Question 1

The Petty Cash account is a separate checking account used for small amounts.

Accepted Answer

A) True 
 B)False

Question 2

The number of days' sales uncollected:

Accepted Answer

A) Measures how much time is likely to pass before the current amount of accounts receivable is received in cash. 
B) Can be used for comparisons to other companies in the same industry. 
C) Can be used for comparisons between current and prior periods. 
D) Reflects the liquidity of receivables. 
E) All of the options are correct. 
A) Measures how much time is likely to pass before the current amount of accounts receivable is received in cash. 
B) Can be used for comparisons to other companies in the same industry. 
C) Can be used for comparisons between current and prior periods. 
D) Reflects the liquidity of receivables. 
E) All of the options are correct.

Question 3

Basic bank services such as bank accounts,bank deposits,and checking contribute to the control and safeguarding of cash.

Accepted Answer

A) True 
 B)False

Question 4

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ___________________.

Accepted Answer

perform re

Question 5

The Cash Over and Short account:

Accepted Answer

A) Is used to record a credit balance in the cash account. 
B) Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and/or from errors in processing petty cash transactions. 
C) Is not necessary in a computerized accounting system. 
D) Can never have a debit balance. 
E) Can never have a credit balance. 
A) Is used to record a credit balance in the cash account. 
B) Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and/or from errors in processing petty cash transactions. 
C) Is not necessary in a computerized accounting system. 
D) Can never have a debit balance. 
E) Can never have a credit balance.

Question 6

A ________________ fund is used for the control of small amounts of cash disbursements.

Accepted Answer

The answer of A ________________ fund is used for the...

Question 7

A company's internal control system:

Accepted Answer

A) Eliminates the company's risk of loss. 
B) Monitors company and employee performance. 
C) Eliminates human error. 
D) Eliminates the need for audits. 
E) Eliminates the need for managers' certification of controls. 
A) Eliminates the company's risk of loss. 
B) Monitors company and employee performance. 
C) Eliminates human error. 
D) Eliminates the need for audits. 
E) Eliminates the need for managers' certification of controls.

Question 8

What is the purpose of the petty cash account?

Accepted Answer

The petty cash account is used to serve

Question 9

A voucher system establishes procedures for verifying,approving,and recording obligations for eventual cash disbursement.

Accepted Answer

A) True 
 B)False

Question 10

The following information is taken from Hogan Company's December 31 balance sheet:
  If net credit sales and cost of goods sold for the current year were $612,000 and $367,200,respectively,the firm's days' sales uncollected for the year is:

Accepted Answer

A) 60 days 
B) 85 days 
C) 42 days 
D) 154 days 
E) 70 days 
A) 60 days 
B) 85 days 
C) 42 days 
D) 154 days 
E) 70 days

Question 11

A voucher system's control over cash disbursements begins when a company incurs an obligation that will result in eventual payment of cash.

Accepted Answer

A) True 
 B)False

Question 12

The following information is available for the Edwards Company for its March 31 bank reconciliation:
From the March 31 bank statement:
   NSF:
 A check from a customer,Cook Co.in payment of their account.
IN:
 Interest earned on the account.
From the Edwards Company's accounting records:
   1.Based on the above information,prepare a bank reconciliation for the Edwards Company.
2.Prepare the necessary general journal entries to adjust cash to the reconciled balance.

Accepted Answer

The answer of The following information is available for the...

Question 13

On June 3,a company received and recorded a $4,500 invoice for merchandise on which the terms were 2/10,n/60.The company records invoices at net amounts.On June 23,the company discovered that the invoice had been incorrectly filed and the discount lost.Prepare the June 3 general journal entry to record the purchase,the June 23 entry to record the discount lost,and the August 2 entry to record payment of the invoice.

Accepted Answer

The answer of On June 3,a company received and recorded...

Question 14

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

Accepted Answer

A) True 
 B)False

Question 15

A company plans to decrease a $200 petty cash fund to $75.The current balance in the account includes $45 petty cash payment in receipts and $165 in currency.The entry to reduce the fund will include a:

Accepted Answer

A) Debit to Cash Short and Over for $10. 
B) Debit to Cash for $90. 
C) Debit to Miscellaneous Expenses for $35. 
D) Credit to Petty Cash for $165. 
E) Credit to Cash for $90. 
A) Debit to Cash Short and Over for $10. 
B) Debit to Cash for $90. 
C) Debit to Miscellaneous Expenses for $35. 
D) Credit to Petty Cash for $165. 
E) Credit to Cash for $90.

Question 16

On August 17,at the end of the day,the cash register's record shows $957,but the count of cash in the register is $965.Prepare the general journal entry to record the day's cash sales.

Accepted Answer

Aug.17 Cash………………………

Question 17

The gross method of recording purchases refers to the method of recording:

Accepted Answer

A) Purchases at the invoice price less any cash discounts. 
B) Specified amounts and timing of payments that a buyer agrees to make in return for being granted credit. 
C) Purchases at the full invoice price, without deducting any cash discounts. 
D) Inventory at its selling price. 
E) Inventory at the lower of cost or market. 
A) Purchases at the invoice price less any cash discounts. 
B) Specified amounts and timing of payments that a buyer agrees to make in return for being granted credit. 
C) Purchases at the full invoice price, without deducting any cash discounts. 
D) Inventory at its selling price. 
E) Inventory at the lower of cost or market.

Question 18

Identify each of the following items 1 through 10 as either (A)cash or (B)cash equivalent.
_____ 1.Coins
_____ 2.Petty cash
_____ 3.Three-month certificate of deposit
_____ 4.Commercial paper
_____ 5.Currency
_____ 6.Certified check
_____ 7.Cashier's check
_____ 8.Money market accounts
_____ 9.Money orders
_____ 10.U.S.treasury bills

Accepted Answer

1.A; 2.A;

Question 19

The principles of internal control include:
 establish responsibilities,maintain adequate records,insure assets,separate recordkeeping from custody of assets,and perform regular and independent reviews.

Accepted Answer

A) True 
 B)False

Question 20

Internal control of cash receipts aims to ensure that all cash received is properly recorded and deposited.

Accepted Answer

A) True 
 B)False

Exam 8: Cash and Internal Controls

The Petty Cash account is a separate checking account used for small amounts.

The number of days' sales uncollected:

Basic bank services such as bank accounts,bank deposits,and checking contribute to the control and safeguarding of cash.

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ___________________.

The Cash Over and Short account:

A ________________ fund is used for the control of small amounts of cash disbursements.

A company's internal control system:

What is the purpose of the petty cash account?

A voucher system establishes procedures for verifying,approving,and recording obligations for eventual cash disbursement.

The following information is taken from Hogan Company's December 31 balance sheet: If net credit sales and cost of goods sold for the current year were $612,000 and $367,200,respectively,the firm's days' sales uncollected for the year is:

A voucher system's control over cash disbursements begins when a company incurs an obligation that will result in eventual payment of cash.

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

A company plans to decrease a $200 petty cash fund to $75.The current balance in the account includes $45 petty cash payment in receipts and $165 in currency.The entry to reduce the fund will include a:

On August 17,at the end of the day,the cash register's record shows $957,but the count of cash in the register is $965.Prepare the general journal entry to record the day's cash sales.

The gross method of recording purchases refers to the method of recording:

The principles of internal control include: establish responsibilities,maintain adequate records,insure assets,separate recordkeeping from custody of assets,and perform regular and independent reviews.

Internal control of cash receipts aims to ensure that all cash received is properly recorded and deposited.

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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