Question 1

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300.This item would be included on the bank reconciliation as a (n)

Accepted Answer

A) deduction from the balance per company's records 
B) addition to the balance per bank statement 
C) deduction from the balance per bank statement 
D) addition to the balance per company's records 
A) deduction from the balance per company's records 
B) addition to the balance per bank statement 
C) deduction from the balance per bank statement 
D) addition to the balance per company's records

Question 2

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

Accepted Answer

A) True 
 B)False

Question 3

You began your new job as the accountant at Bolivar Industries during the month of December.During your first month,you found several interesting issues.1)While looking through the invoices,you found Invoices 213-242,245-271,and 275-290.It appears that invoices243,244,272,273,and 274 are missing.2)During the month,Clerk # 3 issued $250 in refunds as compared to Clerks #1,#2,and #4 who issued less than$50 each.3)The daily cash receipts and bank deposits reconcile,except on Tuesdays during the month.4)Business is generally brisk during the holiday season,but two weeks before Christmas there was a suddenincrease in slow payments.Required
(a)What kind of warning signs could be associated with these issues?
(b)What control could you put in place regarding cash refunds mentioned in 
(a)
(2)?

Accepted Answer

(a)1) Missing invoices or gaps in transa

Question 4

Using the following information,prepare a bank reconciliation for Miller Co.for August 31:

Accepted Answer

The answer of Using the following information,prepare a bank reconciliation...

Question 5

Two features of internal control are presented in the following sections.Each is followed by a list of four irregularities that occurred in processing data.Identify the one irregularity from each list that would be discovered or prevented by the feature of internal control described.

Accepted Answer

The answer of Two features of internal control are presented...

Question 6

Which of the following is not an element of internal control?

Accepted Answer

A) risk assessment 
B) monitoring 
C) information and communication 
D) cost-benefit considerations 
A) risk assessment 
B) monitoring 
C) information and communication 
D) cost-benefit considerations

Question 7

Internal control does not consist of policies and procedures that

Accepted Answer

A) protect assets from misuse 
B) ensure employees and managers comply with laws and regulations 
C) guarantee the company will earn a profit 
D) ensure that business information is accurate 
A) protect assets from misuse 
B) ensure employees and managers comply with laws and regulations 
C) guarantee the company will earn a profit 
D) ensure that business information is accurate

Question 8

A backlog in recording transactions is an example of a warning sign from the accounting system.

Accepted Answer

A) True 
 B)False

Question 9

Why would a bank require a company to maintain a compensating balance?

Accepted Answer

Usually a compensati

Question 10

For each of the following,explain whether the issue would require you to prepare a journal entry for your company,assuming any original entry is correct.If an entry is required,please include it as part of your answer.
(1) The bank recorded your deposit as $91 rather than the actual amount of $191.
(2) Two outstanding checks amounted to $450.
(3) Company Check No.538 for postage was recorded incorrectly by the company bookkeeper as $50 instead of $59.
(4)The bank paid a check for $500 after the company had issued a stop payment and voided the check.
(5)An EFT deposit was made by one of the company's customers,Atlas Design,for merchandise received.Thesale had previously been recorded when shipped and was equal to the payment amount of $125.

Accepted Answer

(1)If you recorded the deposit correctly

Question 11

Groceries R Us,Inc.reported the following data in its annual report.​Cash and cash equivalents $2,280,000Cash flow from operations 
(240,000)​Required
(a)What is the company's "cash burn" per month?
(b)What is the company's ratio of cash to monthly cash expenses?
(c)Interpret the ratio you computed in part
b. What are the implications for Groceries R Us, Inc.?

Accepted Answer

(1)$240,000/12 = $20,000 per month​
(2)$

Question 12

The bank reconciliation

Accepted Answer

A) should be prepared by an employee who records cash transactions 
B) is part of the internal control system 
C) is for information purposes only 
D) is sent to the bank for verification 
A) should be prepared by an employee who records cash transactions 
B) is part of the internal control system 
C) is for information purposes only 
D) is sent to the bank for verification

Question 13

The bank reconciliation is an important part of the system of internal controls.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following reflects a weak internal control system?

