Question 1

Which of the following is an attribute of the internal control procedure-assignment of responsibilities?

Accepted Answer

A) To validate their accounting records,a company should have an audit by an external accountant. 
B) The company should separate the custody of assets from accounting. 
C) The external auditors will monitor internal controls. 
D) Each position has clearly assigned responsibilities. 
A) To validate their accounting records,a company should have an audit by an external accountant. 
B) The company should separate the custody of assets from accounting. 
C) The external auditors will monitor internal controls. 
D) Each position has clearly assigned responsibilities.

Question 2

When replenishing the petty cash fund,the company debits either the associated expense incurred or the asset purchased with the fund.

Accepted Answer

A) True 
 B)False

Question 3

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

Accepted Answer

A) The total sale amount is deposited on the date of the actual sale. 
B) The processing fees for all transactions processed for the month are deducted from the company's bank account,often on the last day of the month. 
C) On the date of sale,the Sales Revenue account is credited for the amount of sale less the processing fee. 
D) The journal entry on the date of sale is identical to a journal entry made for a sale on account. 
A) The total sale amount is deposited on the date of the actual sale. 
B) The processing fees for all transactions processed for the month are deducted from the company's bank account,often on the last day of the month. 
C) On the date of sale,the Sales Revenue account is credited for the amount of sale less the processing fee. 
D) The journal entry on the date of sale is identical to a journal entry made for a sale on account.

Question 4

All cash receipts should be deposited in the bank at the end of each week.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 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 equals the designated fund balance. 
B) A shortage of $2 exists. 
C) To replenish the petty cash fund,the company must write a check,payable to Petty Cash,for $127. 
D) The petty cash fund custodian must locate the $2 discrepancy. 
A) The total of the cash on hand plus petty cash tickets equals the designated fund balance. 
B) A shortage of $2 exists. 
C) To replenish the petty cash fund,the company must write a check,payable to Petty Cash,for $127. 
D) The petty cash fund custodian must locate the $2 discrepancy.

Question 8

Which one of the following items requires an adjustment on the bank side of the bank reconciliation?

Accepted Answer

A) interest earned 
B) a bank service charge 
C) a note collected by the bank 
D) deposits in transit 
A) interest earned 
B) a bank service charge 
C) a note collected by the bank 
D) deposits in transit

Question 9

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 10

A system cannot be overcome or broken into if its internal controls are properly designed and structured.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Goldman Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.The clerk has not yet been adequately trained on the maintenance needs of the equipment.Which internal control procedure needs strengthening?

Accepted Answer

A) assignment of responsibilities 
B) competent,reliable,and ethical personnel 
C) separation of duties 
D) documents 
A) assignment of responsibilities 
B) competent,reliable,and ethical personnel 
C) separation of duties 
D) documents

Question 13

Internal controls must always be judged in light of their costs versus their benefits.

Accepted Answer

A) True 
 B)False

Question 14

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Concerning how companies control cash received by mail,state which employee should perform the following duties:

Accepted Answer

The answer of Concerning how companies control cash received by...

Question 17

The Metro Construction Company had the following financial data as of December 31,2018:
     a.What is the cash ratio as of December 31,2018? Show the formula and your computations.
b.Comment on the cash ratio for Metro Construction Company.

Accepted Answer

a.Cash ratio = (Cash + Cash equivalents)

Question 18

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

Accepted Answer

A) True 
 B)False

Question 19

A check was written by a business for $507 but was recorded in the journal as $705.How would this error be included on the bank reconciliation?

Accepted Answer

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

Question 20

Public companies ________.

Accepted Answer

A) must issue an internal control report which states that the outside auditor is responsible for the adequacy of internal controls 
B) are audited by accounting firms that do not also provide certain consulting services to the public company 
C) are required by the Financial Accounting Standards Board to maintain a system of internal controls 
D) are overseen by the Public Company Accounting Oversight Board 
A) must issue an internal control report which states that the outside auditor is responsible for the adequacy of internal controls 
B) are audited by accounting firms that do not also provide certain consulting services to the public company 
C) are required by the Financial Accounting Standards Board to maintain a system of internal controls 
D) are overseen by the Public Company Accounting Oversight Board

Which of the following is an attribute of the internal control procedure-assignment of responsibilities?

When replenishing the petty cash fund,the company debits either the associated expense incurred or the asset purchased with the fund.

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

All cash receipts should be deposited in the bank at the end of each week.

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 ________.

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

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 in petty cash tickets.Based on this information,which of the following statements is correct?

Which one of the following items requires an adjustment on the bank side of the bank reconciliation?

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

A system cannot be overcome or broken into if its internal controls are properly designed and structured.

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

Goldman Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.The clerk has not yet been adequately trained on the maintenance needs of the equipment.Which internal control procedure needs strengthening?

Internal controls must always be judged in light of their costs versus their benefits.

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account.

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?

Concerning how companies control cash received by mail,state which employee should perform the following duties:

The Metro Construction Company had the following financial data as of December 31,2018: a.What is the cash ratio as of December 31,2018? Show the formula and your computations. b.Comment on the cash ratio for Metro Construction Company.

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

A check was written by a business for $507 but was recorded in the journal as $705.How would this error be included on the bank reconciliation?

Public companies ________.

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

Filters

Exam 8: Internal Control and Cash

Which of the following is an attribute of the internal control procedure-assignment of responsibilities?

When replenishing the petty cash fund,the company debits either the associated expense incurred or the asset purchased with the fund.

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

All cash receipts should be deposited in the bank at the end of each week.

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 ________.

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

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 in petty cash tickets.Based on this information,which of the following statements is correct?

Which one of the following items requires an adjustment on the bank side of the bank reconciliation?

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

A system cannot be overcome or broken into if its internal controls are properly designed and structured.

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

Goldman Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.The clerk has not yet been adequately trained on the maintenance needs of the equipment.Which internal control procedure needs strengthening?

Internal controls must always be judged in light of their costs versus their benefits.

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account.

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?

Concerning how companies control cash received by mail,state which employee should perform the following duties:

The Metro Construction Company had the following financial data as of December 31,2018: a.What is the cash ratio as of December 31,2018? Show the formula and your computations. b.Comment on the cash ratio for Metro Construction Company.

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

A check was written by a business for $507 but was recorded in the journal as $705.How would this error be included on the bank reconciliation?

Public companies ________.

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

Filters