Question 1

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 2

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

Accepted Answer

Basic bank services can be organized int

Question 3

A set of procedures and approvals for verifying, approving, and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n):

Accepted Answer

A)  Cash disbursement system. 
B)  Cash control system. 
C)  Internal cash system. 
D)  Petty cash system. 
E)  Voucher system. 
A)  Cash disbursement system. 
B)  Cash control system. 
C)  Internal cash system. 
D)  Petty cash system. 
E)  Voucher system.

Question 4

Cash registers, time clocks, and personal identification scanners are examples of technologies that can improve internal control.

Accepted Answer

A) True 
 B)False

Question 5

A check involves 3 parties: a maker who signs the check, a payee who is the recipient, and a bank on which the check is drawn.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are true of the number of days' sales uncollected ratio except:

Accepted Answer

A)  Can be used for comparisons to other companies in the same industry. 
B)  Is most effective in evaluating the cash sales of a company. 
C)  Can be used for comparisons between current and prior periods. 
D)  Reflects the liquidity of receivables. 
E)  Measures how much time is likely to pass before the current amount of accounts receivable is received in cash. 
A)  Can be used for comparisons to other companies in the same industry. 
B)  Is most effective in evaluating the cash sales of a company. 
C)  Can be used for comparisons between current and prior periods. 
D)  Reflects the liquidity of receivables. 
E)  Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.

Question 7

Meng Co. maintains a $300 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $80 for office supplies, $160 for merchandise inventory, and $20 for miscellaneous expenses. There is a cash shortage of $8.
- Based on this information, the amount of cash in the fund before the replenishment is:

Accepted Answer

A)  $32. 
B)  $40. 
C)  $260. 
D)  $300. 
E)  $48. 
A)  $32. 
B)  $40. 
C)  $260. 
D)  $300. 
E)  $48.

Question 8

Money orders, cashier's checks, and certified checks are all examples of cash.

Accepted Answer

A) True 
 B)False

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

A sales system with pre-numbered, controlled sales slips is an example of the internal control principle of ________.

Accepted Answer

maintain a

Question 11

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

Accepted Answer

Question 12

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Accepted Answer

A)  The employees handling the cash receipts are bonded. 
B)  For safety, only one person should open the mail, and that person should immediately deposit the cash received in the bank. 
C)  The cashier deposits the money in the bank and the recordkeeper records the amounts received in the accounting records. 
D)  After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the sender's name, the amount, and an explanation of why the money is sent. 
E)  The bank reconciliation is prepared by a person who does not handle cash or record cash receipts. 
A)  The employees handling the cash receipts are bonded. 
B)  For safety, only one person should open the mail, and that person should immediately deposit the cash received in the bank. 
C)  The cashier deposits the money in the bank and the recordkeeper records the amounts received in the accounting records. 
D)  After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the sender's name, the amount, and an explanation of why the money is sent. 
E)  The bank reconciliation is prepared by a person who does not handle cash or record cash receipts.

Question 13

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

Accepted Answer

The answer of A ________ is an internal document (or...

Question 14

On a bank statement, deposits are shown as ________because the depositor's account is a liability on the bank's records

Accepted Answer

The answer of On a bank statement, deposits are shown...

Question 15

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.

Accepted Answer

A) True 
 B)False

Question 16

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Accepted Answer

A) True 
 B)False

Question 17

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Accepted Answer

A) True 
 B)False

Question 18

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Accepted Answer

A)  Added to the book balance of cash. 
B)  Deducted from the book balance of cash. 
C)  Deducted from the bank balance of cash. 
D)  Noted as a memorandum only. 
E)  Added to the bank balance of cash. 
A)  Added to the book balance of cash. 
B)  Deducted from the book balance of cash. 
C)  Deducted from the bank balance of cash. 
D)  Noted as a memorandum only. 
E)  Added to the bank balance of cash.

Question 19

In the process of reconciling its bank statement for April, Donahue Enterprises' accountant compiles the following information: $$\begin{array} { | l | r | } 
\hline \text { Cash balance per company books on April 30 } & \$ 6,275 \
\hline \text { Deposits in transit at month-end } & \$ 1,300 \
\hline \text { Outstanding checks at month-end } & \$ 620 \
\hline \text { Bank charge for printing new checks } & \$ 45 \
\hline \text { Note receivable and interest collected by bank on Donahue's behalf } & \$ 770 \
\hline \text { A check paid to Donahue during the month by a eustomer is returned by the } & \$ 480 \
\text { bank as NSF } & \
\hline
\end{array}$$ The adjusted cash balance per the books on April 30 is:

Accepted Answer

A)  $6,900 
B)  $5,840 
C)  $4,600 
D)  $6,520 
E)  $8,160 
A)  $6,900 
B)  $5,840 
C)  $4,600 
D)  $6,520 
E)  $8,160

Question 20

A company had $43 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:

Accepted Answer

A)  Debit Cash Over and Short for $43. 
B)  Debit Petty Cash for $43. 
C)  Credit Cash Over and Short for $43. 
D)  Credit Petty Cash for $43. 
E)  Credit Cash for $43. 
A)  Debit Cash Over and Short for $43. 
B)  Debit Petty Cash for $43. 
C)  Credit Cash Over and Short for $43. 
D)  Credit Petty Cash for $43. 
E)  Credit Cash for $43.

Exam 8: Cash and Internal Controls

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

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

A set of procedures and approvals for verifying, approving, and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n):

Cash registers, time clocks, and personal identification scanners are examples of technologies that can improve internal control.

A check involves 3 parties: a maker who signs the check, a payee who is the recipient, and a bank on which the check is drawn.

All of the following are true of the number of days' sales uncollected ratio except:

Money orders, cashier's checks, and certified checks are all examples of cash.

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

A sales system with pre-numbered, controlled sales slips is an example of the internal control principle of ________.

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

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

On a bank statement, deposits are shown as ________because the depositor's account is a liability on the bank's records

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

A company had $43 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:

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

Filters

A sales system with pre-numbered, controlled sales slips is an example of the internal control ^principle^of^________.

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