Question 1

For which item does a bank NOT issue a debit memorandum?

Accepted Answer

A) To notify a depositor of all withdrawals through an ATM. 
B) To notify a depositor of a fee assessed to the depositor's account. 
C) To notify a depositor of a uncollectible check. 
D) To notify a depositor of periodic payments arranged in advance, by a depositor. 
E) To notify a depositor of a deposit to their account. 
A) To notify a depositor of all withdrawals through an ATM. 
B) To notify a depositor of a fee assessed to the depositor's account. 
C) To notify a depositor of a uncollectible check. 
D) To notify a depositor of periodic payments arranged in advance, by a depositor. 
E) To notify a depositor of a deposit to their account.

Question 2

Merchandise with an invoice price of $2,000 was purchased on October 3,terms 1/15,n/60.The company uses the net method to record purchases.The entry to record the cash payment of this purchase obligation on October 17 is:

Accepted Answer

A) Debit Accounts Payable $1,980; credit Cash $1,980. 
B) Debit Accounts Payable $2,000; credit Cash $2,000. 
C) Debit Accounts Payable $1,980; credit Discounts Lost $20; credit Cash $2,000. 
D) Debit Accounts Payable $2,000; credit Merchandise Inventory $20; credit Cash $1,980. 
E) Debit Accounts Payable $2,000; credit Merchandise Inventory $40; credit Cash $1,960. 
A) Debit Accounts Payable $1,980; credit Cash $1,980. 
B) Debit Accounts Payable $2,000; credit Cash $2,000. 
C) Debit Accounts Payable $1,980; credit Discounts Lost $20; credit Cash $2,000. 
D) Debit Accounts Payable $2,000; credit Merchandise Inventory $20; credit Cash $1,980. 
E) Debit Accounts Payable $2,000; credit Merchandise Inventory $40; credit Cash $1,960.

Question 3

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Accepted Answer

A) After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the sender's name, the amount, and an explanation of why the money is sent. 
B) The bank reconciliation is prepared by a person who does not handle cash or record cash receipts. 
C) For safety, only one person should open the mail, and that person should immediately deposit the cash received in the bank. 
D) The cashier should not also be the record keeper who records the amounts received in the accounting records. 
E) All of these are good internal control procedures over cash receipts that arrive through the mail. 
A) After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the sender's name, the amount, and an explanation of why the money is sent. 
B) The bank reconciliation is prepared by a person who does not handle cash or record cash receipts. 
C) For safety, only one person should open the mail, and that person should immediately deposit the cash received in the bank. 
D) The cashier should not also be the record keeper who records the amounts received in the accounting records. 
E) All of these are good internal control procedures over cash receipts that arrive through the mail.

Question 4

A company purchased merchandise inventory costing $15,000 with credit terms of 2/10,n/30 on November 7.On November 15,the company paid 1/3 of the amount due.The remaining balance was paid on December 7.
Required:
a.Record the journal entries related to this transaction using the gross method of recording purchases.
b.Record the journal entries related to this transaction using the net method of recording purchases.

Accepted Answer

The answer of A company purchased merchandise inventory costing $15,000...

Question 5

A company had the following transactions during January:
   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

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.

Accepted Answer

A) True 
 B)False

Question 7

A ________ is an internal document (or file)that is used to accumulate information to control cash disbursements.

Accepted Answer

The answer of A ________ is an internal document (or...

Question 8

Deposits in transit are deposits made and recorded by the depositor but not yet recorded on the bank statement.

Accepted Answer

A) True 
 B)False

Question 9

Preparing a bank reconciliation on a monthly basis is an example of:

Accepted Answer

A) Establishing responsibility. 
B) Separation of duties. 
C) Protecting assets by proving accuracy of cash records. 
D) A technological control. 
E) Poor internal control. 
A) Establishing responsibility. 
B) Separation of duties. 
C) Protecting assets by proving accuracy of cash records. 
D) A technological control. 
E) Poor internal control.

Question 10

Maintaining adequate records is an important internal control principle.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises: A document used by the purchasing department to place an order with a vendor.
A method of recording purchases at the full invoice price without deducting any cash discounts.
A report that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.
An internal business document (or file) used to accumulate information to control cash disbursements and to ensure that the transaction is properly recorded.
A method of recording purchases at the full invoice price less any cash discounts.
An income statement account used to record cash overages and cash shortages arising from missing petty cash receipts or from errors in making change.
The ability of a company to pay for its short-term obligations.
An internal document used to report that ordered goods are received and to describe the quantity and condition.
Principles requiring management to establish responsibility, maintain adequate records,\ insure assets, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, and perform reviews.
A measure of the liquidity of receivables computed by taking the current balance of receivables and dividing by the credit sales over the period, and then multiplying by 365.

Accepted Answer

The Answer of Bank reconciliation and Liquidity and Purchase order is...

