Question 1

Identify the advantages for retailers of allowing credit cards to be used in making purchases by their customers.

Accepted Answer

The retailer normally receives payment faster than if he had to collect his own credit sales.The retailer transfers the risk of bad debts to the credit card company.The retailer does not have to provide the necessary administrative support required when deciding to grant credit.

Question 2

Bank service charges are treated as a reconciling item on the book side of a bank reconciliation.

Accepted Answer

A) True 
 B)False  True

Question 3

Prenumbered printed cheques are an example of which internal control principle?

Accepted Answer

A)  Technological controls. 
B)  Maintain adequate records. 
C)  Perform regular and independent reviews. 
D)  Technological controls and maintain adequate records. 
E)  All of these answers are correct. 
A)  Technological controls. 
B)  Maintain adequate records. 
C)  Perform regular and independent reviews. 
D)  Technological controls and maintain adequate records. 
E)  All of these answers are correct. B

Question 4

Liquidity problems exist for a company when its acid-test ratio:

Accepted Answer

A)  Is less than the industry average. 
B)  Is 1 to 1. 
C)  Is higher than 1 to 1. 
D)  Is lower than 1 to 1. 
E)  Is less than the industry average and is lower than 1 to 1. 
A)  Is less than the industry average. 
B)  Is 1 to 1. 
C)  Is higher than 1 to 1. 
D)  Is lower than 1 to 1. 
E)  Is less than the industry average and is lower than 1 to 1.

Question 5

The clerk who has access to the cash in the cash register should not have access to the register tape or file.

Accepted Answer

A) True 
 B)False

Question 6

It is not necessary for businesses to reconcile their chequing accounts since banks keep accurate records and provide internal control support for cash.

Accepted Answer

A) True 
 B)False

Question 7

Discuss how the principles of internal control apply to cash receipts.

Accepted Answer

Internal control principles as applied t

Question 8

A good system of internal control:

Accepted Answer

A)  Encourages adherence to prescribed managerial policies. 
B)  Promotes operational efficiencies. 
C)  Eliminates the need for an audit. 
D)  Both encourages adherence to prescribed managerial policies and promotes operational efficiencies. 
E)  All of these answers are correct. 
A)  Encourages adherence to prescribed managerial policies. 
B)  Promotes operational efficiencies. 
C)  Eliminates the need for an audit. 
D)  Both encourages adherence to prescribed managerial policies and promotes operational efficiencies. 
E)  All of these answers are correct.

Question 9

The Cash Over and Short account:

Accepted Answer

A)  Is used to record a credit balance in the cash account. 
B)  Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and missing petty cash receipts. 
C)  Is not necessary in a computerized accounting system. 
D)  Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and missing petty cash receipts and is not necessary in a computerized accounting system. 
E)  None of these answers is correct. 
A)  Is used to record a credit balance in the cash account. 
B)  Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and missing petty cash receipts. 
C)  Is not necessary in a computerized accounting system. 
D)  Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and missing petty cash receipts and is not necessary in a computerized accounting system. 
E)  None of these answers is correct.

Question 10

Banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions.

Accepted Answer

A) True 
 B)False

Question 11

The bank statement and relevant portions of Baldwin Company's cash records for the month ended June 30,2015 are given below.   Prepare the bank reconciliation at June 30,2015.

Accepted Answer

The answer of The bank statement and relevant portions of...

Question 12

In reconciling the bank balance,an unrecorded debit memorandum for printing cheques should be:

Accepted Answer

A)  Noted as a memo. 
B)  Added to the book balance of cash. 
C)  Deducted from the book balance of cash. 
D)  Added to the bank balance of cash. 
E)  Deducted from the bank balance of cash. 
A)  Noted as a memo. 
B)  Added to the book balance of cash. 
C)  Deducted from the book balance of cash. 
D)  Added to the bank balance of cash. 
E)  Deducted from the bank balance of cash.

Question 13

Principles of internal control include:

Accepted Answer

A)  Establish responsibilities. 
B)  Maintain adequate records. 
C)  Insure assets. 
D)  Bond key employees. 
E)  All of these answers are correct. 
A)  Establish responsibilities. 
B)  Maintain adequate records. 
C)  Insure assets. 
D)  Bond key employees. 
E)  All of these answers are correct.

Question 14

The petty cash fund should be reimbursed at the end of the period even if the fund is not low on money.

