Deck 7: Internal Control and Cash

Question 1

The three elements that are almost always present when a fraud occurs are pressure, rationalization and concealment.

Answer 1

False

Question 2

It is efficient, less costly, to pay small bills each day with cash available from a petty cash fund.

Answer 2

True

Question 3

The following journal entry is necessary upon discovery of a "NSF" check during a bank reconciliation:

A) Accounts Receivable
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Cash
B) Not Sufficient Funds Expense
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Cash
C) Miscellaneous Expense
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Cash
D) No entry is necessary because the bank makes the entry.

Answer 3

Accounts Receivable
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Cash

Question 4

At May 31, Michaelis Company has outstanding checks totaling $19,600. The bank reconciliation for May should show these checks as a(n):

A) Deduction from balance per bank statement
B) Addition to balance per bank statement
C) Addition to balance per general ledger
D) Deduction from balance per general ledger

Question 5

Which of the following bank reconciliation items should not be added to or subtracted from the bank statement balance to determine the reconciled cash balance?

A) Outstanding checks
B) Deposits in the mail but not yet received by the bank
C) Bank service charges
D) None of the above

Question 6

Which of the following items would you add to the Flitter Company's bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:

A) Bank service charges
B) Outstanding and "NSF" checks
C) "NSF" checks Bank collection charges
D) None of the above

Question 7

Which of the following would you add to the balance per general ledger to arrive at the reconciled cash balance in a bank reconciliation?

A) Bank service charge
B) Collection of a note by bank
C) "NSF" checks
D) Deposits in transit

Question 8

Which of the following would you deduct from the bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:

A) Bank service charges
B) Deposits in transit
C) "NSF" checks
D) Outstanding checks

Question 9

In reconciling the January bank statement, the vice president discovered that the bookkeeper had recorded a check written for $681 as $816 in the cash disbursements journal. For the bank reconciliation, the $135 error should be:

A) Added to balance per bank statement
B) Added to balance per general ledger
C) Deducted from balance per bank statement
D) Deducted from balance per general ledger

Question 10

In reconciling the September bank statement, the vice president discovered that the bookkeeper had recorded a check written for $438 as $483 in the cash disbursements journal. For the bank reconciliation, the $45 error should be:

A) Added to balance per bank statement
B) Added to balance per general ledger
C) Deducted from balance per bank statement
D) Deducted from balance per general ledger

Question 11

Watkis Company received its February bank statement, which included a memo indicating that the check of Sarah Company for $652 had been returned as "NSF." Watkis' bank reconciliation should list this check as a(n):

A) Addition to balance per bank statement
B) Deduction from balance per bank statement
C) Addition to balance per general ledger
D) Deduction from balance per general ledger

Question 12

The following information pertains to Mateo Company:

Mateo should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

A) $20,310
B) $25,335
C) $22,260
D) $24,165

Question 13

The following information pertains to Julianna Company:

Julianna should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

A) $27,080
B) $33,780
C) $29,680
D) $32,220

Question 14

The following information pertains to the Juniper Company:

Juniper should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

A) $21,420
B) $21,930
C) $24,375
D) $19,995

Question 15

The following information pertains to the Simran Company:

Simran should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

A) $28,560
B) $29,240
C) $32,500
D) $26,660

Question 16

Cyprus, Inc.'s June bank statement shows a June 30 balance of $27,150. Prior to reconciliation, its books show a cash balance of $27,630. The information below pertains to Cyprus:


The reconciled cash balance at June 30 on the bank reconciliation should be:

A) $30,300
B) $28,560
C) $28,020
D) $27,810

Question 17

Athens, Inc.'s June bank statement shows a June 30 balance of $36,200. Prior to reconciliation, its books show a cash balance of $36,840. The information below pertains to Athens:

The reconciled cash balance at June 30 on the bank reconciliation should be:

A) $40,400
B) $38,080
C) $37,360
D) $37,080

Question 18

Marathon, Inc.'s April bank statement shows an April 30 balance of $15,360. Prior to reconciliation, its books show a cash balance of $16,530. The information below pertains to Marathon, Inc.

The reconciled cash balance at April 30 on the bank reconciliation should be:

A) $18,105
B) $14,010
C) $16,365
D) $16,710

Question 19

Keyser, Inc.'s April bank statement shows an April 30 balance of $20,480. Prior to reconciliation, its books show a cash balance of $22,040. The information below pertains to Keyser, Inc.


The reconciled cash balance at April 30 on the bank reconciliation should be:

A) $24,140
B) $18,680
C) $21,820
D) $22,280

Question 20

In preparing its bank reconciliation at March 31, Valley Company has the following information:

What is the proper cash balance at March 31 for balance sheet purposes?

A) $107,250
B) $110,250
C) $110,400
D) $111,150

Question 21

In preparing its bank reconciliation at March 31, Mountainview Company has the following information:

What is the proper cash balance at March 31 for balance sheet purposes?

A) $143,000
B) $147,000
C) $147,200
D) $148,200

Question 22

After completing a bank reconciliation, you are preparing journal entries to agree the New Horizons Company's Cash account balance with the reconciled balance shown on the reconciliation.
Which of the following requires a journal entry?

A) Deposits in transit at the end of the period
B) Outstanding checks at the end of the period
C) An error by the bank in recording one of the firm's deposits
D) An "NSF" check

Question 23

After completing a bank reconciliation, you are preparing journal entries to agree the Yankee Company's Cash account balance with the reconciled balance shown on the reconciliation.
Which of the following requires a journal entry?

A) Service charges for the period
B) Outstanding checks at the end of the period
C) Deposits in transit at the end of the period
D) An error by the bank in recording one of the firm's deposits

Question 24

The bank statement reported an ending balance of $43,860 after deducting $660 in service charges and an addition of $13,500 for a note collected by the bank on the Cherokee Company's behalf. The company books reported an ending balance of $29,070, and determined that deposits in transit equal $16,800 and outstanding checks equal $18,750.
What is the adjusted cash balance?

A) $41,910
B) $16,800
C) $35,910
D) $21,120

Question 25

The bank statement reported an ending balance of $58,480 after deducting $880 in service charges and an addition of $18,000 for a note collected by the bank on the Bandit Company's behalf. The company books reported an ending balance of $38,760, and determined that deposits in transit equal $22,400 and outstanding checks equal $25,000.
What is the adjusted cash balance?

A) $55,880
B) $22,400
C) $47,880
D) $28,160

Question 26

In comparing the canceled checks on the bank statement with the entries in the accounting records, O'Brien Company found that check number 4239 for May's rent was correctly written and drawn for $9,855 but was erroneously entered in the accounting records as $9,585.
When preparing the May bank reconciliation, the O'Brien Company should:

A) Deduct $270 from the book balance of cash
B) Add $270 to the bank statement balance
C) Deduct $270 from the bank statement balance
D) Add $270 to the book balance of cash

Question 27

In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for May's rent was correctly written and drawn for $6,750 but was erroneously entered in the accounting records as $6,570.
When preparing the May bank reconciliation, the Tammy Company should:

A) Deduct $180 from the book balance of cash
B) Add $180 to the bank statement balance
C) Deduct $180 from the bank statement balance
D) Add $180 to the book balance of cash

Question 28

During its year-end bank reconciliation, Farley Company finds that Check No. 951 was written for $124.05 on the books, but the check was written and cleared the bank for the correct amount, $142.05.
The correct treatment on the bank reconciliation would be:

A) On the bank side, deduct $18 from payments and add $18 to ending balance
B) On the book side, deduct $18 from receipts and add $18 to ending balance
C) On the book side, add $18 to payments and deduct $18 from ending balance
D) On the bank side, add $18 to receipts and add $18 to ending balance

Question 29

During its year-end bank reconciliation, Red River Company finds that Check No. 951 was written for $49.70 on the books, but the check was written and cleared the bank for the correct amount, $94.70.
The correct treatment on the bank reconciliation would be:

A) On the bank side, deduct $45 from payments and add $45 to ending balance
B) On the book side, deduct $45 from payments and add $45 to ending balance
C) On the book side, add $45 to payments and deduct $45 from ending balance
D) On the bank side, add $45 to receipts and add $45 to ending balance

Question 30

If the Four Corners Company's accountant mistakenly records a deposit of $383 as $838, the error would be shown on the bank reconciliation statement as a:

A) $455 deduction from the book balance
B) $455 addition to the bank balance
C) $455 addition to the book balance
D) $455 deduction from the bank balance

Question 31

In preparing its June 30, 2019 bank reconciliation, a company has available the following information:

As of June 30, the company's adjusted cash balance is:

A) $66,600
B) $61,500
C) $66,300
D) $86,400

Question 32

In preparing its June 30, 2019 bank reconciliation, a company has available the following information:

As of June 30, the company's adjusted cash balance is:

A) $ 88,800
B) $ 82,000
C) $ 88,400
D) $115,200

Question 33

Carl Nickolas Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following:

Determine the adjusted cash balance.

A) $22,494
B) $23,448
C) $22,386
D) $21,324

Question 34

Bash Bowling Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following:

Determine the adjusted cash balance.

A) $7,498
B) $7,816
C) $7,462
D) $7,108

Question 35

Windham Company developed the following reconciling information in preparing its September bank reconciliation:

Using the above information, determine the cash balance per books (before adjustments) for Windham Company.

A) $ 6,150
B) $24,000
C) $33,000
D) $17,550

Question 36

Heidi Company developed the following reconciling information in preparing its September bank reconciliation:

Using the above information, determine the cash balance per books (before adjustments) for Heidi Company.

A) $ 8,200
B) $32,000
C) $44,000
D) $23,400

Question 37

On September 30, the books of Goel Company indicates a balance in the Cash account of $11,034. Determine the adjusted balance on the basis of the following reconciling items:
(a)Deposits of cash sales of $972 had been erroneously recorded in the cash receipts journal as $927.
(b)Deposits in transit not recorded by bank, $1,500.
(c)Bank debit memorandum for service charges, $75.
(d)Bank credit memorandum for note collected by bank, $8,550, including $150 interest.
(e)Bank debit memorandum for $654 NSF (not-sufficient-funds) check from Varrat White, a customer.
(f)Checks outstanding, $6,600.

A) $18,792
B) $13,800
C) $18,900
D) $20,400

Question 38

On September 30, the books of Ravalli Company indicates a balance in the Cash account of $14,700. Determine the adjusted balance on the basis of the following reconciling items:
(a)Deposits of cash sales of $1,368 had been erroneously recorded in the cash receipts journal as $1,296.
(b)Deposits in transit not recorded by bank, $2,000.
(c)Bank debit memorandum for service charges, $100.
(d)Bank credit memorandum for note collected by bank, $11,400, including $200 interest.
(e)Bank debit memorandum for $872 NSF (not-sufficient-funds) check from Bill Smith, a customer.
(f)Checks outstanding, $8,800.

A) $25,056
B) $18,400
C) $25,200
D) $27,200

Question 39

The following information was used in reconciling the bank account for Meyer Company on October 31:

Calculate the Adjusted Book Balance on October 31.

A) $27,960
B) $25,080
C) $28,260
D) $27,060

Question 40

The following information was used in reconciling the bank account for Minerva Company on October 31:


Calculate the Adjusted Book Balance on October 31.

A) $37,280
B) $33,440
C) $37,680
D) $36,080

Question 41

Use the following information to prepare a bank reconciliation for Atticus Company at August 31, 2019:
(1) Cash account balance, August 31, $31,185.90.
(2) Bank statement balance, August 31, $37,141.50.
(3) Deposits in transit, $2,880.00.
(4) Outstanding checks, August 31, $9,570.60.
(5) Service charge on bank statement not recorded in books, $75.00.
(6) Bank error - another company's check charged on Atticus Company's bank statement, $750.00.
(7) Check for repairs expense, $2,010.00, incorrectly recorded in books as $2,100.00.

Question 42

Use the following information to prepare a bank reconciliation for McGoo Company at August 31, 2019:
(1) Cash account balance, $18,273.40.
(2) Bank statement balance, August 31, $16,315.00.
(3) Deposits in transit, $2,800.00.
(4) Outstanding checks, August 31, $1,850.80.
(5) Service charge on bank statement not recorded in books, $44.00.
(6) Bank error - another company's check charged on McGoo Company's bank statement, $245.20.
(7) Check for repairs expense, $1,680, incorrectly recorded in books as $960.00.

Question 43

Use the following information to prepare a bank reconciliation for Forester Company at April 30, 2019:
(1) Cash account balance, April 30, $29,359.20.
(2) Bank statement balance, April 30, $32,274.60.
(3) Service charge on bank statement not recorded in books, $210.00.
(4) Deposits in transit, $4,315.80.
(5) Outstanding checks, April 30, $2,840.40.
(6) The bank statement included a charge of $1,399.20 for P. Harper's NSF check. The check, returned with the bank statement, had been received by Forester in payment on account.
(7) The bank collected a $6,000.00 note in April for Forester. This amount was included in the bank statement, but Forester had not yet recorded the collection. The bank's $210.00 service charge for April [see (3) above] included collection charge for the note.