Question 1

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Accepted Answer

The answer of Why is it necessary to journalize transactions...

Question 2

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

Accepted Answer

A) True 
 B)False

Question 3

The journal entry to open a new petty cash fund includes a debit to the Petty Cash account and a credit to the Cash account.

Accepted Answer

A) True 
 B)False

Question 4

A company check for payment must be signed by ________.

Accepted Answer

A)  the company president 
B)  a bank employee 
C)  an employee specifically authorized by the company 
D)  the external auditor

Question 5

Which of the following is NOT an acceptable task for a retail store manager?

Accepted Answer

A)  making the cash deposit at the bank 
B)  proving the cash by comparing the cash in the drawer against the point-of-sale terminal's record of cash sales 
C)  using the point-of-sale terminal's tape to record the journal entry for sales revenue 
D)  overseeing the work of the sales clerks

Question 6

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Accepted Answer

A)  a credit to Petty Cash 
B)  a debit to Accounts Receivable 
C)  a credit to Cash 
D)  a credit to Miscellaneous Expense

Question 7

Which of the following statements regarding a lock-box system is incorrect?

Accepted Answer

A)  Customers send their checks directly to a post office box that belongs to the company. 
B)  Internal control is tight because company personnel never touch incoming cash. 
C)  A bank employee empties the box daily and records the deposits into the company's bank account. 
D)  Cash is put into the company's bank account quickly.

Question 8

Which of the following is NOT an internal control over the petty cash fund?

Accepted Answer

A)  Petty cash tickets are sequentially numbered. 
B)  A specific amount of cash is designated to be kept in the petty cash fund. 
C)  Petty cash tickets serve as the authorization voucher and explanation. 
D)  Two custodians should be assigned responsibility for the petty cash fund.

Question 9

Which of the following statements describes a purchase order?

Accepted Answer

A)  It is an order to purchase goods from a supplier. 
B)  It is a statement from the supplier showing the goods purchased and the amount due. 
C)  It is a report showing that the goods have been received in good condition, as ordered. 
D)  It is a document authorizing a payment to a supplier.

Question 10

By accepting credit and debit cards,companies are able to attract more customers.

Accepted Answer

A) True 
 B)False

Question 11

In addition to the account number,a check shows the 9-digit routing number.

Accepted Answer

A) True 
 B)False

Question 12

The following information is available for Juno Company for the month ending June 30,2019. $ * \quad $ Balance as per the bank statement is $ \$ 11,500 $.
* Balance as per books is $ \$ 10,300 $.
* Check \#506 for $ \$ 1,400 $ and check \#510 for $ \$ 900 $ were not shown on the June 30 , bank statement.
* A deposit in transit of $ \$ 3,218 $ had not been received by the bank when the bank statement was generated.
* A bank debit memo indicated an NSF check for $ \$ 100 $ written by Jane Smith to Juno Company on June 13 .
* A bank credit memo indicated a note collected by the bank of $ \$ 2,200 $ and interest revenue of $ \$ 53 $ on June 20.
* The bank statement indicated service charges of $ \$ 35 $.
 What is the adjusted book balance?

Accepted Answer

A)  $12,453 
B)  $12,418 
C)  $8,053 
D)  $8,000

Question 13

All petty cash fund payments should be supported with sequentially numbered petty cash tickets.

Accepted Answer

A) True 
 B)False

Question 14

To ensure that there is no collusion between the manager and sales clerks,the accounting department employees deposit the cash in the bank and use the deposit slip to prepare the journal entry for cash receipts and sales revenue.

Accepted Answer

A) True 
 B)False

Question 15

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer.
Fifth National Bank requires mandatory vacations and job rotation.

Accepted Answer

The answer of For the following situation,state whether it represents...

Question 16

At Carlson Services,the cashier collects checks and cash from customers,and the junior accountant records the transactions in the journal.The controller approves the journal entries and bank reconciliations.The treasurer signs checks and approves contracts.Which internal control procedure is exemplified in the above situation?

Accepted Answer

A)  assignment of responsibilities 
B)  competent, reliable, and ethical personnel 
C)  separation of duties 
D)  documents

Question 17

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Accepted Answer

A) True 
 B)False

Question 18

If a bank reconciliation includes interest revenue collected by a bank,a journal entry is required which credits Cash and debits Interest Revenue.

Accepted Answer

A) True 
 B)False

Question 19

If a company does not protect its assets,it is throwing away resources.

Accepted Answer

A) True 
 B)False

Question 20

Lane Outfitters Company,a retailer,accepts payment through credit cards.During August,credit card sales amounted to $12,000.The processor charges a 3% fee.Assuming that the credit card processor uses the gross method,prepare the journal entries,on the books of Lane Outfitters,for the credit card sales and the payment of fees.(Ignore cost of goods sold.)Omit explanation.

Accepted Answer

The answer of Lane Outfitters Company,a retailer,accepts payment through credit...

Exam 8: Internal Control and Cash

Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized.

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

The journal entry to open a new petty cash fund includes a debit to the Petty Cash account and a credit to the Cash account.

A company check for payment must be signed by ________.

Which of the following is NOT an acceptable task for a retail store manager?

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Which of the following statements regarding a lock-box system is incorrect?

Which of the following is NOT an internal control over the petty cash fund?

Which of the following statements describes a purchase order?

By accepting credit and debit cards,companies are able to attract more customers.

In addition to the account number,a check shows the 9-digit routing number.

All petty cash fund payments should be supported with sequentially numbered petty cash tickets.

To ensure that there is no collusion between the manager and sales clerks,the accounting department employees deposit the cash in the bank and use the deposit slip to prepare the journal entry for cash receipts and sales revenue.

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer. Fifth National Bank requires mandatory vacations and job rotation.

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

If a bank reconciliation includes interest revenue collected by a bank,a journal entry is required which credits Cash and debits Interest Revenue.

If a company does not protect its assets,it is throwing away resources.