit. 
D) It promotes operational efficiency. 
A) It ensures timely collection of accounts receivables. 
B) It ensures that collusion will never happen. 
C) It guarantees that a business makes profit. 
D) It promotes operational efficiency.

Question 19

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Accepted Answer

A) True 
 B)False

Question 20

Morris Company established a petty cash fund with a $600 balance.Which of the following statements is incorrect?

Accepted Answer

A) A journal entry is needed to debit the Cash account and credit the Petty Cash account for $600. 
B) There is no net effect on current assets. 
C) The sum of the cash plus the total of the petty cash tickets should equal $600 at all times. 
D) The petty cash custodian cashes a check for $600 and places the currency in the petty cash fund box. 
A) A journal entry is needed to debit the Cash account and credit the Petty Cash account for $600. 
B) There is no net effect on current assets. 
C) The sum of the cash plus the total of the petty cash tickets should equal $600 at all times. 
D) The petty cash custodian cashes a check for $600 and places the currency in the petty cash fund box.

Exam 8: Internal Control and Cash

The bank made an EFT payment of a telephone bill of $5,000.How would this information be included on the bank reconciliation?

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Which of the following is included in the internal control procedure-documents?

Which of the following items are reconciling items on the bank side of the reconciliation?

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

A company received a bank statement showing a balance of $78,000.Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400.What is the company's adjusted bank balance?

A ________ is a document explaining the reasons for the difference between a depositor's Cash account in the ledger and the depositor's cash balance in its bank account.

Which of the following is an objective of internal control?

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer. The bookkeeper opens the mail,makes the deposit,and makes the journal entries to record receipt of the cash and checks.

The following information is needed to reconcile the cash balance for Johnson Catering Services. What was the adjusted book balance?

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

A petty cash fund was established with a $600 balance.It currently has cash of $150 and petty cash tickets as shown below: Which of the following would be the journal entry to replenish the Petty Cash account?

Cash and cash equivalents are divided by ________ to determine the cash ratio.

Which of the following items must be examined by the controller or treasurer before signing a check?

Jupiter Service Company decides to increase the amount of the petty cash fund from $200 to $700.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $500.

When a check is issued,the party who is paying the cash is referred to as the ________.

A petty cash fund was established with a $600 balance.It currently has cash of $45 and petty cash tickets as shown below: Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Which of the following is a benefit provided by internal control?

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Morris Company established a petty cash fund with a $600 balance.Which of the following statements is incorrect?

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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