Question 1

The entry to record to establish a petty cash fund is a ________ to Cash and a ________ to Petty Cash.

Accepted Answer

A) debit;debit 
B) credit;credit 
C) credit;debit 
D) debit;credit 
A) debit;debit 
B) credit;credit 
C) credit;debit 
D) debit;credit

Question 2

The company has $8,000 in its checking account,$16,000 in its savings account,$800 in petty cash,$20,000 in one-year Treasury bills,and $12,000 in a money market fund.What amount should be reported as cash and cash equivalents on the balance sheet?

Accepted Answer

A) $24,000 
B) $24,800 
C) $36,800 
D) $56,800 
A) $24,000 
B) $24,800 
C) $36,800 
D) $56,800

Question 3

NSF checks from customers should be a(n)________ on a bank reconciliation.

Accepted Answer

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

Question 4

A bank reconciliation item that a company's bank may not know about would be:

Accepted Answer

A) electronic fund transfers. 
B) deposits in transit. 
C) NSF checks. 
D) service charges. 
A) electronic fund transfers. 
B) deposits in transit. 
C) NSF checks. 
D) service charges.

Question 5

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 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 bank reconciliation as of December 31.

Accepted Answer

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

Question 6

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) written,recorded,sent to the payees,but not yet paid by the bank. 
D) paid 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) written,recorded,sent to the payees,but not yet paid by the bank. 
D) paid by the bank.

Question 7

Match the term to the appropriate definition.There are more definitions than terms.
-NSF (Not Sufficient Funds)Check

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 8

Which of the following would be deducted from the ending cash balance per books when performing a bank reconciliation?

Accepted Answer

A) Electronic fund transfers 
B) Service charges 
C) Deposits in transit 
D) Outstanding checks 
A) Electronic fund transfers 
B) Service charges 
C) Deposits in transit 
D) Outstanding checks

Question 9

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

Accepted Answer

A) Company check 
B) Purchase requisition 
C) Supplier invoice 
D) Cash count sheet 
A) Company check 
B) Purchase requisition 
C) Supplier invoice 
D) Cash count sheet

Question 10

The services provided by banks help businesses to control cash by meeting which of the following control objectives?

Accepted Answer

A) Establish responsibility 
B) Segregate duties 
C) Restrict access 
D) Imprest the system 
A) Establish responsibility 
B) Segregate duties 
C) Restrict access 
D) Imprest the system

Question 11

A highly effective internal control should be implemented even if the cost is greater than the benefit.

Accepted Answer

A) True 
 B)False

Question 12

Collusion occurs when:

Accepted Answer

A) employees work together to get around internal controls. 
B) an outside party completes an independent verification. 
C) a company assigns sequential numbers to their documents. 
D) passcodes are required to open cash registers. 
A) employees work together to get around internal controls. 
B) an outside party completes an independent verification. 
C) a company assigns sequential numbers to their documents. 
D) passcodes are required to open cash registers.

Question 13

Which of the following key requirements of the Sarbanes-Oxley Act (SOX)is correctly paired with the correct action?

Accepted Answer

A) Counteract incentives - independent audit committee. 
B) Encourage honesty - ethics code. 
C) Reduce opportunities - stiff prison terms. 
D) Counteract incentives - internal control evaluation. 
A) Counteract incentives - independent audit committee. 
B) Encourage honesty - ethics code. 
C) Reduce opportunities - stiff prison terms. 
D) Counteract incentives - internal control evaluation.

Question 14

A process for approving and documenting all purchases and payments on account is referred to as a(n):

Accepted Answer

A) voucher system. 
B) imprest system. 
C) reconciliation procedure. 
D) cash receipts process. 
A) voucher system. 
B) imprest system. 
C) reconciliation procedure. 
D) cash receipts process.

Question 15

Which element is part of the fraud triangle?

Accepted Answer

A) Incentive 
B) Misappropriation 
C) Corruption 
D) Sustainability 
A) Incentive 
B) Misappropriation 
C) Corruption 
D) Sustainability

Question 16

A system used to reimburse employees for expenditures they have made on behalf of the organization is referred to as a(n):

Accepted Answer

A) electronic funds transfer. 
B) voucher system. 
C) petty cash system. 
D) internal control system. 
A) electronic funds transfer. 
B) voucher system. 
C) petty cash system. 
D) internal control system.

Question 17

Most companies pay salaries and wages to employees through EFTs,which are known by employees as:

Accepted Answer

A) direct deposits. 
B) vouchers. 
C) remittance advices. 
D) checks. 
A) direct deposits. 
B) vouchers. 
C) remittance advices. 
D) checks.

Question 18

Match the term to the appropriate definition.There are more definitions than terms.
-Cash Equivalents

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 19

A check that you have written has cleared the bank when:

Accepted Answer

A) funds have been withdrawn from your bank account to cover the check. 
B) the bank notifies you that you have insufficient funds to cover the check (NSF). 
C) the supplier to whom you gave the check records the payment received. 
D) the supplier to whom you gave the check deposits it in his bank account. 
A) funds have been withdrawn from your bank account to cover the check. 
B) the bank notifies you that you have insufficient funds to cover the check (NSF). 
C) the supplier to whom you gave the check records the payment received. 
D) the supplier to whom you gave the check deposits it in his bank account.

Question 20

Which of the following is the primary goal of internal controls for cash payments?

Accepted Answer

A) Ensure that the business pays only for properly authorized transactions. 
B) Confirm that the request for payments is made by someone who is approved to order goods or services of the type and amount requested. 
C) Ensure that the supplier charges only for items received at approved prices. 
D) Make payments only when a purchase is supported by complete voucher documentation. 
A) Ensure that the business pays only for properly authorized transactions. 
B) Confirm that the request for payments is made by someone who is approved to order goods or services of the type and amount requested. 
C) Ensure that the supplier charges only for items received at approved prices. 
D) Make payments only when a purchase is supported by complete voucher documentation.

The entry to record to establish a petty cash fund is a to Cash and a to Petty Cash.

The company has $8,000 in its checking account,$16,000 in its savings account,$800 in petty cash,$20,000 in one-year Treasury bills,and $12,000 in a money market fund.What amount should be reported as cash and cash equivalents on the balance sheet?

NSF checks from customers should be a(n)________ on a bank reconciliation.

A bank reconciliation item that a company's bank may not know about would be:

Outstanding checks refer to checks that have been:

Match the term to the appropriate definition.There are more definitions than terms. -NSF (Not Sufficient Funds)Check

Which of the following would be deducted from the ending cash balance per books when performing a bank reconciliation?

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

The services provided by banks help businesses to control cash by meeting which of the following control objectives?

A highly effective internal control should be implemented even if the cost is greater than the benefit.

Collusion occurs when:

Which of the following key requirements of the Sarbanes-Oxley Act (SOX)is correctly paired with the correct action?

A process for approving and documenting all purchases and payments on account is referred to as a(n):

Which element is part of the fraud triangle?

A system used to reimburse employees for expenditures they have made on behalf of the organization is referred to as a(n):

Most companies pay salaries and wages to employees through EFTs,which are known by employees as:

Match the term to the appropriate definition.There are more definitions than terms. -Cash Equivalents

A check that you have written has cleared the bank when:

Which of the following is the primary goal of internal controls for cash payments?

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

The entry to record to establish a petty cash fund is a ________ to Cash and a ________ to Petty Cash.

The company has $8,000 in its checking account,$16,000 in its savings account,$800 in petty cash,$20,000 in one-year Treasury bills,and $12,000 in a money market fund.What amount should be reported as cash and cash equivalents on the balance sheet?

NSF checks from customers should be a(n)________ on a bank reconciliation.

A bank reconciliation item that a company's bank may not know about would be:

Outstanding checks refer to checks that have been:

Match the term to the appropriate definition.There are more definitions than terms. -NSF (Not Sufficient Funds)Check

Which of the following would be deducted from the ending cash balance per books when performing a bank reconciliation?

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

The services provided by banks help businesses to control cash by meeting which of the following control objectives?

A highly effective internal control should be implemented even if the cost is greater than the benefit.

Collusion occurs when:

Which of the following key requirements of the Sarbanes-Oxley Act (SOX)is correctly paired with the correct action?

A process for approving and documenting all purchases and payments on account is referred to as a(n):

Which element is part of the fraud triangle?

A system used to reimburse employees for expenditures they have made on behalf of the organization is referred to as a(n):

Most companies pay salaries and wages to employees through EFTs,which are known by employees as:

Match the term to the appropriate definition.There are more definitions than terms. -Cash Equivalents

A check that you have written has cleared the bank when:

Which of the following is the primary goal of internal controls for cash payments?

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

The entry to record to establish a petty cash fund is a to Cash and a to Petty Cash.