Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

Accepted Answer

There are four steps that must be comple

Question 3

It is generally not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.

Accepted Answer

A) True 
 B)False

Question 4

On a bank statement, deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Assigning purchasing, receiving, and paying for merchandise to one department or individual is a way to streamline a voucher system.

Accepted Answer

A) True 
 B)False

Question 7

A petty cash fund was originally established with a check for $100. On August 31, which is the period end, the petty cash fund included the following:
 $$\begin{array} { | l | r | } 
\hline \text { Petty cash receipts: } & \
\hline \text { Postage } & \$ 43.50 \
\hline \text { Office supplies } & 11.85 \
\hline \text { Office equipment repair } & 39.00 \
\hline \text { Cash } & 4.25 \
\hline
\end{array}$$ Prepare the general journal entry to record the replenishment of the petty cash fund on August 31.

Accepted Answer

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

Question 8

A company established a petty cash fund in April of the current year and experienced the following transactions affecting the fund during April. Prepare journal entries to establish the fund on April 1, to replenish it on April 25, and to record the increase in the fund on April 25.
 $$\begin{array} { | l | l | } 
\hline \text { April } 1 & \text { Prepared a company check for } \$ 300.00 \text { to establith the petty cash fund } \
\hline 25 & \begin{array} { l } 
\text { Prepared a company check to replenith the fund for the following } \
\text { expenditures made since April } 1 .
\end{array} \
\hline & \text { Paid \$84.50 for cleaning services. } \
\hline & \text { Paid \$84.00 for postage expense. } \
\hline & \text { Paid \$103.15 for offee supplies. } \
\hline & \text { Counted \$23.35 remaining in the petty cath box. } \
\hline 25& \text { The company decides to increase the fund by \$100. }\
\hline 
\end{array}$$

Accepted Answer

None

Question 9

Internal controls are crucial to companies that convert from U.S. GAAP to IFRS because of all of the following risks except:

Accepted Answer

A)  Ineffective communication of the change to investors, creditors, and others. 
B)  Possible misstatement of financial information. 
C)  Management's inability to certify the effectiveness of the controls. 
D)  Possible fraud. 
E)  Controls are significantly different across the globe. 
A)  Ineffective communication of the change to investors, creditors, and others. 
B)  Possible misstatement of financial information. 
C)  Management's inability to certify the effectiveness of the controls. 
D)  Possible fraud. 
E)  Controls are significantly different across the globe.

Question 10

A bank statement provided by the bank includes:

Accepted Answer

A)  A list of outstanding checks. 
B)  A list of petty cash amounts. 
C)  A listing of deposits in transit. 
D)  A reconciliation to the depositor cash account. 
E)  The beginning and the ending balance of the depositor's account. 
A)  A list of outstanding checks. 
B)  A list of petty cash amounts. 
C)  A listing of deposits in transit. 
D)  A reconciliation to the depositor cash account. 
E)  The beginning and the ending balance of the depositor's account.

Question 11

Two limitations of internal control systems are ________and________.

Accepted Answer

human error/human fr

Question 12

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

Accepted Answer

A)  Purchase order. 
B)  Invoice approval. 
C)  Invoice. 
D)  Purchase requisition. 
E)  Receiving report. 
A)  Purchase order. 
B)  Invoice approval. 
C)  Invoice. 
D)  Purchase requisition. 
E)  Receiving report.

Question 13

The number of days' sales uncollected:

Accepted Answer

A)  Is calculated by dividing sales by accounts receivable. 
B)  Measures a company's ability to pay its bills on time. 
C)  Is used to evaluate the liquidity of receivables. 
D)  Measures a company's debt to income. 
E)  Is calculated by dividing accounts receivable by sales. 
A)  Is calculated by dividing sales by accounts receivable. 
B)  Measures a company's ability to pay its bills on time. 
C)  Is used to evaluate the liquidity of receivables. 
D)  Measures a company's debt to income. 
E)  Is calculated by dividing accounts receivable by sales.

Question 14

Pelcher Co. maintains a $400 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $110 for office supplies, $140 for merchandise inventory, and $70 for miscellaneous expenses. There is a cash overage of $4.
- The journal entry to replenish the fund on January 31 is:

Accepted Answer

A)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Cr. Cash over and short, $4; Cr. Cash, $316. 
B)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Cr. Cash over and short, $4; Cr. Petty cash, $316. 
C)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Dr. Cash over and short, $4; Cr. Cash, $324. 
D)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Dr. Cash over and short, $4; Cr. Petty cash, $324. 
E)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Dr. Cash over and short, $4; Cr. Petty cash, $400. 
A)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Cr. Cash over and short, $4; Cr. Cash, $316. 
B)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Cr. Cash over and short, $4; Cr. Petty cash, $316. 
C)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Dr. Cash over and short, $4; Cr. Cash, $324. 
D)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Dr. Cash over and short, $4; Cr. Petty cash, $324. 
E)  Dr. Office Supplies, $110; Dr. Merchandise inventory, $140; Dr. Miscellaneous expenses, $70; Dr. Cash over and short, $4; Cr. Petty cash, $400.

Question 15

Having external auditors test the company's financial records and evaluate the effectiveness of the  internal  control    system is partof the  internal  control principle of ________ .

Accepted Answer

perform re

Question 16

On June 1, a company established a $75 petty cash fund. On June 27, the petty cash fund contains
$5.25 in cash and the following paid petty cash receipts: postage, $19.50; office supplies, $36.25; and miscellaneous expense $14.00. Give the general journal entry to reimburse the fund on June 27.

Accepted Answer

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

Question 17

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 18

The Cash Over and Short account:

Accepted Answer

A)  Is used to record the income effects of errors in making change and/or processing petty cash transactions. 
B)  Can never have a debit balance. 
C)  Can never have a credit balance. 
D)  Is not necessary in a computerized accounting system. 
E)  Is used when the cash account reports a credit balance. 
A)  Is used to record the income effects of errors in making change and/or processing petty cash transactions. 
B)  Can never have a debit balance. 
C)  Can never have a credit balance. 
D)  Is not necessary in a computerized accounting system. 
E)  Is used when the cash account reports a credit balance.

Question 19

Cash, not including cash equivalents, includes:

Accepted Answer

A)  Customer checks, cashier checks, and money orders. 
B)  Two-year certificates of deposit. 
C)  Postage stamps. 
D)  IOUs. 
E)  Money market funds. 
A)  Customer checks, cashier checks, and money orders. 
B)  Two-year certificates of deposit. 
C)  Postage stamps. 
D)  IOUs. 
E)  Money market funds.

Question 20

When a company purchases an insurance policy against losses from theft by an employee, that   employee___________

Accepted Answer

The answer of When a company purchases an insurance policy...

Exam 8: Cash and Internal Controls

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

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

It is generally not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.

On a bank statement, deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.

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

Assigning purchasing, receiving, and paying for merchandise to one department or individual is a way to streamline a voucher system.

Internal controls are crucial to companies that convert from U.S. GAAP to IFRS because of all of the following risks except:

A bank statement provided by the bank includes:

Two limitations of internal control systems are ________and________.

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

The number of days' sales uncollected:

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is partof the internal control principle of ________ .

On June 1, a company established a $75 petty cash fund. On June 27, the petty cash fund contains $5.25 in cash and the following paid petty cash receipts: postage, $19.50; office supplies, $36.25; and miscellaneous expense $14.00. Give the general journal entry to reimburse the fund on June 27.

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

The Cash Over and Short account:

Cash, not including cash equivalents, includes:

When a company purchases an insurance policy against losses from theft by an employee, that employee___________

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

Two limitations of internal control systems are and.