Question 1

Common control principles include all of the following,except:

Accepted Answer

A) outsource work to third parties. 
B) segregate of duties. 
C) independently verify. 
D) restrict access to assets and information. 
A) outsource work to third parties. 
B) segregate of duties. 
C) independently verify. 
D) restrict access to assets and information. A

Question 2

A remittance advice:

Accepted Answer

A) explains the purpose of a customer's payment. 
B) ensures cash sales are properly recorded in the accounting records. 
C) enhances the safe deposit of cash in the bank. 
D) reduces the risk of cash-handling errors. 
A) explains the purpose of a customer's payment. 
B) ensures cash sales are properly recorded in the accounting records. 
C) enhances the safe deposit of cash in the bank. 
D) reduces the risk of cash-handling errors. A

Question 3

When duties are properly segregated,the accounting department should compare the cash in the register with the cash count sheet.

Accepted Answer

A) True 
 B)False  True

Question 4

A cash register does not:

Accepted Answer

A) restrict access to cash. 
B) document the amount of cash received for items sold. 
C) summarize the cash register's total cash sales. 
D) reconcile accrual accounting with cash accounting. 
A) restrict access to cash. 
B) document the amount of cash received for items sold. 
C) summarize the cash register's total cash sales. 
D) reconcile accrual accounting with cash accounting.

Question 5

The petty cash fund was used to reimburse employees for office expenses during the month.The cash and receipts in the locked box equaled the Petty Cash account balance.When the petty cash fund is replenished,the related journal entry will include a debit to:

Accepted Answer

A) Office Expenses. 
B) Petty Cash. 
C) Cash. 
D) Cash Shortage. 
A) Office Expenses. 
B) Petty Cash. 
C) Cash. 
D) Cash Shortage.

Question 6

Which of the following is deducted from the bank balance on a bank reconciliation?

Accepted Answer

A) Deposits in transit 
B) Outstanding checks 
C) EFT received from customers 
D) Bank service charge 
A) Deposits in transit 
B) Outstanding checks 
C) EFT received from customers 
D) Bank service charge

Question 7

Which of the following is not a reason that a business needs an effective internal control system?

Accepted Answer

A) Ensure that work is completed efficiently and effectively. 
B) Produce reliable and timely accounting information for use by people external to the organization. 
C) Protect assets by reducing the risk of fraud. 
D) Identify ways to circumvent applicable laws and regulations. 
A) Ensure that work is completed efficiently and effectively. 
B) Produce reliable and timely accounting information for use by people external to the organization. 
C) Protect assets by reducing the risk of fraud. 
D) Identify ways to circumvent applicable laws and regulations.

Question 8

The volume of transactions is enormous and the risk of handling errors is significant for:

Accepted Answer

A) cash. 
B) inventory. 
C) accounts receivable. 
D) computer software. 
A) cash. 
B) inventory. 
C) accounts receivable. 
D) computer software.

Question 9

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Accepted Answer

A) Debit Accounts Receivable and credit Cash in the amount of $776. 
B) Debit Cash and credit Accounts Receivable in the amount of $776. 
C) Debit NSF Check Expense and credit Accounts Receivable in the amount of $776. 
D) No journal entry is necessary. 
A) Debit Accounts Receivable and credit Cash in the amount of $776. 
B) Debit Cash and credit Accounts Receivable in the amount of $776. 
C) Debit NSF Check Expense and credit Accounts Receivable in the amount of $776. 
D) No journal entry is necessary.

Question 10

A bank service charge should be a(n)________ on a bank reconciliation.

Accepted Answer

A) addition to the bank balance 
B) deduction from the bank balance 
C) addition to the book balance 
D) deduction from the book balance 
A) addition to the bank balance 
B) deduction from the bank balance 
C) addition to the book balance 
D) deduction from the book balance

Question 11

Before reconciling its bank statement,Rollin Corporation's general ledger had a month-end balance in the cash account of $9,450.The bank reconciliation for the month contained the following items:   Given the above information,what up-to-date ending cash balance should Rollin report at month-end?

Accepted Answer

A) $8,100 
B) $8,676 
C) $9,288 
D) $10,062 
A) $8,100 
B) $8,676 
C) $9,288 
D) $10,062

Question 12

Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations,reporting,and compliance.

Accepted Answer

A) True 
 B)False

Question 13

An attempt to deceive others for personal gain is known as:

Accepted Answer

A) fraud. 
B) larceny. 
C) opportunity. 
D) incentive. 
A) fraud. 
B) larceny. 
C) opportunity. 
D) incentive.

Question 14

Egrane,Inc.'s monthly bank statement showed the ending balance of cash of $14,800.The bank reconciliation for the period showed an adjustment for a deposit in transit of $1,200,outstanding checks of $1,600,a NSF check of $560,bank service charges of $24 and the EFT from a customer in payment of the customer's account of $1,200. What journal entry should be recorded by Egrane for the NSF check returned?

Accepted Answer

A) Debit Accounts Receivable and credit Cash for $560. 
B) Debit Cash and credit Accounts Receivable for $560. 
C) Debit Cash and credit Accounts Payable for $560. 
D) No journal entry is necessary for this item. 
A) Debit Accounts Receivable and credit Cash for $560. 
B) Debit Cash and credit Accounts Receivable for $560. 
C) Debit Cash and credit Accounts Payable for $560. 
D) No journal entry is necessary for this item.

Question 15

Outstanding checks have:

Accepted Answer

A) been recorded by the company but not yet by the bank. 
B) been recorded by the bank but not yet by the company. 
C) not been recorded by the bank or the company. 
D) been recorded by both the bank and the company. 
A) been recorded by the company but not yet by the bank. 
B) been recorded by the bank but not yet by the company. 
C) not been recorded by the bank or the company. 
D) been recorded by both the bank and the company.

Question 16

Cottage Co.deposits all cash receipts on the day when they are received and it makes all cash payments by check.At the close of business on December 31,its Cash account shows a debit balance of $36,606.The company's bank statement as of December 31 shows an ending cash balance of $31,842.The following information was also available.
Outstanding checks as of December 31 total $4,522.
Included with the bank statement was a debit memo in the amount of $70 for bank service charges.
Check No.2519,listed with the canceled checks,was correctly drawn for $805 in payment of a utility bill on December 16.The company mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $895.
The December 31 cash receipts of $6,850 were placed in the bank's night depository after banking hours and were not recorded on the December 31 bank statement.
The bank deducted $2,456 for an NSF check from a customer deposited on December 10.
Required:
Prepare the journal entries for the items that would appear on the company's bank reconciliation as of December 31.(If no entry is required for a transaction/event,select "No Journal Entry Required" in the first account field. )

Accepted Answer

The answer of Cottage Co.deposits all cash receipts on the...

Question 17

Match the term to the appropriate definition.There are more definitions than terms.
-Bank Reconciliation

Accepted Answer

A) Money or any instrument that banks will accept for deposit and immediately credit to a company's account. 
B) A process for approving and documenting all purchases and payments on account. 
C) Short-term,highly liquid investments purchased within three months of maturity. 
D) Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations. 
E) Not available for general use but rather restricted for a specific purpose.
F)An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.
G)Another name for bounced checks.They arise when the check writer (your customer)does not have sufficient funds to cover the amount of the check.
H)An attempt to deceive others for personal gain.
I)A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence.
J)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
K)A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.
L)Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment. 
A) Money or any instrument that banks will accept for deposit and immediately credit to a company's account. 
B) A process for approving and documenting all purchases and payments on account. 
C) Short-term,highly liquid investments purchased within three months of maturity. 
D) Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations. 
E) Not available for general use but rather restricted for a specific purpose.
F)An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.
G)Another name for bounced checks.They arise when the check writer (your customer)does not have sufficient funds to cover the amount of the check.
H)An attempt to deceive others for personal gain.
I)A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence.
J)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
K)A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.
L)Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment.

Question 18

Which of the following statements concerning a petty cash fund is not correct?

