Question 1

Cash equivalents:

Accepted Answer

A)  Are readily convertible to a known cash amount. 
B)  Include short-term investments purchased within 3 months of their maturity dates. 
C)  Have a market value that is not sensitive to interest rate changes. 
D)  Include short-term U.S. treasury bills. 
E)  All of these. 
A)  Are readily convertible to a known cash amount. 
B)  Include short-term investments purchased within 3 months of their maturity dates. 
C)  Have a market value that is not sensitive to interest rate changes. 
D)  Include short-term U.S. treasury bills. 
E)  All of these. E

Question 2

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035. The proper entry to account for this excess includes a:

Accepted Answer

A)  Credit to Cash for $35. 
B)  Debit to Cash for $35. 
C)  Credit to Cash Over and Short for $35. 
D)  Debit to Cash Over and Short for $35. 
E)  Debit to Petty Cash for $35. 
A)  Credit to Cash for $35. 
B)  Debit to Cash for $35. 
C)  Credit to Cash Over and Short for $35. 
D)  Debit to Cash Over and Short for $35. 
E)  Debit to Petty Cash for $35. C

Question 3

The net method for recording purchases records the purchase invoice at its net amount of any cash discount.

Accepted Answer

A) True 
 B)False  True

Question 4

Managers place a high priority on internal control systems because the systems assist managers in the:

Accepted Answer

A)  Prevention of avoidable losses. 
B)  Planning of operations. 
C)  Monitoring of company performance. 
D)  Monitoring of employee performance. 
E)  Assurance that no loss will occur. 
A)  Prevention of avoidable losses. 
B)  Planning of operations. 
C)  Monitoring of company performance. 
D)  Monitoring of employee performance. 
E)  Assurance that no loss will occur.

Question 5

An invoice is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of sale.

Accepted Answer

A) True 
 B)False

Question 6

Cash equivalents:

Accepted Answer

A)  Are short-term, highly liquid investment assets. 
B)  Include 6-month CDs. 
C)  Include checking accounts. 
D)  Are recorded in petty cash. 
E)  Include money orders. 
A)  Are short-term, highly liquid investment assets. 
B)  Include 6-month CDs. 
C)  Include checking accounts. 
D)  Are recorded in petty cash. 
E)  Include money orders.

Question 7

On June 3, a company received and recorded a $4,500 invoice for merchandise on which the terms were 2/10, n/60. The company records invoices at net amounts. On June 23, the company discovered that the invoice had been incorrectly filed and the discount lost. Prepare the June 3 general journal entry to record the purchase, the June 23 entry to record the discount lost, and the August 2 entry to record payment of the invoice.

Accepted Answer

The answer of On June 3, a company received and...

Question 8

A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should:

Accepted Answer

A)  Deduct the deposit from the bank statement balance. 
B)  Send the bank a debit memorandum. 
C)  Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
D)  Add the deposit to the book balance of cash. 
E)  Add the deposit to the bank statement balance. 
A)  Deduct the deposit from the bank statement balance. 
B)  Send the bank a debit memorandum. 
C)  Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
D)  Add the deposit to the book balance of cash. 
E)  Add the deposit to the bank statement balance.

Question 9

During the month of September, Norris Industries issued a check in the amount of $845 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $854. The journal entry to correct this mistake when discovered will include:

Accepted Answer

A)  A debit to Accounts Payable for $854. 
B)  A credit to Cash for $854. 
C)  A credit to Cash for $9. 
D)  A credit to Accounts Payable for $9. 
E)  A debit to Cash for $49. 
A)  A debit to Accounts Payable for $854. 
B)  A credit to Cash for $854. 
C)  A credit to Cash for $9. 
D)  A credit to Accounts Payable for $9. 
E)  A debit to Cash for $49.

Question 10

The document that is an itemized statement of goods prepared by a vendor listing the customer's name, items sold, sales prices, and terms of the sale is the

Accepted Answer

A)  Purchase requisition. 
B)  Purchase order. 
C)  Invoice. 
D)  Receiving report. 
E)  Invoice approval. 
A)  Purchase requisition. 
B)  Purchase order. 
C)  Invoice. 
D)  Receiving report. 
E)  Invoice approval.

Question 11

Internal control in technologically advanced accounting systems depends more on the design and operation of the information system and less on the analysis of its resulting documents.

Accepted Answer

A) True 
 B)False

Question 12

Outstanding checks refer to checks that have been:

Accepted Answer

A)  Written, recorded, sent to payees, and received and paid by the bank. 
B)  Written and not yet recorded in the company books. 
C)  Held as blank checks. 
D)  Written, recorded on the company books, sent to the payee, but have not yet been paid by the bank. 
E)  Issued by the bank. 
A)  Written, recorded, sent to payees, and received and paid by the bank. 
B)  Written and not yet recorded in the company books. 
C)  Held as blank checks. 
D)  Written, recorded on the company books, sent to the payee, but have not yet been paid by the bank. 
E)  Issued by the bank.

Question 13

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

Accepted Answer

A) True 
 B)False

Question 14

Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

Accepted Answer

A) True 
 B)False

Question 15

In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information:   The adjusted cash balance per the books on September 30 is:

Accepted Answer

A)  $6,900 
B)  $8,160 
C)  $4,600 
D)  $6,520 
E)  $5,840 
A)  $6,900 
B)  $8,160 
C)  $4,600 
D)  $6,520 
E)  $5,840

Question 16

In reimbursing the petty cash fund:

Accepted Answer

A)  Cash is debited. 
B)  Petty Cash is credited. 
C)  Petty Cash is debited. 
D)  Appropriate expense accounts are debited. 
E)  No expenses are recorded. 
A)  Cash is debited. 
B)  Petty Cash is credited. 
C)  Petty Cash is debited. 
D)  Appropriate expense accounts are debited. 
E)  No expenses are recorded.

Question 17

The Discounts Lost account represents the savings earned in taking advantage of purchase discounts.

Accepted Answer

A) True 
 B)False

Question 18

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ___________________.

Accepted Answer

The answer of The internal document that is used to...

Question 19

A sales system with prenumbered, controlled sales slips is an example of the internal control principle of ______________________.

Accepted Answer

Maintain a

Question 20

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:

Accepted Answer

A)  Vendor. 
B)  Payee. 
C)  Vendee. 
D)  Creditor. 
E)  Debtor. 
A)  Vendor. 
B)  Payee. 
C)  Vendee. 
D)  Creditor. 
E)  Debtor.

Exam 8: Cash and Internal Controls

Cash equivalents:

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035. The proper entry to account for this excess includes a:

The net method for recording purchases records the purchase invoice at its net amount of any cash discount.

Managers place a high priority on internal control systems because the systems assist managers in the:

An invoice is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of sale.

Cash equivalents:

A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should:

During the month of September, Norris Industries issued a check in the amount of $845 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $854. The journal entry to correct this mistake when discovered will include:

The document that is an itemized statement of goods prepared by a vendor listing the customer's name, items sold, sales prices, and terms of the sale is the

Internal control in technologically advanced accounting systems depends more on the design and operation of the information system and less on the analysis of its resulting documents.

Outstanding checks refer to checks that have been:

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information: The adjusted cash balance per the books on September 30 is:

In reimbursing the petty cash fund:

The Discounts Lost account represents the savings earned in taking advantage of purchase discounts.

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ___________________.

A sales system with prenumbered, controlled sales slips is an example of the internal control principle of ______________________.

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters