Question 1

When a check is issued,the party being paid the cash is referred to as the ________.

Accepted Answer

A) payee 
B) maker 
C) bank signatory 
D) depositor

Question 2

John's Food Market had the following financial data at December 31,2018:
   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 3

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) 
 
B) 
 
C) 
 
D)

Question 4

The security measures are the same for any type of cash receipts.

Accepted Answer

A) True 
 B)False

Question 5

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

Accepted Answer

A) a journal entry,a supplier invoice,and a description of the goods being purchased 
B) a receiving report,an invoice,and a purchase order 
C) a purchase order,a journal entry,and a price catalog 
D) a supplier invoice,a bill of lading,and the supplier's financial statements

Question 6

Under the net method of handling credit and debit card payments,the ________.

Accepted Answer

A) net amount of the sale is credited to the Sales Revenue account on the date of sale 
B) credit to the sales revenue is selling price less the transaction fee 
C) business writes a check to the third-party processor for the processing fee 
D) processing fee is debited to the Credit Card Expense account on the date of sale

Question 7

It is difficult and costly to plan controls that can prevent collusion.

Accepted Answer

A) True 
 B)False

Question 8

For the following situation,state whether it represents a strength or weakness in internal control and give the reason for your answer.
- 
The movie theater has the following policy.Tickets are sold by the cashier.The ticket stubs are collected by the ticket taker.The ticket stubs are stored in a locked box,and the accounting personnel match the number of ticket stubs to the number of tickets sold.

Accepted Answer

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

Question 9

A company has a cash ratio of 2.3.What does this imply?

Accepted Answer

A) The company has an unnecessarily large amount of cash and cash equivalents. 
B) The company does not have enough cash supply. 
C) The company is not in a position to pay off its long-term liabilities. 
D) The company is not in a position to pay off its current liabilities.

Question 10

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 11

A basic procedure of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated.

Accepted Answer

A) True 
 B)False

Question 12

Concerning how companies control cash received by mail,state which employee should perform the following duties:

Accepted Answer

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

Question 13

A point-of-sale terminal provides control for over the counter cash receipts.

Accepted Answer

A) True 
 B)False

Question 14

Journal entries are required if the bank reconciliation includes a book error.

Accepted Answer

A) True 
 B)False

Question 15

The data of Graham Brothers Company for two years are given below.  Based on the above information,which of the following statements is TRUE?

Accepted Answer

A) Cash ratio has increased from 0.02 in 2018 to 0.03 in 2019. 
B) Cash ratio has increased from 0.05 in 2018 to 0.08 in 2019. 
C) Cash ratio has increased from 0.387 in 2018 to 0.221 in 2019. 
D) Cash ratio has increased from 0.221 in 2018 to 0.387 in 2019.

Question 16

The bank statement ________.

Accepted Answer

A) must include physical copies of canceled checks 
B) must be mailed to customers each month 
C) does not include an ending balance of the customer's account because the bank cannot determine which checks have been cashed during the statement period 
D) may show service charges,EFT collections from customers,and EFT withdrawals

Question 17

If the bank reconciliation includes a bank service charge,a journal entry is required,which debits Bank Expense and credits Cash.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be included in the journal to record an NSF check?

Accepted Answer

A) a debit to Accounts Payable and a credit to Cash 
B) a debit to Accounts Receivable and a credit to Cash 
C) a debit to Cash and a credit to Accounts Receivable 
D) a debit to Bank Expense and a credit to Cash

Question 19

The bank made an EFT payment of a telephone bill of $5,000.How would this information be included on the bank reconciliation?

Accepted Answer

A) an addition on the bank side 
B) a deduction on the book side 
C) an addition on the book side 
D) a deduction on the bank side

Question 20

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?

Accepted Answer

A) an encryption system 
B) an imprest system 
C) a lock-box system 
D) a firewall system

Exam 8: Internal Control and Cash

When a check is issued,the party being paid the cash is referred to as the ________.

John's Food Market had the following financial data at December 31,2018: 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.

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?

The security measures are the same for any type of cash receipts.

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

Under the net method of handling credit and debit card payments,the ________.

It is difficult and costly to plan controls that can prevent collusion.

A company has a cash ratio of 2.3.What does this imply?

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

A basic procedure of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated.

Concerning how companies control cash received by mail,state which employee should perform the following duties:

A point-of-sale terminal provides control for over the counter cash receipts.

Journal entries are required if the bank reconciliation includes a book error.

The data of Graham Brothers Company for two years are given below. Based on the above information,which of the following statements is TRUE?

The bank statement ________.

If the bank reconciliation includes a bank service charge,a journal entry is required,which debits Bank Expense and credits Cash.

Which of the following would be included in the journal to record an NSF check?

The bank made an EFT payment of a telephone bill of $5,000.How would this information be included on the bank reconciliation?

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?