Question 1

________ includes currency, coins, and amounts on deposit in checking accounts and savings accounts.

Accepted Answer

Cash

Question 2

The following information is available for the Victor Company for its March 31 bank reconciliation:
From the March 31 bank statement:
 $$\begin{array} { | r | r | r | r | } 
\hline \text { Previous } & \text { Total Checks and } & \text { Total Deposits and } & \text { Current } \
\text { Balance } & \text { Debits } & \text { Credits } & \text { Balance } \
\hline \$ 9,908 & \$ 7,805 & \$ 11,905 & \$ 14,008 \
\hline
\end{array}$$   NSF: A check from a customer, Booker Co. in payment of their account.
100
IN: Interest earned on the account.
From the Victor Company's accounting records:
 $$\begin{array}{c}
{ \text { Cash Receipts Depasited } } \\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}\end{array}$$ $$\begin{array} {c}
{ \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 & \underline { 340 } \
\hline & \underline { 6.895 } \
\hline
\end{array}\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

$$\begin{array} { | l | r | r | l | r | } 
\hline & & \underline { 16,098 } & & 15,798 \
\hline \text { Deduct: } & & & \text { Deduct: } & \
\hline \text { Outstanding checks } & & & \text { NSF check } & 500\
\hline \text { \#2907 } & \$ 460 & & & \
\hline \# 2910 & \underline { 340 } & \underline { 800 } & & \
\hline \text { Adjusted bank balance } & & \$ 1 5 , 2 9 8 & \text { Adjusted book balance } & \$ 15,298 \
\hline
\end{array}$$ 2.
 $$\begin{array} { | l | l | r | r | } 
\hline \text { Mar. 31 } & \text { Cash } & 295 & \
\hline & \text { Interest revenue } & & 295 \
\hline & & & \
\hline \text { Mar. 31 } & \text { Accounts receivable -Booker Company } & 500 & \
\hline & \text { Cash } & & 500 \
\hline
\end{array}$$

Question 3

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Accepted Answer

A) True 
 B)False  False

Question 4

Canceled checks are checks the bank has paid and deducted from the customer's account during the period.

Accepted Answer

A) True 
 B)False

Question 5

The number of days' sales uncollected is used to:

Accepted Answer

A)  Measure the amount of cash sales during a period. 
B)  Identify the likelihood of collecting sales on account. 
C)  Estimate how much time is likely to pass before the current amount of accounts receivable is received in cash. 
D)  Measure how many days of sales remain until the end of the year. 
E)  Determine the number of days that have passed without collecting on accounts receivable. 
A)  Measure the amount of cash sales during a period. 
B)  Identify the likelihood of collecting sales on account. 
C)  Estimate how much time is likely to pass before the current amount of accounts receivable is received in cash. 
D)  Measure how many days of sales remain until the end of the year. 
E)  Determine the number of days that have passed without collecting on accounts receivable.

Question 6

The account is used to record the effects of cash overages and shortages from errors in making change or managing a petty cash fund.

Accepted Answer

The answer of The account is used to record the...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

When a petty cash fund is in use:

Accepted Answer

A)  Cash is debited when funds are replenished. 
B)  Expenses are not recorded. 
C)  Petty Cash is credited when funds are replenished. 
D)  Expenses paid with petty cash are recorded when the fund is replenished. 
E)  Petty Cash is debited when funds are replenished. 
A)  Cash is debited when funds are replenished. 
B)  Expenses are not recorded. 
C)  Petty Cash is credited when funds are replenished. 
D)  Expenses paid with petty cash are recorded when the fund is replenished. 
E)  Petty Cash is debited when funds are replenished.

Question 9

A properly designed internal control system:

Accepted Answer

A)  Requires the use of non-computerized systems. 
B)  Lowers the company's risk of loss. 
C)  Eliminates the need for an audit. 
D)  Insures profitable operations. 
E)  Is not necessary if the company uses a computerized system. 
A)  Requires the use of non-computerized systems. 
B)  Lowers the company's risk of loss. 
C)  Eliminates the need for an audit. 
D)  Insures profitable operations. 
E)  Is not necessary if the company uses a computerized system.

Question 10

For each of the independent cases below, identify the principle of internal control that is violated, and recommend what should be done to remedy the violation.
1. In order to save money, Indigo Company has decided to drop its property insurance on assets; and stop bonding the cashiers who handle upwards of $5,000 in cash each day.
2. Jobs Company records each sale on a preprinted invoice. Because invoices are sometimes damaged in the process of preparation, the invoices are not prenumbered. Instead, the sales clerk writes the next number on each invoice as it is prepared.
3. Keegan Company is a very small business. Dylan Epps, one of the two office clerks, opens the mail each day and removes the cash receipts that come in the mail. Dylan also records the receipts in the cash records and the customer's account and deposits the cash in the bank.
4. Ludwig Company prides itself on hiring only the most competent employees. The owner, Jeremy Ludwig, believes that since the employees are highly competent he can show he trusts them completely by not checking up on their performance.
5. Maple Industries is a small business with three accounting employees. Each employee is
well-trained and able to perform any of the accounting tasks, including handling cash receipts and cash disbursements, and preparing the bank reconciliation. Because of this cross-training, the employees share responsibilities for all of the tasks.

Accepted Answer

triplicate that indicates each sender's

Question 11

If the Cash Over and Short account has a credit balance at the end of the period, the amount is commonly reported as miscellaneous revenue.

Accepted Answer

A) True 
 B)False

Question 12

On August 25, Barrymore Co. purchased $5,000 worth of merchandise on terms 2/10, n/30; on September 4, the amount due was paid. Using the net method of recording purchases, prepare general journal entries to record (a) the purchase on August 25, and (b) the cash payment on September 4.

Accepted Answer

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

Question 13

When reimbursing the petty cash fund:

Accepted Answer

A)  Appropriate expense accounts are debited. 
B)  Cash is debited. 
C)  Petty Cash is debited. 
D)  Petty Cash is credited. 
E)  No expenses are recorded. 
A)  Appropriate expense accounts are debited. 
B)  Cash is debited. 
C)  Petty Cash is debited. 
D)  Petty Cash is credited. 
E)  No expenses are recorded.

Question 14

In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information:
$\begin{array} { | l | l | } 
\hline \text { Cash balance per company books on January 30 } & \$ 4,725 \
\hline \text { Deposits in transit at month-end } &  { \$ 1,800 } \
\hline \text { Outstanding checks at month-end } & \$ 520 \
\hline \text { Bank service charges } & \$ 25 \
\hline \text { EFT automatically deducted monthly, not yet recorded by Maxi } & \$ 380 \
\hline \text { An NSF check returned on a customer account } &  \$ 265\
\hline \
\hline \text { An NSF check returned on a customer account } &  \$ 265\
\hline
\end{array}$

Accepted Answer

A)  $4,055 
B)  $4,585 
C)  $5,335 
D)  $4,815 
E)  $5,855 
A)  $4,055 
B)  $4,585 
C)  $5,335 
D)  $4,815 
E)  $5,855

Question 15

Which of the following is not one of the policies and procedures that make up an internal control system?

Accepted Answer

A)  Guarantee a return to investors. 
B)  Promote efficient operations. 
C)  Urge adherence to company policies. 
D)  Protect assets. 
E)  Ensure reliable accounting. 
A)  Guarantee a return to investors. 
B)  Promote efficient operations. 
C)  Urge adherence to company policies. 
D)  Protect assets. 
E)  Ensure reliable accounting.

Question 16

The following account balances are taken from Everest Events at December 31.
 $$\begin{array} { | l | r | r | } 
\hline & 2016 & 2015 \
\hline \text { Accounts receivable } & 170,230 & 260,450 \
\hline \text { Net sales } & 1,500,750 & 1,450,600 \
\hline
\end{array}$$ 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 17

Umber Company's bank reconciliation for September is presented below. Prepare the necessary adjusting journal entries based on the reconciliation report.
 $\begin{array}{c}
\text {UMBER COMPANY}\
\text {Bank Reconciliation}\
\text { September 30}\
\begin{array}{|l|r|l|r|r}
\hline\text { Bank statement balance } & \$ 1,350 & \text { Book balance of cash } & & \$ 995 \
\hline \text { Add: } & &\text { Add: } & & \
\hline \text { Deposit in transit } & 1,250 & \text { Proceeds of note } & 900 & \
\hline \text { Bank error } & 275 & \text { Less note collection fee } & 25 & \underline{875} \
\hline & \$ 2,875 & & & 1,870 \
\hline \text { Deduct: } && \text { Deduct: } & & \
\hline \text { Outstanding checks } & \underline{1,145} & \text { NSF check plus processing fee } & & 125 \
\hline & & \text { Bank service charge } & & \underline{15} \
\hline \text { Reconciled balance } & \$ 1,730 & \text { Reconciled balance } & & \underline{\$ 1,730} \
\hline
\end{array}\end{array}$

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

Maintaining adequate records is an important internal control principle.

Accepted Answer

A) True 
 B)False

Question 20

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation.
_____ 1. Bank service charges
_____ 2. Outstanding checks
_____ 3. Deposits in transit
_____ 4. NSF check
_____ 5. Interest on a checking account
_____ 6. The company properly wrote a check for $95.80 that the bank incorrectly paid as $9.58.
7. The bank printed checks for the depositor for a fee.
_____ 8. Bank debit memorandum
_____ 9. Bank credit memorandum
_____ 10. The bank collected a $1,000 note for the depositor.

Accepted Answer

1. Book; 2. Bank; 3.

Exam 8: Cash and Internal Controls

________ includes currency, coins, and amounts on deposit in checking accounts and savings accounts.

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Canceled checks are checks the bank has paid and deducted from the customer's account during the period.

The number of days' sales uncollected is used to:

The account is used to record the effects of cash overages and shortages from errors in making change or managing a petty cash fund.

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

When a petty cash fund is in use:

A properly designed internal control system:

If the Cash Over and Short account has a credit balance at the end of the period, the amount is commonly reported as miscellaneous revenue.

On August 25, Barrymore Co. purchased $5,000 worth of merchandise on terms 2/10, n/30; on September 4, the amount due was paid. Using the net method of recording purchases, prepare general journal entries to record (a) the purchase on August 25, and (b) the cash payment on September 4.

When reimbursing the petty cash fund:

Which of the following is not one of the policies and procedures that make up an internal control system?

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

Maintaining adequate records is an important internal control principle.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

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

Present and Future Values in Accounting

Activity-Based Costing

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