Accepted Answer

A) All employees are well supervised. 
B) A single employee is responsible for comparing a receiving report to an invoice. 
C) All employees must take their vacations. 
D) A single employee is responsible for collecting and recording cash. 
A) All employees are well supervised. 
B) A single employee is responsible for comparing a receiving report to an invoice. 
C) All employees must take their vacations. 
D) A single employee is responsible for collecting and recording cash.

Question 15

The amount of the outstanding checks is included on the bank reconciliation as a (n)

Accepted Answer

A) deduction from the balance per company's records 
B) addition to the balance per bank statement 
C) deduction from the balance per bank statement 
D) addition to the balance per company's records 
A) deduction from the balance per company's records 
B) addition to the balance per bank statement 
C) deduction from the balance per bank statement 
D) addition to the balance per company's records

Question 16

A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.

Accepted Answer

A) True 
 B)False

Question 17

When the petty cash fund is replenished,the petty cash account is credited for the total of all expenditures made since the fund was last replenished.

Accepted Answer

A) True 
 B)False

Question 18

Consider the following information from the cash account.Assume cash payments were 84% of collections.How much was the beginning balance of the cash account?

Accepted Answer

$245,000 × 84% = $20

Question 19

During a bank reconciliation process,

Accepted Answer

A) outstanding checks and deposits in transit are added to the bank statement balance 
B) outstanding checks are subtracted and deposits in transit are added to the bank statement balance 
C) outstanding checks and deposits in transit are subtracted from the bank statement balance 
D) outstanding checks are added and deposits in transit are subtracted from the bank statement balance 
A) outstanding checks and deposits in transit are added to the bank statement balance 
B) outstanding checks are subtracted and deposits in transit are added to the bank statement balance 
C) outstanding checks and deposits in transit are subtracted from the bank statement balance 
D) outstanding checks are added and deposits in transit are subtracted from the bank statement balance

Question 20

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation.
-A $1,000 note from one of your customers was collected by the bank

Accepted Answer

A) Added to the company's books 
B) Subtracted from the company's books 
C) Added to the bank statement balance 
D) Subtracted from the bank statement balance 
A) Added to the company's books 
B) Subtracted from the company's books 
C) Added to the bank statement balance 
D) Subtracted from the bank statement balance

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300.This item would be included on the bank reconciliation as a (n)

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

Using the following information,prepare a bank reconciliation for Miller Co.for August 31:

Two features of internal control are presented in the following sections.Each is followed by a list of four irregularities that occurred in processing data.Identify the one irregularity from each list that would be discovered or prevented by the feature of internal control described.

Which of the following is not an element of internal control?

Internal control does not consist of policies and procedures that

A backlog in recording transactions is an example of a warning sign from the accounting system.

Why would a bank require a company to maintain a compensating balance?

The bank reconciliation

The bank reconciliation is an important part of the system of internal controls.

Which of the following reflects a weak internal control system?

The amount of the outstanding checks is included on the bank reconciliation as a (n)

A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.

When the petty cash fund is replenished,the petty cash account is credited for the total of all expenditures made since the fund was last replenished.

Consider the following information from the cash account.Assume cash payments were 84% of collections.How much was the beginning balance of the cash account?

During a bank reconciliation process,

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -A $1,000 note from one of your customers was collected by the bank

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 8: Internal Control and Cash

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300.This item would be included on the bank reconciliation as a (n)

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

Using the following information,prepare a bank reconciliation for Miller Co.for August 31:

Two features of internal control are presented in the following sections.Each is followed by a list of four irregularities that occurred in processing data.Identify the one irregularity from each list that would be discovered or prevented by the feature of internal control described.

Which of the following is not an element of internal control?

Internal control does not consist of policies and procedures that

A backlog in recording transactions is an example of a warning sign from the accounting system.

Why would a bank require a company to maintain a compensating balance?

The bank reconciliation

The bank reconciliation is an important part of the system of internal controls.

Which of the following reflects a weak internal control system?

The amount of the outstanding checks is included on the bank reconciliation as a (n)

A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.

When the petty cash fund is replenished,the petty cash account is credited for the total of all expenditures made since the fund was last replenished.

Consider the following information from the cash account.Assume cash payments were 84% of collections.How much was the beginning balance of the cash account?

During a bank reconciliation process,

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -A $1,000 note from one of your customers was collected by the bank

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters