Question 1

Principles of internal control

Accepted Answer

A) Fundamental guidelines applicable to all companies established to minimize the risk of fraud and theft and to increase the reliability and accuracy of the accounting records. 
B) Short-term, highly liquid investment assets that are readily convertible to cash and close enough to their due date so that their market value will not greatly change. 
C) An internal document used to collect information to control cash payments and to ensure that a transaction is properly recorded. 
D) An income statement account used to record the income effects of cash overages and cash shortages arising from missing petty cash receipts or errors in making change. 
E) A measure of how quickly a company can convert its accounts receivable into cash.
F)Principle that says the costs of internal controls must not exceed their benefits
G)A set of procedures and approvals designed to control cash payments and the acceptance of liabilities.
H)Used by the bank to verify signatures of persons authorized to write checks.
I)A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.
J)The ability of a company to pay for its near-term obligations. 
A) Fundamental guidelines applicable to all companies established to minimize the risk of fraud and theft and to increase the reliability and accuracy of the accounting records. 
B) Short-term, highly liquid investment assets that are readily convertible to cash and close enough to their due date so that their market value will not greatly change. 
C) An internal document used to collect information to control cash payments and to ensure that a transaction is properly recorded. 
D) An income statement account used to record the income effects of cash overages and cash shortages arising from missing petty cash receipts or errors in making change. 
E) A measure of how quickly a company can convert its accounts receivable into cash.
F)Principle that says the costs of internal controls must not exceed their benefits
G)A set of procedures and approvals designed to control cash payments and the acceptance of liabilities.
H)Used by the bank to verify signatures of persons authorized to write checks.
I)A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.
J)The ability of a company to pay for its near-term obligations.

Question 2

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Accepted Answer

A) True 
 B)False

Question 3

A properly designed internal control system is a key part of systems design,analysis,and performance.

Accepted Answer

A) True 
 B)False

Question 4

Umber Company's bank reconciliation for September is presented below.Prepare the necessary adjusting journal entries based on the reconciliation report.

Accepted Answer

The answer of Umber Company's bank reconciliation for September is...

Question 5

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) Held as blank checks. 
D) Written,recorded on the company books,sent to the payee,but not yet paid by the bank. 
E) Issued 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) Held as blank checks. 
D) Written,recorded on the company books,sent to the payee,but not yet paid by the bank. 
E) Issued by the bank.

Question 6

A ________ fund is used to make cash payments of small amounts to avoid the time and cost of writing checks.

Accepted Answer

The answer of A ________ fund is used to make...

Question 7

The following account balances are taken from Ferguson Sports at December 31.
   Calculate the number of days' sales uncollected for both years.According to this analysis,is the company's collection of receivables improving? Explain.

Accepted Answer

Days' Sales Uncollected Ratio = Ending A

Question 8

Which of the following events would cause a bank to reduce a depositor's account?

Accepted Answer

A) The depositor orders new checks through the bank at a cost of $50. 
B) The bank collects a note receivable and related interest on the depositor's behalf. 
C) There are outstanding checks drawn on the account at month-end. 
D) There are deposits in transit on the account at month-end. 
E) The bank corrects an error from previous month by adding $75 to the depositor account. 
A) The depositor orders new checks through the bank at a cost of $50. 
B) The bank collects a note receivable and related interest on the depositor's behalf. 
C) There are outstanding checks drawn on the account at month-end. 
D) There are deposits in transit on the account at month-end. 
E) The bank corrects an error from previous month by adding $75 to the depositor account.

Question 9

Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check.At the close of business on May 31,its Cash account shows a debit balance of $17,025.Clayborn's May bank statement shows $15,800 on deposit in the bank.Determine the adjusted cash balance using the following information:   The adjusted cash balance should be:

Accepted Answer

A) $16,400 
B) $11,200 
C) $21,000 
D) $16,425 
E) $17,000 
A) $16,400 
B) $11,200 
C) $21,000 
D) $16,425 
E) $17,000

Question 10

A remittance advice is a(n):

Accepted Answer

A) Explanation for a payment by check. 
B) Bank statement. 
C) Internal voucher. 
D) Electronic funds transfer. 
E) Cancelled check. 
A) Explanation for a payment by check. 
B) Bank statement. 
C) Internal voucher. 
D) Electronic funds transfer. 
E) Cancelled check.

Question 11

The itemized statement of goods prepared by a vendor listing the customer's name,items sold,sales prices,and terms of the sale is called the:

Accepted Answer

A) Purchase requisition. 
B) Purchase order. 
C) Invoice. 
D) Receiving report. 
E) Invoice approval. 
A) Purchase requisition. 
B) Purchase order. 
C) Invoice. 
D) Receiving report. 
E) Invoice approval.

Question 12

When a company purchases an insurance policy against losses from theft by an employee,that employee is ________.

Accepted Answer

The answer of When a company purchases an insurance policy...

Question 13

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227,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 14

An ________ refers to the policies and procedures managers use to protect assets,ensure reliable accounting,promote efficient operations,and urge adherence to company policies.

Accepted Answer

internal c

Question 15

Easton Co.deposits all cash receipts on the day they are received and makes all cash payments by check.At the close of business on June 30,its Cash account shows a debit balance of $60,209.Easton's June bank statement shows $58,349 on deposit in the bank.Determine the adjusted cash balance using the following information:   The adjusted cash balance should be:

Accepted Answer

A) $60,194 
B) $60,239 
C) $62,149 
D) $56,424 
E) $60,224 
A) $60,194 
B) $60,239 
C) $62,149 
D) $56,424 
E) $60,224

Question 16

Because employees know that bonding is an insurance policy against loss from theft,bonding does not generally discourage loss from theft.

Accepted Answer

A) True 
 B)False

Question 17

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.

Accepted Answer

A) True 
 B)False

Question 18

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

Accepted Answer

A) True 
 B)False

Exam 6: Cash,fraud,and Internal Controls

Principles of internal control

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

A properly designed internal control system is a key part of systems design,analysis,and performance.

Umber Company's bank reconciliation for September is presented below.Prepare the necessary adjusting journal entries based on the reconciliation report.

Outstanding checks refer to checks that have been:

A ________ fund is used to make cash payments of small amounts to avoid the time and cost of writing checks.

The following account balances are taken from Ferguson Sports at December 31. Calculate the number of days' sales uncollected for both years.According to this analysis,is the company's collection of receivables improving? Explain.

Which of the following events would cause a bank to reduce a depositor's account?

A remittance advice is a(n):

The itemized statement of goods prepared by a vendor listing the customer's name,items sold,sales prices,and terms of the sale is called the:

When a company purchases an insurance policy against losses from theft by an employee,that employee is ________.

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227,how should this error be treated on the bank reconciliation?

An ________ refers to the policies and procedures managers use to protect assets,ensure reliable accounting,promote efficient operations,and urge adherence to company policies.

Because employees know that bonding is an insurance policy against loss from theft,bonding does not generally discourage loss from theft.

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

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.

Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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