Question 1

Which of the following is not a basic principle of cash management?

Accepted Answer

A) Increase collection of receivables. 
B) Keep inventory levels high. 
C) Delay payment of liabilities. 
D) Invest idle cash. 
A) Increase collection of receivables. 
B) Keep inventory levels high. 
C) Delay payment of liabilities. 
D) Invest idle cash.

Question 2

Related selling activities do not include

Accepted Answer

A) ordering the merchandise. 
B) making a sale. 
C) shipping the goods. 
D) billing the customer. 
A) ordering the merchandise. 
B) making a sale. 
C) shipping the goods. 
D) billing the customer.

Question 3

The cash disbursements section on a cash budget shows expected borrowings and repayments of borrowed funds plus interest.

Accepted Answer

A) True 
 B)False

Question 4

Clark Company developed the following reconciling information in preparing its September bank reconciliation: $\begin{array}{lr}
\text { Cash balance per bank, } 9 / 30 & \$ 46,200 \
\text { Note receivable collected by bank } & 25,200 \
\text { Outstanding checks } & 37,800 \
\text { Deposits in transit } & 18,900 \
\text { Bank service charges } & 315 \
\text { NSF check } & 5,040
\end{array}$ Using the above information determine the cash balance per books (before adjustments) for the Clark Company.

Accepted Answer

A) $41055. 
B) $65100. 
C) $7455. 
D) $63000. 
A) $41055. 
B) $65100. 
C) $7455. 
D) $63000.

Question 5

Management of cash is the responsibility of the company

Accepted Answer

A) accountant. 
B) president. 
C) treasurer. 
D) vice-president. 
A) accountant. 
B) president. 
C) treasurer. 
D) vice-president.

Question 6

Which of the following is not an internal control procedure for cash?

Accepted Answer

A) Only designated personnel are authorized to handle cash. 
B) The same individual receives the cash and pays the bills. 
C) Surprise audits of cash on hand should be made occasionally. 
D) Access to cash is limited. 
A) Only designated personnel are authorized to handle cash. 
B) The same individual receives the cash and pays the bills. 
C) Surprise audits of cash on hand should be made occasionally. 
D) Access to cash is limited.

Question 7

Which of the following is not a basic principle of cash management?

Accepted Answer

A) Increase collection of receivables. 
B) Keep inventory levels low. 
C) Pay all liabilities early. 
D) Invest idle cash. 
A) Increase collection of receivables. 
B) Keep inventory levels low. 
C) Pay all liabilities early. 
D) Invest idle cash.

Question 8

Cash equivalents do not include

Accepted Answer

A) money market accounts. 
B) commercial paper. 
C) U.S.Treasury bills. 
D) long-term investments. 
A) money market accounts. 
B) commercial paper. 
C) U.S.Treasury bills. 
D) long-term investments.

Question 9

A debit memorandum would not be issued by the bank for

Accepted Answer

A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable. 
A) a bank service charge. 
B) the issuance of traveler's checks. 
C) the wiring of funds. 
D) the collection of a notes receivable.

Question 10

A basic principle of cash management is to increase the speed of paying liabilities.

Accepted Answer

A) True 
 B)False

Question 11

Curate Company assembled the following information in completing its May bank reconciliation: $$\begin{array} { l r } 
\text { Balance per bank } & \$ 13,224 \
\text { Outstanding checks } & 2,480 \
\text { Deposits in transit } & 4,000 \
\text { NSF check } & 256 \
\text { Bank service charges } & 80 \
\text { Cash balance per books } & 15,080
\end{array}$$ Use the following tabular analysis to determine the required adjustments to Curate's accounts for the deposits in transit:

Accepted Answer

A) Increase Cash by $4000. 
B) Increase Cash by $1520. 
C) Increase Cash by $336. 
D) No adjustment is required by Curate for the deposits in transit. 
A) Increase Cash by $4000. 
B) Increase Cash by $1520. 
C) Increase Cash by $336. 
D) No adjustment is required by Curate for the deposits in transit.

Question 12

For efficiency of operations and better control over cash a company should maintain only one bank account.

Accepted Answer

A) True 
 B)False

Question 13

At Emerson Company one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the accounting records.Which of the following is the best explanation of this type of internal control principle over cash receipts?

Accepted Answer

A) Physical controls. 
B) Documentation procedures. 
C) Segregation of duties. 
D) Mechanical controls. 
A) Physical controls. 
B) Documentation procedures. 
C) Segregation of duties. 
D) Mechanical controls.

Question 14

Internal auditors

Accepted Answer

A) are hired by CPA firms to audit business firms. 
B) are employees of the IRS who evaluate the internal controls of companies filing tax returns. 
C) evaluate the system of internal controls for the companies that employ them. 
D) cannot evaluate the system of internal controls of the company that employs them because they are not independent. 
A) are hired by CPA firms to audit business firms. 
B) are employees of the IRS who evaluate the internal controls of companies filing tax returns. 
C) evaluate the system of internal controls for the companies that employ them. 
D) cannot evaluate the system of internal controls of the company that employs them because they are not independent.

Question 15

Of the following employees who should prepare the bank reconciliation?