Accepted Answer

A) A petty cash fund acts as a control by establishing a limited amount of cash to use for specific types of expenses. 
B) A petty cash fund is similar to an imprest payroll account in acting as a control of a limited amount of cash. 
C) The company's petty cash custodian is responsible for operating the petty cash fund. 
D) To avoid the administrative costs of the use of purchasing cards,or Pcards,many organizations have started using petty cash funds. 
A) A petty cash fund acts as a control by establishing a limited amount of cash to use for specific types of expenses. 
B) A petty cash fund is similar to an imprest payroll account in acting as a control of a limited amount of cash. 
C) The company's petty cash custodian is responsible for operating the petty cash fund. 
D) To avoid the administrative costs of the use of purchasing cards,or Pcards,many organizations have started using petty cash funds.

Question 19

The Sarbanes-Oxley Act (SOX)requires the establishment of an audit committee that includes the:

Accepted Answer

A) president of the company. 
B) chief financial officer of the company. 
C) independent directors. 
D) company's external auditors. 
A) president of the company. 
B) chief financial officer of the company. 
C) independent directors. 
D) company's external auditors.

Question 20

Petty cash payments are recorded in the accounting system when:

Accepted Answer

A) the petty cash fund needs to be replenished. 
B) a payment is made out of petty cash. 
C) a bank reconciliation is prepared for the petty cash fund. 
D) cash is received from returns of merchandise. 
A) the petty cash fund needs to be replenished. 
B) a payment is made out of petty cash. 
C) a bank reconciliation is prepared for the petty cash fund. 
D) cash is received from returns of merchandise.

Common control principles include all of the following,except:

A remittance advice:

When duties are properly segregated,the accounting department should compare the cash in the register with the cash count sheet.

A cash register does not:

The petty cash fund was used to reimburse employees for office expenses during the month.The cash and receipts in the locked box equaled the Petty Cash account balance.When the petty cash fund is replenished,the related journal entry will include a debit to:

Which of the following is deducted from the bank balance on a bank reconciliation?

Which of the following is not a reason that a business needs an effective internal control system?

The volume of transactions is enormous and the risk of handling errors is significant for:

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

A bank service charge should be a(n)________ on a bank reconciliation.

Before reconciling its bank statement,Rollin Corporation's general ledger had a month-end balance in the cash account of $9,450.The bank reconciliation for the month contained the following items: Given the above information,what up-to-date ending cash balance should Rollin report at month-end?

Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations,reporting,and compliance.

An attempt to deceive others for personal gain is known as:

Outstanding checks have:

Match the term to the appropriate definition.There are more definitions than terms. -Bank Reconciliation

Which of the following statements concerning a petty cash fund is not correct?

The Sarbanes-Oxley Act (SOX)requires the establishment of an audit committee that includes the:

Petty cash payments are recorded in the accounting system when:

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 5: Fraud,Internal Control,and Cash

Common control principles include all of the following,except:

A remittance advice:

When duties are properly segregated,the accounting department should compare the cash in the register with the cash count sheet.

A cash register does not:

The petty cash fund was used to reimburse employees for office expenses during the month.The cash and receipts in the locked box equaled the Petty Cash account balance.When the petty cash fund is replenished,the related journal entry will include a debit to:

Which of the following is deducted from the bank balance on a bank reconciliation?

Which of the following is not a reason that a business needs an effective internal control system?

The volume of transactions is enormous and the risk of handling errors is significant for:

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

A bank service charge should be a(n)________ on a bank reconciliation.

Before reconciling its bank statement,Rollin Corporation's general ledger had a month-end balance in the cash account of $9,450.The bank reconciliation for the month contained the following items: Given the above information,what up-to-date ending cash balance should Rollin report at month-end?

Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations,reporting,and compliance.

An attempt to deceive others for personal gain is known as:

Outstanding checks have:

Match the term to the appropriate definition.There are more definitions than terms. -Bank Reconciliation

Which of the following statements concerning a petty cash fund is not correct?

The Sarbanes-Oxley Act (SOX)requires the establishment of an audit committee that includes the:

Petty cash payments are recorded in the accounting system when:

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters