Question 1

Technologically advanced accounting systems rarely need monitoring for errors because computers always process transactions correctly.

Accepted Answer

A) True 
 B)False

Question 2

Vouchers should be used for purchases of inventory and all other expenditures made within a company.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Since petty cash is concerned with such small amounts of cash,it is not necessary to document all transactions with a petty cash receipt.

Accepted Answer

A) True 
 B)False

Question 5

What is a voucher system and what are the two areas for which it establishes control procedures?

Accepted Answer

A voucher system is a set of procedures

Question 6

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

Accepted Answer

A) Deduct the check amount from the book balance of cash. 
B) Add the check amount to the book balance of cash. 
C) Deduct the check amount from the bank balance. 
D) Add the check amount to the bank balance. 
E) Make a journal entry in the company records for an error. 
A) Deduct the check amount from the book balance of cash. 
B) Add the check amount to the book balance of cash. 
C) Deduct the check amount from the bank balance. 
D) Add the check amount to the bank balance. 
E) Make a journal entry in the company records for an error.

Question 7

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.Short-term investment in commercial paper
_____ 5.Currency
_____ 6.Certified check
_____ 7.Cashier's check
_____ 8.Sixty-day certificate of deposit
_____ 9.Money orders
_____ 10.U.S.treasury bills

Accepted Answer

1.A; 2.A;

Question 8

On May 1,a company established a $125 petty cash fund.On May 22,the petty cash fund contains $6 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $25; postage,$21; and office supplies,$66.Record the general journal entry to reimburse the fund.

Accepted Answer

The answer of On May 1,a company established a $125...

Question 9

Plenty Co.established a petty cash fund of $150 on October 1.On October 10,the petty cash fund was replenished when there was $49 remaining and there were petty cash receipts for: office supplies,$47; transportation-in on inventory purchased,$32; and postage,$22.On October 15,the petty cash fund was decreased to $125 in total.Plenty Co.uses the perpetual inventory system.Record the above transactions in general journal form.

Accepted Answer

The answer of Plenty Co.established a petty cash fund of...

Question 10

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

Accepted Answer

A) Promoting efficient operations. 
B) Protecting assets. 
C) Upholding company policies. 
D) Ensuring reliable accounting. 
E) Assuring that no loss will occur. 
A) Promoting efficient operations. 
B) Protecting assets. 
C) Upholding company policies. 
D) Ensuring reliable accounting. 
E) Assuring that no loss will occur.

Question 11

Approved vouchers are recorded in a journal called the voucher register.

Accepted Answer

A) True 
 B)False

Question 12

At the end of the day on March 15,the cash register's record shows $1,957,but the count of cash in the register is $1,965.Prepare the general journal entry to record the day's cash sales.

Accepted Answer

The answer of At the end of the day on...

Question 13

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 14

The document that the purchasing department prepares and sends to the vendor to place an order 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 15

The following information is available for Fenton Manufacturing Company at June 30:   Based on this information,Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Accepted Answer

A) $28,495 
B) $29,286 
C) $23,286 
D) $12,095 
E) $22,495 
A) $28,495 
B) $29,286 
C) $23,286 
D) $12,095 
E) $22,495

Question 16

Internal control systems are:

Accepted Answer

A) Developed by the Securities and Exchange Commission for public companies. 
B) Developed by the Small Business Administration for non-public companies. 
C) Developed by the Internal Revenue Service for all U.S.companies. 
D) Required by Sarbanes-Oxley (SOX)to be documented and certified if the company's stock is traded on an exchange (a public company). 
E) Required only if a company plans to engage in interstate commerce. 
A) Developed by the Securities and Exchange Commission for public companies. 
B) Developed by the Small Business Administration for non-public companies. 
C) Developed by the Internal Revenue Service for all U.S.companies. 
D) Required by Sarbanes-Oxley (SOX)to be documented and certified if the company's stock is traded on an exchange (a public company). 
E) Required only if a company plans to engage in interstate commerce.

Question 17

The internal document prepared to notify the appropriate persons that goods ordered have been received,describing the quantities and condition of the goods is 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 18

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 19

A bank does not reduce the account of the depositor of which of the following?

Accepted Answer

A) All withdrawals through an ATM. 
B) A fee assessed to the depositor's account. 
C) An uncollectible check. 
D) Periodic payments arranged in advance,by a depositor. 
E) A deposit to their account. 
A) All withdrawals through an ATM. 
B) A fee assessed to the depositor's account. 
C) An uncollectible check. 
D) Periodic payments arranged in advance,by a depositor. 
E) A deposit to their account.

Question 20

A key factor in a voucher system includes all of the following except:

Accepted Answer

A) Only approved departments and individuals are authorized to incur a liability that will result in the payment of cash. 
B) Procedures for purchasing,receiving,and paying for merchandise are divided among several departments. 
C) The system limits the individuals that can incur cash payment liabilities for a company. 
D) It is applied to purchases of merchandise inventory and all other expenses. 
E) It is not necessary if the supplier provides both receiving report and invoice with the merchandise shipped. 
A) Only approved departments and individuals are authorized to incur a liability that will result in the payment of cash. 
B) Procedures for purchasing,receiving,and paying for merchandise are divided among several departments. 
C) The system limits the individuals that can incur cash payment liabilities for a company. 
D) It is applied to purchases of merchandise inventory and all other expenses. 
E) It is not necessary if the supplier provides both receiving report and invoice with the merchandise shipped.

Exam 6: Cash,fraud,and Internal Controls

Technologically advanced accounting systems rarely need monitoring for errors because computers always process transactions correctly.

Vouchers should be used for purchases of inventory and all other expenditures made within a company.

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

Since petty cash is concerned with such small amounts of cash,it is not necessary to document all transactions with a petty cash receipt.

What is a voucher system and what are the two areas for which it establishes control procedures?

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

On May 1,a company established a $125 petty cash fund.On May 22,the petty cash fund contains $6 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $25; postage,$21; and office supplies,$66.Record the general journal entry to reimburse the fund.

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

Approved vouchers are recorded in a journal called the voucher register.

At the end of the day on March 15,the cash register's record shows $1,957,but the count of cash in the register is $1,965.Prepare the general journal entry to record the day's cash sales.

A company's internal control system:

The document that the purchasing department prepares and sends to the vendor to place an order is called the:

The following information is available for Fenton Manufacturing Company at June 30: Based on this information,Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Internal control systems are:

The internal document prepared to notify the appropriate persons that goods ordered have been received,describing the quantities and condition of the goods is the:

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 ________.

A bank does not reduce the account of the depositor of which of the following?

A key factor in a voucher system includes all of the following except:

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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