Question 12

The following information is available to reconcile Cloy Company's book balance of cash with its bank statement cash balance as of June 30.The June 30 cash balance according to the accounting records is $58,542,and the bank statement cash balance for that date is $68,047.
a.The bank erroneously cleared a $395 check against the account in June that was not issued by Cloy.The check documentation included with the bank statement indicates the check was actually issued by Clare Co.
b.On June 30,the bank issued a credit memorandum for $35 interest earned on Cloy's account.
c.When the June checks are compared with entries in the accounting records,it is found that Check No.1727 had been correctly drawn for $1,450 to pay for advertising but was erroneously entered in the accounting records as $1,540.
d.A credit memorandum indicates that the bank collected $9,000 cash on a note receivable for Cloy,deducted a $30 collection fee,and credited the balance to the company's Cash account.Cloy did not record this transaction before receiving the statement.
e.A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870 received from a customer.The bank assessed a $25 fee for processing it.
f.Cloy's June 30 daily cash receipts of $6,325 were placed in the bank's night depository on that date,but do not appear on the June 30 bank statement.
g.Cloy's June 30 cash disbursements journal indicates that Check No.1737 for $4,830 and Check No.1740 for $3,280 were both written and entered in the accounting records,but are not among the canceled checks.
h.A debit memorandum for $85.00 indicates the bank deducted the annual lock box fee for the company.
1.Prepare the bank reconciliation for this company as of June 30.
2.Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of June 30.

Accepted Answer

The answer of The following information is available to reconcile...

Question 13

Technologically advanced accounting systems do not need monitoring for errors because computers always process transactions correctly.

Accepted Answer

A) True 
 B)False

Question 14

Internal control devices for banking activities include signature cards,deposit tickets,checks,and bank statements.

Accepted Answer

A) True 
 B)False

Question 15

A remittance advice is:

Accepted Answer

A) An explanation for a payment by check. 
B) A bank statement. 
C) A voucher. 
D) An EFT. 
E) A cancelled check. 
A) An explanation for a payment by check. 
B) A bank statement. 
C) A voucher. 
D) An EFT. 
E) A cancelled check.

Question 16

A company had net sales of $31,500 and ending accounts receivable of $2,700 for the current period.Its days' sales uncollected equals:

Accepted Answer

A) 11.7 days. 
B) 23.3 days. 
C) 31.3 days. 
D) 42.5 days. 
E) 46.6 days. 
A) 11.7 days. 
B) 23.3 days. 
C) 31.3 days. 
D) 42.5 days. 
E) 46.6 days.

Question 17

A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30.In preparing the September 30 bank reconciliation,the company should:

Accepted Answer

A) Deduct the deposit from the bank statement balance. 
B) Send the bank a debit memorandum. 
C) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
D) Add the deposit to the book balance of cash. 
E) Add the deposit to the bank statement balance. 
A) Deduct the deposit from the bank statement balance. 
B) Send the bank a debit memorandum. 
C) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
D) Add the deposit to the book balance of cash. 
E) Add the deposit to the bank statement balance.

Question 18

On a bank statement,deposits are shown as __________________,because the depositor's account is a liability on the bank's records.

Accepted Answer

The answer of On a bank statement,deposits are shown as...

Question 19

A petty cash fund was originally established with a check for $150.In the petty cash fund on December 31 (the period-end),you find the following:
   Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

Accepted Answer

Dec.31 Postage Expense ………… 43

Question 20

Match between columns
                        Premises: A document signed by the depositor instructing the bank to pay a specified amount to a designated recipient.
An expense resulting from failure to take advantage of cash discounts on purchases.
The buyer or purchaser of goods or services.
An internal document listing the goods needed by a department and requesting that it be purchased.
An itemized statement of goods prepared by the vendor that lists the customer's name, the items sold, the sales price of each item, and the terms of sale.
Currency, coins, and amounts on deposit in bank checking and many savings accounts.
The seller of goods or services.
All the policies and procedures managers use to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
Short-term, highly liquid investments that are readily convertible to a known cash amount and are sufficiently close to their maturity date so that the market value is not sensitive to interest rate changes.
An asset such as cash that can be readily used to settle near-term obligations.

Accepted Answer

The Answer of Cash and Liquid assets and Purchase requisition is...

Exam 8: Cash and Internal Controls

For which item does a bank NOT issue a debit memorandum?

Merchandise with an invoice price of $2,000 was purchased on October 3,terms 1/15,n/60.The company uses the net method to record purchases.The entry to record the cash payment of this purchase obligation on October 17 is:

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

A company had the following transactions during January: Using the net method of recording purchases,prepare the journal entries to record these January transactions.

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.

A ________ is an internal document (or file)that is used to accumulate information to control cash disbursements.

Deposits in transit are deposits made and recorded by the depositor but not yet recorded on the bank statement.

Preparing a bank reconciliation on a monthly basis is an example of:

Maintaining adequate records is an important internal control principle.

Technologically advanced accounting systems do not need monitoring for errors because computers always process transactions correctly.

Internal control devices for banking activities include signature cards,deposit tickets,checks,and bank statements.

A remittance advice is:

A company had net sales of $31,500 and ending accounts receivable of $2,700 for the current period.Its days' sales uncollected equals:

A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30.In preparing the September 30 bank reconciliation,the company should:

On a bank statement,deposits are shown as __________________,because the depositor's account is a liability on the bank's records.

A petty cash fund was originally established with a check for $150.In the petty cash fund on December 31 (the period-end),you find the following: Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

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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