Question 1

Match the following terms with their correct definition.
-the fees charged by the bank for chequing accounting services

Accepted Answer

A)  bank reconciliation
B)  deposit in transit
C)  nonsufficient funds cheque
D)  outstanding cheque
E)  service charges E

Question 2

The foundation of the internal control system is the control _____________ - the collection of environmental factors that influence the effectiveness of control procedures.

Accepted Answer

environment

Question 3

The accountant must make journal entries for all items in the bank section of the bank reconciliation.

Accepted Answer

A) True 
 B)False  False

Question 4

Match the following terms with their correct definitions.
-action that reduces the likelihood that records could be used to conceal intentional misstatements,theft,or fraud

Accepted Answer

A)  accounting system
B)  business process risks
C)  control activities
D)  control environment
E)  internal control systemF) safeguardingG) segregation of dutiesH) strategic risks

Question 5

Who are responsible for monitoring activities within the internal control system?

Accepted Answer

A)   external auditors and managers
B)   internal auditors and board of directors
C)   the board of directors and managers
D)   chair of the board and managers

Question 6

A cost-cutting measure used in many business organizations is the use of a(n)____________________ fund,whereby a custodian handles disbursements and documentation for small expenditures.

Accepted Answer

The answer of A cost-cutting measure used in many business...

Question 7

Dow Electronics established a petty cash fund to pay for small,incidental expenditures incurred at the office.The fund is handled by a trustworthy custodian.At the end of the month,the fund is replenished.On September 30,the petty cash fund contained $13 in cash and the following receipts:
 $$\begin{array} { l r } 
\text { Office supplies } & \$ 87 \
\text { Delivery fees } & 35 \
\text { Repairs } & 67 \
\text { Postage } & 48
\end{array}$$ 
Record journal entries to: a)establish the petty cash fund; b)replenish the fund and recognize expenses at the end of September; and c)increase the fund balance to $300.

Accepted Answer

The answer of Dow Electronics established a petty cash fund...

Question 8

Which of the following items would be added to the company's cash balance on a bank reconciliation?

Accepted Answer

A)   outstanding cheques
B)   deposits in transit
C)   bank service charges
D)   interest earned on the bank account

Question 9

On a bank reconciliation,bank service charges for the month are added to the cash balance per the company records.

Accepted Answer

A) True 
 B)False

Question 10

Designs on You
The following information relates to the company's May bank reconciliation:
 $\begin{array}{llr}
  \text {  Bank statement balance} &\$5,000\
 \text { Unadjusted cash balance according to company records } &?\
 \text { Deposit in transit } &1,000\
 \text {  Outstanding cheques} &500\
 \text { Bank service charges } &50\
 \text { Interest earned on the bank account } &10\
 \text { Customer's NSF cheque returned by the bank } &25\
\end{array}$
 In addition, a cheque was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000.
-Refer to the figure Designs on You.What is the company's adjusted cash balance at May 31?

Accepted Answer

A)   $4,865
B)   $5,000
C)   $5,365
D)   $5,500

Question 11

Collections of accounts receivable are considered to be cash equivalents.

Accepted Answer

A) True 
 B)False

Question 12

The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.)
-An employee from the accounting department compares the cash register tapes with the bank deposits.

Accepted Answer

A)  adheres to sound internal controls
B)  violates sound internal controls
C)  neither strengthens nor violates internal control

Question 13

The establishment of a petty cash fund has no effect on the company's total cash balance.

Accepted Answer

A) True 
 B)False

Question 14

MATCHING
The accountant for a local manufacturing company is reconciling the company's bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.)
-cheque written on the company's account in May that does not appear on the bank statement

Accepted Answer

A)  addition to bank balance
B)  subtraction from bank balance
C)  addition to company balance
D)  subtraction from company balance
E)  not included on the reconciliation

Question 15

The practices of delaying payments to suppliers,speeding up collection from customers,and earning the greatest possible return on any excess cash are known as ____________________ principles.

Accepted Answer

The answer of The practices of delaying payments to suppliers,speeding...

Question 16

A(n)____________________ is the process used by an accountant to ensure consistency between the balance shown on the bank statement for a particular account and the balance shown on the accounting records.

Accepted Answer

The answer of A(n)____________________ is the process used by an...

Question 17

Which of the following is characteristic of a credit memo and its relationship to a company's bank reconciliation procedures?

Accepted Answer

A)   It must be recorded as a credit to the balance per the customer's records.
B)   It is issued to notify a company of bank service charges that need to be recorded on the company's records.
C)   It is issued when a customer gives the company an NSF cheque that needs to be recorded on the company's records.
D)   It must be recorded as a debit to the balance per the company's records.

Question 18

What is the name of the account that records differences between amounts of cash deposited and amounts from the cash register tapes?

Accepted Answer

A)   petty cash
B)   cash over and short
C)   cash equivalents
D)   discrepancy expense

Question 19

A credit memo appears on the September bank statement.How should this amount be treated on the September bank reconciliation?

Accepted Answer

A)   It should be added to the company's balance.
B)   It should be added to the bank balance.
C)   It should be deducted from the company's balance.
D)   It should be deducted from the bank balance.

Question 20

Business process risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as resource allocations.

Accepted Answer

The answer of Business process risk assessment is designed to...

Exam 2: Internal Control and Cash

Match the following terms with their correct definition. -the fees charged by the bank for chequing accounting services

The foundation of the internal control system is the control _____________ - the collection of environmental factors that influence the effectiveness of control procedures.

The accountant must make journal entries for all items in the bank section of the bank reconciliation.

Match the following terms with their correct definitions. -action that reduces the likelihood that records could be used to conceal intentional misstatements,theft,or fraud

Who are responsible for monitoring activities within the internal control system?

A cost-cutting measure used in many business organizations is the use of a(n)____________________ fund,whereby a custodian handles disbursements and documentation for small expenditures.

Which of the following items would be added to the company's cash balance on a bank reconciliation?

On a bank reconciliation,bank service charges for the month are added to the cash balance per the company records.

Collections of accounts receivable are considered to be cash equivalents.

The establishment of a petty cash fund has no effect on the company's total cash balance.

The practices of delaying payments to suppliers,speeding up collection from customers,and earning the greatest possible return on any excess cash are known as ____________________ principles.

A(n)____________________ is the process used by an accountant to ensure consistency between the balance shown on the bank statement for a particular account and the balance shown on the accounting records.

Which of the following is characteristic of a credit memo and its relationship to a company's bank reconciliation procedures?

What is the name of the account that records differences between amounts of cash deposited and amounts from the cash register tapes?

A credit memo appears on the September bank statement.How should this amount be treated on the September bank reconciliation?

Business process risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as resource allocations.