Accepted Answer

A) Anne the bookkeeper because she is aware of all transactions that affected cash. 
B) Michael the treasurer because he has control of the checkbook and has taken more accounting courses than any other employee. 
C) Mary the cashier because she does not pay bills. 
D) Frank the purchasing agent because he does not work in the accounting department. 
A) Anne the bookkeeper because she is aware of all transactions that affected cash. 
B) Michael the treasurer because he has control of the checkbook and has taken more accounting courses than any other employee. 
C) Mary the cashier because she does not pay bills. 
D) Frank the purchasing agent because he does not work in the accounting department.

Question 16

Deng Company gathered the following reconciling information in preparing its June bank reconciliation: $$\begin{array} { l r } 
\text { Cash balance per books, } 6 / 30 & \$ 12,600 \
\text { Deposits in transit } & 2,300 \
\text { Notes receivable and interest collected by bank } & 5,060 \
\text { Bank charge for check printing } & 200 \
\text { Outstanding checks } & 6,000 \
\text { NSF check } & 1,420
\end{array}$$ Use the following tabular analysis to determine the required adjustment for the outstanding checks:

Accepted Answer

A) Decrease Cash $6000 decrease Accounts Receivable $12000. 
B) Increase Cash $6000 increase Revenue $6000. 
C) Increase Accounts Receivable $6000 increase Revenues $6000. 
D) No adjustment is needed to Deng's accounts for the outstanding checks. 
A) Decrease Cash $6000 decrease Accounts Receivable $12000. 
B) Increase Cash $6000 increase Revenue $6000. 
C) Increase Accounts Receivable $6000 increase Revenues $6000. 
D) No adjustment is needed to Deng's accounts for the outstanding checks.

Question 17

Curate Company assembled the following information in completing its May bank reconciliation: $$\begin{array}{l}
\begin{array} { l r } 
\text { Balance per bank } & \$ 13,224 \
\text { Outstanding checks } & 2,480 \
\text { Deposits in transit } & 4,000 \
\text { NSF check } & 256 \
\text { Bank service charges } & 80 \
\text { Cash balance per books } & 15,080
\end{array}\
\text { Use the following tabular analysis to determine the required adjustments to Curate's accounts: }
\end{array}$$

Accepted Answer

A) Decrease Accounts Receivable by $256. 
B) Decrease Cash by $2480. 
C) Increase Expense by $336. 
D) Increase Expenses by $80. 
A) Decrease Accounts Receivable by $256. 
B) Decrease Cash by $2480. 
C) Increase Expense by $336. 
D) Increase Expenses by $80.

Question 18

Restricted cash should be reported

Accepted Answer

A) always as a noncurrent asset. 
B) separately on the income statement. 
C) separately on the balance sheet. 
D) always as a current asset. 
A) always as a noncurrent asset. 
B) separately on the income statement. 
C) separately on the balance sheet. 
D) always as a current asset.

Question 19

In preparing a bank reconciliation outstanding checks are

Accepted Answer

A) added to the balance per bank. 
B) deducted from the balance per books. 
C) added to the balance per books. 
D) deducted from the balance per bank. 
A) added to the balance per bank. 
B) deducted from the balance per books. 
C) added to the balance per books. 
D) deducted from the balance per bank.

Question 20

While preparing the bank reconciliation you notice that a check written by the company for $750 has been outstanding for 5 months.What is the best action for you to take?

Accepted Answer

A) Void the check.If it has not been cashed in 5 months it will never be cashed. 
B) Issue a replacement check because you assume the original check has been lost. 
C) Wait 3 more months to give the bank more time to clear the check. 
D) Investigate to determine why the check has not cleared. 
A) Void the check.If it has not been cashed in 5 months it will never be cashed. 
B) Issue a replacement check because you assume the original check has been lost. 
C) Wait 3 more months to give the bank more time to clear the check. 
D) Investigate to determine why the check has not cleared.

Which of the following is not a basic principle of cash management?

Related selling activities do not include

The cash disbursements section on a cash budget shows expected borrowings and repayments of borrowed funds plus interest.

Management of cash is the responsibility of the company

Which of the following is not an internal control procedure for cash?

Which of the following is not a basic principle of cash management?

Cash equivalents do not include

A debit memorandum would not be issued by the bank for

A basic principle of cash management is to increase the speed of paying liabilities.

For efficiency of operations and better control over cash a company should maintain only one bank account.

At Emerson Company one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the accounting records.Which of the following is the best explanation of this type of internal control principle over cash receipts?

Internal auditors

Of the following employees who should prepare the bank reconciliation?

Restricted cash should be reported

In preparing a bank reconciliation outstanding checks are

While preparing the bank reconciliation you notice that a check written by the company for $750 has been outstanding for 5 months.What is the best action for you to take?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 5: Fraud, Internal Control, and Cash

Which of the following is not a basic principle of cash management?

Related selling activities do not include

The cash disbursements section on a cash budget shows expected borrowings and repayments of borrowed funds plus interest.

Management of cash is the responsibility of the company

Which of the following is not an internal control procedure for cash?

Which of the following is not a basic principle of cash management?

Cash equivalents do not include

A debit memorandum would not be issued by the bank for

A basic principle of cash management is to increase the speed of paying liabilities.

For efficiency of operations and better control over cash a company should maintain only one bank account.

At Emerson Company one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the accounting records.Which of the following is the best explanation of this type of internal control principle over cash receipts?

Internal auditors

Of the following employees who should prepare the bank reconciliation?

Restricted cash should be reported

In preparing a bank reconciliation outstanding checks are

While preparing the bank reconciliation you notice that a check written by the company for $750 has been outstanding for 5 months.What is the best action for you to take?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters