Question 1

The steps to reconcile the beginning balance of the bank statement to the adjusted bank balance include adding outstanding checks,deposits,and bank service charges.

Accepted Answer

A) True 
 B)False

Question 2

A voucher system is a series of prescribed control procedures:

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 3

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period.As a result,in preparing this period's reconciliation,the amount of this check should be:

Accepted Answer

A) Added to the book balance of cash. 
B) Deducted from the book balance of cash. 
C) Added to the bank balance of cash. 
D) Deducted from the bank balance of cash. 
E) Ignored in preparing the period's bank reconciliation. 
A) Added to the book balance of cash. 
B) Deducted from the book balance of cash. 
C) Added to the bank balance of cash. 
D) Deducted from the bank balance of cash. 
E) Ignored in preparing the period's bank reconciliation.

Question 4

A company established a $400 petty cash fund by issuing a check to the custodian on October 1.On October 15,the petty cash fund was replenished and increased to $1,000 in total.The contents of the petty cash fund at the time of the October 15 replenishment were:
   Prepare the general journal entry to record both the reimbursement and the increase of the petty fund on October 15.

Accepted Answer

Oct.15 Merchandise Inventory………………………….

Question 5

A company had the following transactions during January:
Jan.2 Purchased merchandise,invoice price of $20,000,with terms 2/10,n/30.
4 Received a credit memorandum for $4,000,the invoice price on merchandise returned
from the purchase of January 2.
12 Purchased merchandise,invoice price of $15,000,with terms 3/15,n/30.
26 Paid for the merchandise purchased on January 12.
30 Paid for the merchandise purchased on January 2.
Using the net method of recording purchases,prepare the journal entries to record these January transactions.

Accepted Answer

The answer of A company had the following transactions during...

Question 6

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount,and have maturities of one year.

Accepted Answer

A) True 
 B)False

Question 7

Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.

Accepted Answer

A) True 
 B)False

Question 8

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

Accepted Answer

A) True 
 B)False

Question 9

An internal control system consists of all of the following policies and procedures except ones designed to:

Accepted Answer

A) Protect assets. 
B) Ensure reliable accounting. 
C) Guarantee a return to investors 
D) Urge adherence to company policies. 
E) Promote efficient operations. 
A) Protect assets. 
B) Ensure reliable accounting. 
C) Guarantee a return to investors 
D) Urge adherence to company policies. 
E) Promote efficient operations.

Question 10

Martha Company has an established petty cash fund in the amount of $500.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 $301 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 Transportation-Out of $73. 
C) A credit to Office Supplies of $66. 
D) A credit to Cash Over and Short of $10. 
E) A debit to Cash Over and Short of $10. 
A) A debit to Transportation-In of $73. 
B) A debit to Transportation-Out of $73. 
C) A credit to Office Supplies of $66. 
D) A credit to Cash Over and Short of $10. 
E) A debit to Cash Over and Short of $10.

Question 11

The document the purchasing department sends to the vendor that is used to place an order is the __________________________.

Accepted Answer

The answer of The document the purchasing department sends to...

Question 12

A sales system with pre-numbered,controlled sales slips is an example of the internal control principle of _______________________.

Accepted Answer

maintain a

Question 13

The _________________ account is used to record the effects of cash overages and shortages from errors in making change.

Accepted Answer

The answer of The _________________ account is used to record...

Question 14

Principles of internal control include all of the following except:

Accepted Answer

A) Apply technological controls. 
B) Maintain minimal assets. 
C) Perform regular and independent reviews. 
D) Separate recordkeeping from custody of assets. 
E) Divide responsibilities for related transactions. 
A) Apply technological controls. 
B) Maintain minimal assets. 
C) Perform regular and independent reviews. 
D) Separate recordkeeping from custody of assets. 
E) Divide responsibilities for related transactions.

Question 15

If a check correctly written and paid by the bank for $794 is incorrectly recorded in the company's books for $749,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. 
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.

Question 16

Internal control policies and procedures have limitations including:

Accepted Answer

A) Human error. 
B) Human fraud. 
C) Cost-benefit principle. 
D) Collusion. 
E) All of the options are limitations. 
A) Human error. 
B) Human fraud. 
C) Cost-benefit principle. 
D) Collusion. 
E) All of the options are limitations.

Question 17

A company records purchases using the net method.On February 1,they purchased merchandise inventory on account for $8,300 with terms of 1/10,n/30.The February 1 journal entry to record this transaction would include a:

Accepted Answer

A) Debit to Merchandise Inventory of $8,300. 
B) Debit to Merchandise Inventory of $8,217. 
C) Debit to Merchandise Inventory of $83. 
D) Credit to Merchandise Inventory of $83. 
E) Credit to Accounts Payable of $8,300. 
A) Debit to Merchandise Inventory of $8,300. 
B) Debit to Merchandise Inventory of $8,217. 
C) Debit to Merchandise Inventory of $83. 
D) Credit to Merchandise Inventory of $83. 
E) Credit to Accounts Payable of $8,300.

Question 18

Cancelled checks are checks the bank has paid and deducted from the customer's account during the period.

Accepted Answer

A) True 
 B)False

Question 19

________________ includes currency,coins,and amounts on deposit in checking accounts and savings accounts.

Accepted Answer

The answer of ________________ includes currency,coins,and amounts on deposit in...

Question 20

Cash equivalents:

Accepted Answer

A) Are readily convertible to a known cash amount. 
B) Include short-term investments purchased within 3 months of their maturity dates. 
C) Have a market value that is not sensitive to interest rate changes. 
D) Include short-term U.S.treasury bills. 
E) All of the choices are cash equivalents. 
A) Are readily convertible to a known cash amount. 
B) Include short-term investments purchased within 3 months of their maturity dates. 
C) Have a market value that is not sensitive to interest rate changes. 
D) Include short-term U.S.treasury bills. 
E) All of the choices are cash equivalents.

Exam 8: Cash and Internal Controls

The steps to reconcile the beginning balance of the bank statement to the adjusted bank balance include adding outstanding checks,deposits,and bank service charges.

A voucher system is a series of prescribed control procedures:

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period.As a result,in preparing this period's reconciliation,the amount of this check should be:

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount,and have maturities of one year.

Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

An internal control system consists of all of the following policies and procedures except ones designed to:

The document the purchasing department sends to the vendor that is used to place an order is the __________________________.

A sales system with pre-numbered,controlled sales slips is an example of the internal control principle of _______________________.

The _________________ account is used to record the effects of cash overages and shortages from errors in making change.

Principles of internal control include all of the following except:

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

Internal control policies and procedures have limitations including:

A company records purchases using the net method.On February 1,they purchased merchandise inventory on account for $8,300 with terms of 1/10,n/30.The February 1 journal entry to record this transaction would include a:

Cancelled checks are checks the bank has paid and deducted from the customer's account during the period.

________________ includes currency,coins,and amounts on deposit in checking accounts and savings accounts.

Cash equivalents:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

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 Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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