Question 1

When replenishing the petty cash fund,the company debits either the associated expense incurred or the asset purchased with the fund.

Accepted Answer

A) True 
 B)False

Question 2

Match each term to its definition.
-Invoice

Accepted Answer

A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted.

Question 3

Regarding controls over cash receipts by mail,the accounting department should prepare the deposit ticket from the remittance advices.

Accepted Answer

A) True 
 B)False

Question 4

John's Food Market had the following financial data at December 31,2018:
 $$\begin{array} { | l | l | } 
\hline \text { Cash } & \$ 54,000 \
\hline \text { Cash Equivalents } & 24,000 \
\hline \text { Accounts Receivable } & 40,000 \
\hline \text { Total current } & \
\text { liabilities } & 130,000 \
\hline
\end{array}$$ $$\begin{array} { l l } 
\text { Cash and cash equivalents } & \$ 78,000 \
\text { Total current liabilities } & 130,000
\end{array}$$ a.What is the cash ratio as of December 31,2018? Show the formula and your computations.
b.Comment on the cash ratio for Metro Construction Company.

Accepted Answer

The answer of John's Food Market had the following financial...

Question 5

A check payment for $658 was incorrectly entered in the Cash account as $856.Which of the following adjustments needs to be made?

Accepted Answer

A)  decrease the book balance 
B)  decrease the bank statement balance 
C)  increase the book balance 
D)  increase the bank statement balance

Question 6

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

Accepted Answer

A)  The total sale amount is deposited on the date of the actual sale. 
B)  The processing fees for all transactions processed for the month are deducted from the company's bank account, often on the last day of the month. 
C)  On the date of sale, the Sales Revenue account is credited for the amount of sale less the processing fee. 
D)  The journal entry on the date of sale is identical to a journal entry made for a sale on account.

Question 7

Phillips Company had the following financial data for the year ended December 31,2019. $$\begin{array} { | l | r | } 
\hline \text { Cash } & \$ 42,000 \
\hline \text { Cash equivalents } & 80,000 \
\hline \text { Long term investments } & 55,000 \
\hline \text { Total current liabilities } & 148,000 \
\hline
\end{array}$$ What is the cash ratio as of December 31,2019,for Phillips Company? (Round your answer to two decimal places.)

Accepted Answer

A)  0.28 
B)  0.37 
C)  0.45 
D)  0.82

Question 8

The bank statement shows the beginning and ending balances of cash in a bank account,cash receipts and payments,and the names of all individuals who are authorized to sign checks.

Accepted Answer

A) True 
 B)False

Question 9

Concerning how companies control cash received by mail,state which employee should perform the following duties:
 $$\begin{array} {| l | l | } 
\hline \text { Duty } & \begin{array} { l } 
\text { Employee who should } \
\text { perform the duty }
\end{array} \
\hline \text { Open the mail and send } & \
\text { customer checks to the } & \
\text { treasurer } & \
\hline \text { Compare the bank deposits to } \
\text { the journal entry for cash } \
\text { receipts }\
\hline
\end{array}$$

Accepted Answer

The answer of Concerning how companies control cash received by...

Question 10

Refer to the following bank reconciliation:
  Journalize the adjusting entry for the third reconciling item: NSF check.Omit explanation

Accepted Answer

The answer of Refer to the following bank reconciliation:
 ...

Question 11

On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 12

The imprest system requires that the petty cash box contain cash and petty cash tickets that total the amount of the imprest balance only at the end of each month.

Accepted Answer

A) True 
 B)False

Question 13

Burglar alarms,fire alarms,and security cameras improve internal control.

Accepted Answer

A) True 
 B)False

Question 14

A cash equivalent is a highly liquid investment that can be converted into cash in one year or less.

Accepted Answer

A) True 
 B)False

Question 15

The bookkeeper of Wilson Electric Supply Company recorded a $1,591 check as $15,910 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

Accepted Answer

A)  $$\begin{array} { | l | l | l | } 
\hline \text { Cash } & 14,319 & \
\hline \text { Sales Revenue } & & 14,319 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | } 
\hline \text { Rent Expense } & 15,910 & \
\hline \text { Cash } & & 15,910 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | } 
\hline \text { Cash } & 14,319 & \
\hline \text { Rent Expense } & & 14,319 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | l | } 
\hline \text { Booking Error } & 1,591 & \
\hline \text { Cash } & & 1,591 \
\hline
\end{array}$$

Question 16

Which of the following components of internal control consist of work performed by internal and external auditors?

Accepted Answer

A)  monitoring of controls 
B)  information systems 
C)  control procedures 
D)  control environment

Question 17

Prepare the journal entries for the following petty cash transactions of City Coffee Shop.Omit explanation.
 $$\begin{array} { | l | l | } 
\hline \text { Sept. 10 } & \text { Established a petty cash fund with a } \$ 300 \text { balance. } \
\hline & \begin{array} { l }  
\text { The petty cash fund has } \$ 105 \text { in cash and } \$ 200 \text { in petty cash } \
\text { tickets there were issued to pay for Delivery Expense } ( \$ 115 ) \
\text { and Postage Expense } ( \$ 85 ) \text {. Replenished the fund and }
\end{array} \
\text { Sept. 30 } & \text { recorded the expenditures. } \
\hline \text { Oct. 15 } & \text { Decreased the balance of the petty cash fund to } \$ 250 . \
\hline
\end{array}$$

Accepted Answer

The answer of Prepare the journal entries for the following...

Question 18

External auditors evaluate company controls to ensure the financial statements are presented fairly,in accordance with Generally Accepted Accounting Principles.

Accepted Answer

A) True 
 B)False

Question 19

List the four steps,the proper order,of the purchasing and payment process.

Accepted Answer

The answer of List the four steps,the proper order,of the...

Question 20

At Radiant Company,the sales department is also responsible for recording cash transactions as it does not have a separate accounting department.Which internal control procedure needs strengthening?

Accepted Answer

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

Exam 8: Internal Control and Cash

When replenishing the petty cash fund,the company debits either the associated expense incurred or the asset purchased with the fund.

Match each term to its definition. -Invoice

Regarding controls over cash receipts by mail,the accounting department should prepare the deposit ticket from the remittance advices.

A check payment for $658 was incorrectly entered in the Cash account as $856.Which of the following adjustments needs to be made?

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

The bank statement shows the beginning and ending balances of cash in a bank account,cash receipts and payments,and the names of all individuals who are authorized to sign checks.

Refer to the following bank reconciliation: Journalize the adjusting entry for the third reconciling item: NSF check.Omit explanation

On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.

The imprest system requires that the petty cash box contain cash and petty cash tickets that total the amount of the imprest balance only at the end of each month.

Burglar alarms,fire alarms,and security cameras improve internal control.

A cash equivalent is a highly liquid investment that can be converted into cash in one year or less.

The bookkeeper of Wilson Electric Supply Company recorded a $1,591 check as $15,910 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

Which of the following components of internal control consist of work performed by internal and external auditors?

External auditors evaluate company controls to ensure the financial statements are presented fairly,in accordance with Generally Accepted Accounting Principles.

List the four steps,the proper order,of the purchasing and payment process.

At Radiant Company,the sales department is also responsible for recording cash transactions as it does not have a separate accounting department.Which internal control procedure needs strengthening?