Accepted Answer

A) True 
 B)False

Question 15

Principles of internal control include:

Accepted Answer

A)  Record purchases using the gross method. 
B)  Divide responsibilities for related transactions. 
C)  Perform regular and independent reviews. 
D)  Divide responsibilities for related transactions and perform regular and independent reviews. 
E)  All of these answers are correct. 
A)  Record purchases using the gross method. 
B)  Divide responsibilities for related transactions. 
C)  Perform regular and independent reviews. 
D)  Divide responsibilities for related transactions and perform regular and independent reviews. 
E)  All of these answers are correct.

Question 16

The common rule of thumb is that a company's acid-test ratio should be at least 1.5 to 1.

Accepted Answer

A) True 
 B)False

Question 17

Internal control procedures for cash receipts require:

Accepted Answer

A)  Separation of custody of cash receipts from their recordkeeping. 
B)  In-store cash sales be recorded on a cash register at the time of each sale. 
C)  All cheques to be numbered in sequence. 
D)  Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale. 
E)  All of these answers are correct. 
A)  Separation of custody of cash receipts from their recordkeeping. 
B)  In-store cash sales be recorded on a cash register at the time of each sale. 
C)  All cheques to be numbered in sequence. 
D)  Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale. 
E)  All of these answers are correct.

Question 18

What is the purpose of the petty cash account?

Accepted Answer

The petty cash account is used

Question 19

Preventing unauthorized access to company resources is one of the most difficult and time-consuming tasks for internal control experts.

Accepted Answer

A) True 
 B)False

Question 20

Cash equivalents:

Accepted Answer

A)  Include savings accounts. 
B)  Include chequing accounts. 
C)  Are short-term investments that a company invests their cash in to increase their earnings. 
D)  Include savings and chequing accounts. 
E)  All of these answers are correct. 
A)  Include savings accounts. 
B)  Include chequing accounts. 
C)  Are short-term investments that a company invests their cash in to increase their earnings. 
D)  Include savings and chequing accounts. 
E)  All of these answers are correct.

Identify the advantages for retailers of allowing credit cards to be used in making purchases by their customers.

Bank service charges are treated as a reconciling item on the book side of a bank reconciliation.

Prenumbered printed cheques are an example of which internal control principle?

Liquidity problems exist for a company when its acid-test ratio:

The clerk who has access to the cash in the cash register should not have access to the register tape or file.

It is not necessary for businesses to reconcile their chequing accounts since banks keep accurate records and provide internal control support for cash.

Discuss how the principles of internal control apply to cash receipts.

A good system of internal control:

The Cash Over and Short account:

Banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions.

The bank statement and relevant portions of Baldwin Company's cash records for the month ended June 30,2015 are given below. Prepare the bank reconciliation at June 30,2015.

In reconciling the bank balance,an unrecorded debit memorandum for printing cheques should be:

Principles of internal control include:

The petty cash fund should be reimbursed at the end of the period even if the fund is not low on money.

Principles of internal control include:

The common rule of thumb is that a company's acid-test ratio should be at least 1.5 to 1.

Internal control procedures for cash receipts require:

What is the purpose of the petty cash account?

Preventing unauthorized access to company resources is one of the most difficult and time-consuming tasks for internal control experts.

Cash equivalents:

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Receivables

Filters

Exam 8: Internal Control and Cash

Identify the advantages for retailers of allowing credit cards to be used in making purchases by their customers.

Bank service charges are treated as a reconciling item on the book side of a bank reconciliation.

Prenumbered printed cheques are an example of which internal control principle?

Liquidity problems exist for a company when its acid-test ratio:

The clerk who has access to the cash in the cash register should not have access to the register tape or file.

It is not necessary for businesses to reconcile their chequing accounts since banks keep accurate records and provide internal control support for cash.

Discuss how the principles of internal control apply to cash receipts.

A good system of internal control:

The Cash Over and Short account:

Banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions.

The bank statement and relevant portions of Baldwin Company's cash records for the month ended June 30,2015 are given below. Prepare the bank reconciliation at June 30,2015.

In reconciling the bank balance,an unrecorded debit memorandum for printing cheques should be:

Principles of internal control include:

The petty cash fund should be reimbursed at the end of the period even if the fund is not low on money.

Principles of internal control include:

The common rule of thumb is that a company's acid-test ratio should be at least 1.5 to 1.

Internal control procedures for cash receipts require:

What is the purpose of the petty cash account?

Preventing unauthorized access to company resources is one of the most difficult and time-consuming tasks for internal control experts.

Cash equivalents:

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Receivables

Filters