Question 1

Internal controls are crucial to companies that convert from U.S.GAAP to IFRS because of all of the following risks except:

Accepted Answer

A) Possible misstatement of financial information. 
B) Possible fraud. 
C) Controls are significantly different across the globe. 
D) Ineffective communication of the change to investors,creditors,and others. 
E) Management's inability to certify the effectiveness of the controls. 
A) Possible misstatement of financial information. 
B) Possible fraud. 
C) Controls are significantly different across the globe. 
D) Ineffective communication of the change to investors,creditors,and others. 
E) Management's inability to certify the effectiveness of the controls.

Question 2

A set of procedures and approvals for verifying,approving and recording obligations for eventual cash disbursement,and for issuing checks for payment only of verified,approved,and recorded obligations is referred to as a(n):

Accepted Answer

A) Internal cash system. 
B) Petty cash system. 
C) Cash disbursement system. 
D) Voucher system. 
E) Cash control system. 
A) Internal cash system. 
B) Petty cash system. 
C) Cash disbursement system. 
D) Voucher system. 
E) Cash control system.

Question 3

When a petty cash fund is in use:

Accepted Answer

A) Expenses paid with petty cash are recorded when the fund is replenished. 
B) Petty Cash is debited when funds are replenished. 
C) Petty Cash is credited when funds are replenished. 
D) Expenses are not recorded. 
E) Cash is debited when funds are replenished. 
A) Expenses paid with petty cash are recorded when the fund is replenished. 
B) Petty Cash is debited when funds are replenished. 
C) Petty Cash is credited when funds are replenished. 
D) Expenses are not recorded. 
E) Cash is debited when funds are replenished.

Question 4

Outstanding checks refer to checks that have been:

Accepted Answer

A) Written,recorded,sent to payees,and received and paid by the bank. 
B) Written and not yet recorded in the company books. 
C) Held as blank checks. 
D) Written,recorded on the company books,sent to the payee,but not yet paid by the bank. 
E) Issued by the bank. 
A) Written,recorded,sent to payees,and received and paid by the bank. 
B) Written and not yet recorded in the company books. 
C) Held as blank checks. 
D) Written,recorded on the company books,sent to the payee,but not yet paid by the bank. 
E) Issued by the bank.

Question 5

The three parties involved with a check are:

Accepted Answer

A) The writer,the cashier,and the bank. 
B) The maker,the payee,and the bank. 
C) The maker,the manager,and the payee. 
D) The bookkeeper,the payee,and the bank. 
E) The signer,the cashier,and the company. 
A) The writer,the cashier,and the bank. 
B) The maker,the payee,and the bank. 
C) The maker,the manager,and the payee. 
D) The bookkeeper,the payee,and the bank. 
E) The signer,the cashier,and the company.

Question 6

Cash equivalents:

Accepted Answer

A) Include savings accounts. 
B) Include checking accounts. 
C) Are readily converted to a known cash amount. 
D) Include time deposits. 
E) Have no immediate value. 
A) Include savings accounts. 
B) Include checking accounts. 
C) Are readily converted to a known cash amount. 
D) Include time deposits. 
E) Have no immediate value.

Question 7

A voucher system is a set of procedures and approvals:

Accepted Answer

A) Designed to eliminate the need for subsidiary ledgers. 
B) Designed to determine if the company is operating profitably. 
C) Used almost exclusively by small companies. 
D) Used to ensure that the company sells on credit only to creditworthy customers. 
E) Designed to control cash disbursements and the acceptance of obligations. 
A) Designed to eliminate the need for subsidiary ledgers. 
B) Designed to determine if the company is operating profitably. 
C) Used almost exclusively by small companies. 
D) Used to ensure that the company sells on credit only to creditworthy customers. 
E) Designed to control cash disbursements and the acceptance of obligations.

Question 8

The principles of internal control include:

Accepted Answer

A) Separate recordkeeping from custody of assets. 
B) Maintain minimal records. 
C) Use only computerized systems. 
D) Bond all employees. 
E) Require automated sales systems. 
A) Separate recordkeeping from custody of assets. 
B) Maintain minimal records. 
C) Use only computerized systems. 
D) Bond all employees. 
E) Require automated sales systems.

Question 9

____________________ are short-term,highly liquid investment assets that are readily convertible to a known amount of cash.

Accepted Answer

The answer of ____________________ are short-term,highly liquid investment assets that...

Question 10

In the process of reconciling its bank statement for January,Maxi's Clothing's accountant compiles the following information:   The adjusted cash balance per the books on January 31 is:

Accepted Answer

A) $5,855 
B) $5,335 
C) $4,055 
D) $4,815 
E) $4,585 
A) $5,855 
B) $5,335 
C) $4,055 
D) $4,815 
E) $4,585

Question 11

A bank does not issue a debit memorandum to notify the depositor of which of the following?

Accepted Answer

A) All withdrawals through an ATM. 
B) A fee assessed to the depositor's account. 
C) An uncollectible check. 
D) Periodic payments arranged in advance,by a depositor. 
E) A deposit to their account. 
A) All withdrawals through an ATM. 
B) A fee assessed to the depositor's account. 
C) An uncollectible check. 
D) Periodic payments arranged in advance,by a depositor. 
E) A deposit to their account.

Question 12

Clayborn Company' bank reconciliation as of May 31 is shown below.   The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

Accepted Answer

A) A debit to Cash of $625 
B) A debit to Cash of $5,200 
C) A credit to Cash of $4,600 
D) A credit to Cash of $600 
E) A debit to cash of $25 
A) A debit to Cash of $625 
B) A debit to Cash of $5,200 
C) A credit to Cash of $4,600 
D) A credit to Cash of $600 
E) A debit to cash of $25

Question 13

A voucher is an internal document or file:

Accepted Answer

A) Prepared after an invoice is received. 
B) Used as a substitute for an invoice if the supplier fails to send one. 
C) Used to accumulate information needed to control cash disbursements and to ensure that transactions are properly recorded. 
D) Takes the place of a bank check. 
E) Prepared before the company orders goods to make sure that all goods are being ordered from an approved vendor list. 
A) Prepared after an invoice is received. 
B) Used as a substitute for an invoice if the supplier fails to send one. 
C) Used to accumulate information needed to control cash disbursements and to ensure that transactions are properly recorded. 
D) Takes the place of a bank check. 
E) Prepared before the company orders goods to make sure that all goods are being ordered from an approved vendor list.

Question 14

In the process of reconciling its bank statement for April,Donahue Enterprises' accountant compiles the following information:   The adjusted cash balance per the books on April 30 is:

Accepted Answer

A) $6,900 
B) $8,160 
C) $4,600 
D) $6,520 
E) $5,840 
A) $6,900 
B) $8,160 
C) $4,600 
D) $6,520 
E) $5,840

Question 15

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794,how should this error be treated on the bank reconciliation?

Accepted Answer

A) Subtract $45 from the bank's balance. 
B) Add $45 to the bank's balance. 
C) Subtract $45 from the book balance. 
D) Add $45 to the book balance. 
E) Subtract $45 from the bank's balance and add $45 to the book's balancE.$749 - $794 = $45 too much deducted from the company's cash account balance that must be added back to cash. 
A) Subtract $45 from the bank's balance. 
B) Add $45 to the bank's balance. 
C) Subtract $45 from the book balance. 
D) Add $45 to the book balance. 
E) Subtract $45 from the bank's balance and add $45 to the book's balancE.$749 - $794 = $45 too much deducted from the company's cash account balance that must be added back to cash.

Question 16

The means of recording purchases under the assumption that the cash discount for prompt payment will be taken is called the _________________________.

Accepted Answer

The answer of The means of recording purchases under the...

Question 17

A petty cash fund was originally established with a check for $100.On August 31,which is the period end,the petty cash fund included the following:   Prepare the general journal entry to record the replenishment of the petty cash fund on August 31.

Accepted Answer

The answer of A petty cash fund was originally established...

Question 18

Childers Company has an established petty cash fund in the amount of $400.The fund was last reimbursed on November 30.At the end of December,the fund contained the following petty cash receipts:   If,in addition to these receipts,the petty cash fund contains $201 of cash,the journal entry to reimburse the fund on December 31 will include:

Accepted Answer

A) A debit to Transportation-In of $73. 
B) A debit to Petty Cash of $189. 
C) A credit to Office Supplies of $66. 
D) A credit to Cash Over and Short of $10. 
E) A credit to Cash of $199. 
A) A debit to Transportation-In of $73. 
B) A debit to Petty Cash of $189. 
C) A credit to Office Supplies of $66. 
D) A credit to Cash Over and Short of $10. 
E) A credit to Cash of $199.

Question 19

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the _______________.

Accepted Answer

The answer of The internal document that is used to...

Question 20

A remittance advice is a(n):

Accepted Answer

A) Explanation for a payment by check. 
B) Bank statement. 
C) Internal voucher. 
D) Electronic funds transfer. 
E) Cancelled check. 
A) Explanation for a payment by check. 
B) Bank statement. 
C) Internal voucher. 
D) Electronic funds transfer. 
E) Cancelled check.

Exam 8: Cash and Internal Controls

Internal controls are crucial to companies that convert from U.S.GAAP to IFRS because of all of the following risks except:

A set of procedures and approvals for verifying,approving and recording obligations for eventual cash disbursement,and for issuing checks for payment only of verified,approved,and recorded obligations is referred to as a(n):

When a petty cash fund is in use:

Outstanding checks refer to checks that have been:

The three parties involved with a check are:

Cash equivalents:

A voucher system is a set of procedures and approvals:

The principles of internal control include:

____________________ are short-term,highly liquid investment assets that are readily convertible to a known amount of cash.

In the process of reconciling its bank statement for January,Maxi's Clothing's accountant compiles the following information: The adjusted cash balance per the books on January 31 is:

A bank does not issue a debit memorandum to notify the depositor of which of the following?

Clayborn Company' bank reconciliation as of May 31 is shown below. The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

A voucher is an internal document or file:

In the process of reconciling its bank statement for April,Donahue Enterprises' accountant compiles the following information: The adjusted cash balance per the books on April 30 is:

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794,how should this error be treated on the bank reconciliation?

The means of recording purchases under the assumption that the cash discount for prompt payment will be taken is called the _________________________.

A petty cash fund was originally established with a check for $100.On August 31,which is the period end,the petty cash fund included the following: Prepare the general journal entry to record the replenishment of the petty cash fund on August 31.

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the _______________.

A remittance advice is a(n):

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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