Question 1

Human fraud is driven by the triple-threat of fraud: Opportunity,collusion,and rationalization.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794,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 4

Great Falls Co.'s bank reconciliation as of February 28 is shown below.
$$\begin{array} { | l | r | l|r| } 
\hline \text { Bank balance } & \$ 37,643& \text { Book balance } & \$ 38,153 \
\hline + \text { Deposit in transit } & 2,950& \text { Note collection } & + 745 \
\hline \text { - Outstanding checks } & \underline { - 1,730 }&\text { Check printing  } & \underline { - 35 } \
\hline \text { Adjusted bank balance } & \$ 38,863 &\text { Adjusted book balance } & \$ 38,863 \
\hline
\end{array}$$
One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes:

Accepted Answer

A)  Debit Note Payable $745; credit Cash $745. 
B)  Debit Cash $745; credit Note Receivable $745. 
C)  Debit Cash $2,950; credit Sales $2,950. 
D)  Debit Cash $2,950; credit Accounts Receivable $2,950. 
E)  Debit Miscellaneous Expense $35; credit Accounts Payable $35. 
A)  Debit Note Payable $745; credit Cash $745. 
B)  Debit Cash $745; credit Note Receivable $745. 
C)  Debit Cash $2,950; credit Sales $2,950. 
D)  Debit Cash $2,950; credit Accounts Receivable $2,950. 
E)  Debit Miscellaneous Expense $35; credit Accounts Payable $35.

Question 5

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:
$$\begin{array} { | l | r | } 
\hline \text { Deposit in transit } & \$ 5,200 \
\hline \text { Outstanding checks } & \$ 4,600 \
\hline \text { Bank service fees, not yet recorded by company } & \$ 25 \
\hline \text { A NSF check from a customer, not yet recorded by the company } & \$ 600 \
\hline
\end{array}$$
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 6

Match each of the following terms with the appropriate definitions.
-A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.

Accepted Answer

A) Days' sales uncollected 
B) Gross method 
C) Receiving report 
D) Bank reconciliation 
E) Purchase order
F)Principles of internal control
G)Cash Over and Short
H)Liquidity
I)Net method
J)Voucher system 
A) Days' sales uncollected 
B) Gross method 
C) Receiving report 
D) Bank reconciliation 
E) Purchase order
F)Principles of internal control
G)Cash Over and Short
H)Liquidity
I)Net method
J)Voucher system

Question 7

The following information is available for the Victor Company for its March 31 bank reconciliation:
From the March 31 bank statement:

NSF: A check from a customer,Booker Co.in payment of their account.
IN: Interest earned on the account.
From the Victor Company's accounting records:
 $\text { Cash Receipts Deposited }$
$\begin{array} { | l | c | r | } 
\hline \text { Date } && \text { Cash Debit } \
\hline \text { March } & 7 & 4,340 \
\hline & 27 & 7,270 \
\hline & 31 & \underline { 2,090 } \
\hline & & \underline { 13,700 } \
\hline & & \
\hline & & \
\hline & & \
\hline
\end{array}$ 
 $ \text { Cash Disbursements }$
$\begin{array} { | r | r | } 
\hline \text { Check No. } & \text { Cash Debit } \
\hline 2905 & 170 \
\hline 2906 & 3,850 \
\hline 2907 & 460 \
\hline 2908 & 1,350 \
\hline 2909 & 725 \
\hline 2910 & 340 \
\hline & 6,895 \
\hline
\end{array}$ 
   
1.Based on the above information,prepare a bank reconciliation for the Victor Company.
2.Prepare the necessary general journal entries to adjust cash to the reconciled balance.

Accepted Answer

1.
 @#IMG-DLM& 2.
 \[\begin{array} { | l | l | r |

Question 8

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 9

Two clerks sharing the same cash register is a violation of which internal control principle?

Accepted Answer

A)  Establish responsibilities. 
B)  Maintain adequate records. 
C)  Insure assets. 
D)  Bond key employees. 
E)  Apply technological controls. 
A)  Establish responsibilities. 
B)  Maintain adequate records. 
C)  Insure assets. 
D)  Bond key employees. 
E)  Apply technological controls.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Match each of the following terms with the appropriate definitions.
-A document the purchasing department uses to place an order with a supplier.

Accepted Answer

A) Days' sales uncollected 
B) Gross method 
C) Receiving report 
D) Bank reconciliation 
E) Purchase order
F)Principles of internal control
G)Cash Over and Short
H)Liquidity
I)Net method
J)Voucher system 
A) Days' sales uncollected 
B) Gross method 
C) Receiving report 
D) Bank reconciliation 
E) Purchase order
F)Principles of internal control
G)Cash Over and Short
H)Liquidity
I)Net method
J)Voucher system

Question 12

A company records purchase invoices at net amounts.On March 5,the company recorded merchandise purchased,invoice price $17,000,terms 2/15,n/60.On March 24,this company discovered that the invoice had been incorrectly filed and the discount had been lost.The invoice was paid on April 1.Prepare journal entries to record these events.

Accepted Answer

\[\begin{array} { | l | l | l | r | r |

Question 13

On March 1,a company established a $75 petty cash fund.On March 12,the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25; postage,$19.50; and office supplies,$36.Give the general journal entry to reimburse the fund and to increase its amount to $150 on March 12.

Accepted Answer

None

Question 14

The principles of internal control include:

Accepted Answer

A)  Separate recordkeeping from custody of assets. 
B)  Maintain minimal records. 
C)  Use only computerized systems. 
D)  Bond all employees. 
E)  Require automated sales systems. 
A)  Separate recordkeeping from custody of assets. 
B)  Maintain minimal records. 
C)  Use only computerized systems. 
D)  Bond all employees. 
E)  Require automated sales systems.

Question 15

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Accepted Answer

A)  Cash Lost. 
B)  Bank Reconciliation. 
C)  Petty Cash. 
D)  Cash Over and Short. 
E)  Cash Receivable. 
A)  Cash Lost. 
B)  Bank Reconciliation. 
C)  Petty Cash. 
D)  Cash Over and Short. 
E)  Cash Receivable.

Question 16

Maintaining adequate records is an important internal control principle.

Accepted Answer

A) True 
 B)False

Question 17

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 18

The means of recording purchases under the assumption that the cash discount for prompt payment will be taken is called the ________.

Accepted Answer

The answer of The means of recording purchases under the...

Question 19

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of selling,general and administrative expenses.

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

Human fraud is driven by the triple-threat of fraud: Opportunity,collusion,and rationalization.

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

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

Match each of the following terms with the appropriate definitions. -A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.

Outstanding checks refer to checks that have been:

Two clerks sharing the same cash register is a violation of which internal control principle?

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

Match each of the following terms with the appropriate definitions. -A document the purchasing department uses to place an order with a supplier.

The principles of internal control include:

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Maintaining adequate records is an important internal control principle.

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

The means of recording purchases under the assumption that the cash discount for prompt payment will be taken is called the ________.

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of selling,general and administrative expenses.

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

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 6: Cash, fraud, and Internal Controls

Human fraud is driven by the triple-threat of fraud: Opportunity,collusion,and rationalization.

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

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

Match each of the following terms with the appropriate definitions. -A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.

Outstanding checks refer to checks that have been:

Two clerks sharing the same cash register is a violation of which internal control principle?

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

Match each of the following terms with the appropriate definitions. -A document the purchasing department uses to place an order with a supplier.

The principles of internal control include:

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Maintaining adequate records is an important internal control principle.

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

The means of recording purchases under the assumption that the cash discount for prompt payment will be taken is called the ________.

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of selling,general and administrative expenses.

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

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters