Question 1

A seller (or provider) of goods or services to a business organization is known as a:

Accepted Answer

A)  Payee. 
B)  Vendee. 
C)  Creditor. 
D)  Debtor. 
E)  Vendor. 
A)  Payee. 
B)  Vendee. 
C)  Creditor. 
D)  Debtor. 
E)  Vendor.

Question 2

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

Accepted Answer

A) True 
 B)False

Question 3

Cash equivalents:

Accepted Answer

A)  Are recorded in petty cash. 
B)  Include checking accounts. 
C)  Include money orders. 
D)  Are short-term, highly liquid investment assets. 
E)  Include 6-month certificates of deposit. 
A)  Are recorded in petty cash. 
B)  Include checking accounts. 
C)  Include money orders. 
D)  Are short-term, highly liquid investment assets. 
E)  Include 6-month certificates of deposit.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50.
- The journal entry to record the increase in the fund balance on October 1 is:

Accepted Answer

A)  Debit Cash $50; credit Petty Cash $50. 
B)  Debit Petty Cash $50; credit Cash $50. 
C)  Debit Petty Cash $300; credit Cash $300. 
D)  Debit Miscellaneous Expense $50; credit Cash $50. 
E)  Debit Petty Cash $50; credit Accounts Payable $50. 
A)  Debit Cash $50; credit Petty Cash $50. 
B)  Debit Petty Cash $50; credit Cash $50. 
C)  Debit Petty Cash $300; credit Cash $300. 
D)  Debit Miscellaneous Expense $50; credit Cash $50. 
E)  Debit Petty Cash $50; credit Accounts Payable $50.

Question 6

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. Commercial paper
_____ 5. Currency
6. Certified check
7. Cashier's check
_____ 8. Money market accounts
9. Money orders
_____ 10. U.S. treasury bills

Accepted Answer

1. A; 2. A; 3. B; 4.

Question 7

A company had the following transactions during January:
 $\begin{array}{|l|l|}
\hline \text { Jan. 2 } & \text { Purchased merchandise, invoice price of } \$ 16,000, \text { with terms } 2 / 10, \mathrm{n} / 30 . \
\hline 4 & \begin{array}{l}
\text { Received a credit memorandum for } \$ 4,000, \text { the invoice price on } \
\text { merchandise returned from the purchase of January } 2 .
\end{array} \
\hline 12 & \text { Purchased merchandise, invoice price of } \$ 15,000, \text { with terms } 3 / 15, \mathrm{n} / 30 . \
\hline 26 & \text { Paid for the merchandise purchased on January } 12 . \
\hline 30 & \text { Paid for the merchandise purchased on January 2. } \
\hline
\end{array}$
 Using the net method of recording purchases, prepare the journal entries to record these January transactions.

Accepted Answer

None

Question 8

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

Accepted Answer

A)  Deduct the deposit from the bank statement balance. 
B)  Add the deposit to the bank statement balance. 
C)  Send the bank a debit memorandum. 
D)  Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
E)  Add the deposit to the book balance of cash. 
A)  Deduct the deposit from the bank statement balance. 
B)  Add the deposit to the bank statement balance. 
C)  Send the bank a debit memorandum. 
D)  Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. 
E)  Add the deposit to the book balance of cash.

Question 9

Gardener Company had the following transactions during January:
 $\begin{array}{|r|l|}
\hline \text { Jan. 10 } & \begin{array}{l}
\text { Purchased merchandise at a } \$ 8,900 \text { price, invoice dated January } 10 \text {, terms } 1 / 10, \
\mathrm{n} / 30 .
\end{array} \
\hline 13 & \begin{array}{l}
\text { Received a } \$ 900 \text { credit memorandum (at full invoice price) for the return of } \
\text { merchandise that it purchased on January } 10 .
\end{array} \
\hline 18 & \begin{array}{l}
\text { Purchased merchandise at a } \$ 8,500 \text { price, invoice dated January } 18, \text { terms } 2 / 10, \
\mathrm{n} / 30 .
\end{array} \
\hline 27 & \text { Paid for the merchandise purchased on January 18, less the discount. } \
\hline 31 & \begin{array}{l}
\text { Paid for the merchandise purchased on January 10. Payment was delayed } \
\text { because the invoice was mistakenly fled for payment today. This error caused } \
\text { the discount to be lost. }
\end{array} \
\hline
\end{array}$  Using the net method of recording purchases, prepare the journal entries to record these January transactions.

Accepted Answer

The answer of Gardener Company had the following transactions during...

Question 10

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

Question 11

At the end of the day, the cash register's record shows $2,050, but the count of cash in the cash register is $2,058. The correct entry to record the cash sales is

Accepted Answer

A)  Debit Cash $2,058; credit Sales $2,058. 
B)  Debit Cash $2,050; debit Cash Over and Short $8; credit Sales $2,058. 
C)  Debit Cash Over and Short $8, credit Sales $8. 
D)  Debit Cash $2,058; credit Cash Over and Short $8; credit Sales $2,050. 
E)  Debit Cash $2,050; credit Sales $2,050. 
A)  Debit Cash $2,058; credit Sales $2,058. 
B)  Debit Cash $2,050; debit Cash Over and Short $8; credit Sales $2,058. 
C)  Debit Cash Over and Short $8, credit Sales $8. 
D)  Debit Cash $2,058; credit Cash Over and Short $8; credit Sales $2,050. 
E)  Debit Cash $2,050; credit Sales $2,050.

Question 12

What is the purpose of the days' sales uncollected ratio?

Accepted Answer

The days' sales uncollected ratio is a l

Question 13

Basic bank services do not include:

Accepted Answer

A)  Petty cash management. 
B)  Bank accounts. 
C)  Bank deposits. 
D)  Electronic funds transfer. 
E)  Checking. 
A)  Petty cash management. 
B)  Bank accounts. 
C)  Bank deposits. 
D)  Electronic funds transfer. 
E)  Checking.

Question 14

Principles of internal control include all of the following except:

Accepted Answer

A)  Apply technological controls. 
B)  Maintaining security by having one person track and record assets. 
C)  Divide responsibilities for related transactions. 
D)  Separate recordkeeping from custody of assets. 
E)  Perform regular and independent reviews. 
A)  Apply technological controls. 
B)  Maintaining security by having one person track and record assets. 
C)  Divide responsibilities for related transactions. 
D)  Separate recordkeeping from custody of assets. 
E)  Perform regular and independent reviews.

Question 15

The following information is available for Montrose Company at December 31: A nine-month certificate of deposit maturing on June 30 of
$$\begin{array} { | l | r | } 
\hline \text { Cash in bank account } & \$ 8,540 \
\hline \text { Petty cash } & 250 \
\hline \text { Money market fund balance } & \$ 10,400 \
\hline \text { Checks from customers } & \$ 1,350 \
\hline \text { NSF checks from customers returned by bank } & \$ 805 \
\hline \text { Treasury bill maturing in 60 days } & \$ 10,000 \
\hline \text { Money orders } & \$ 290 \
\hline \text { A nine-month certificate of deposit maturing on June 30 of next year } & \$ 6,000 \
\hline
\end{array}$$
Based on this information, the amounts considered Cash and Cash Equivalents, respectively on December 31 are:

Accepted Answer

A)  Cash $19,190; Cash equivalents $16,000 
B)  Cash $8,540; Cash equivalents $22,290 
C)  Cash $8,790; Cash equivalents $26,400 
D)  Cash $10,430; Cash equivalents $20,400 
E)  Cash $11,235; Cash equivalents $26,400 
A)  Cash $19,190; Cash equivalents $16,000 
B)  Cash $8,540; Cash equivalents $22,290 
C)  Cash $8,790; Cash equivalents $26,400 
D)  Cash $10,430; Cash equivalents $20,400 
E)  Cash $11,235; Cash equivalents $26,400

Question 16

Norman Co. had $5,925 million in sales and $1,155 million in ending accounts receivable for the current period. For the same period, Opal Co. reported $5,885 million in sales and $790 million in ending accounts receivable. Calculate the days' sales uncollected for both companies as of the end of the current period and indicate which company is doing a better job in managing the collection of its receivables.

Accepted Answer

Days' Sales Uncollected Ratio

Question 17

Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $18,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following: $$\begin{array} { | l | r | } 
\hline \text { Deposit in transit } & 1.450 \
\hline \text { Outstanding checks } & 8 3 7  \
\hline
\end{array}$$ Additionally, a $29 check written and recorded by the company correctly was recorded by the bank as a $92 deduction.
The adjusted cash balance per the bank records should be:

Accepted Answer

A)  $18,974 
B)  $20,711 
C)  $19,037 
D)  $18,911 
E)  $16,137 
A)  $18,974 
B)  $20,711 
C)  $19,037 
D)  $18,911 
E)  $16,137

Question 18

Explain the difference between cash and cash equivalents.

Accepted Answer

Cash includes currency, coins, deposits

Question 19

The following information is available for Fenton Manufacturing Company at June 30: $$\begin{array} { | l | r | } 
\hline \text { Cash in bank account } & \$ 11,455 \
\hline \text { Inventory of postage stamps } & \$ 74 \
\hline \text { Money market fund balance } & \$ 10,400 \
\hline \text { Petty cash balanes } & \$ 350 \
\hline \text { NSF checks from customers returned by bank } & \$ 867 \
\hline \text { Postdated checks received from customers } & \$ 791 \
\hline \text { Money orders } & \$ 290 \
\hline \text { A nine-month certificate of deposit maturing on December 31 of } & \$ 6,000 \
 \text { current year } & \
\hline
\end{array}$$ Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Accepted Answer

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

Question 20

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

A seller (or provider) of goods or services to a business organization is known as a:

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

Cash equivalents:

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

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

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:

At the end of the day, the cash register's record shows $2,050, but the count of cash in the cash register is $2,058. The correct entry to record the cash sales is

What is the purpose of the days' sales uncollected ratio?

Basic bank services do not include:

Principles of internal control include all of the following except:

Explain the difference between cash and cash equivalents.

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

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

Exam 8: Cash and Internal Controls

A seller (or provider) of goods or services to a business organization is known as a:

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

Cash equivalents:

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

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

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:

At the end of the day, the cash register's record shows $2,050, but the count of cash in the cash register is $2,058. The correct entry to record the cash sales is

What is the purpose of the days' sales uncollected ratio?

Basic bank services do not include:

Principles of internal control include all of the following except:

Explain the difference between cash and cash equivalents.

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

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