Question 1

Which of the following items are reconciling items on the book side of the reconciliation?

Accepted Answer

A)  outstanding checks and correction of book error 
B)  deposit in transit and NSF check 
C)  bank service charge and outstanding checks 
D)  bank service charge and correction of book error 
A)  outstanding checks and correction of book error 
B)  deposit in transit and NSF check 
C)  bank service charge and outstanding checks 
D)  bank service charge and correction of book error

Question 2

List the five components of internal control.

Accepted Answer

control procedures,r

Question 3

Journal entries are required for the reconciling items on the book side because ________.

Accepted Answer

A)  those transactions have not yet been recorded by the bank 
B)  the adjusted balances on both sides are the same amounts 
C)  the amounts are immaterial 
D)  those transactions have not yet been recorded on the company's books 
A)  those transactions have not yet been recorded by the bank 
B)  the adjusted balances on both sides are the same amounts 
C)  the amounts are immaterial 
D)  those transactions have not yet been recorded on the company's books

Question 4

Match each term to its definition.
-Receiving Report

Accepted Answer

A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted. 
A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted.

Question 5

The environment is the culture of a business,and it starts with the CEO or CFO and the top managers.

Accepted Answer

A) True 
 B)False

Question 6

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 in petty cash tickets.Based on this information,which of the following statements is correct?

Accepted Answer

A)  The total of the cash on hand plus petty cash tickets equals the designated fund balance. 
B)  A shortage of $2 exists. 
C)  To replenish the petty cash fund, the company must write a check, payable to Petty Cash, for $127. 
D)  The petty cash fund custodian must locate the $2 discrepancy. 
A)  The total of the cash on hand plus petty cash tickets equals the designated fund balance. 
B)  A shortage of $2 exists. 
C)  To replenish the petty cash fund, the company must write a check, payable to Petty Cash, for $127. 
D)  The petty cash fund custodian must locate the $2 discrepancy.

Question 7

Which of the following is an attribute of the internal control component-monitoring of controls?

Accepted Answer

A)  Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B)  Monitoring of controls is the "tone at the top" of the business. 
C)  Monitoring of controls is designed to ensure that the business's goals are achieved. 
D)  Monitoring of controls deals with identification and assessment of business risks. 
A)  Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. 
B)  Monitoring of controls is the "tone at the top" of the business. 
C)  Monitoring of controls is designed to ensure that the business's goals are achieved. 
D)  Monitoring of controls deals with identification and assessment of business risks.

Question 8

A company which sells merchandise or services can receive cash from customers ________.

Accepted Answer

A)  over the counter 
B)  by electronic funds transfer 
C)  through the mail 
D)  in any of the above forms 
A)  over the counter 
B)  by electronic funds transfer 
C)  through the mail 
D)  in any of the above forms

Question 9

Rearranging plain-text messages by a mathematical process is known as ________.

Accepted Answer

A)  password 
B)  phishing 
C)  encryption 
D)  virus 
A)  password 
B)  phishing 
C)  encryption 
D)  virus

Question 10

An electronic funds transfers system ________.

Accepted Answer

A)  does not include debit card transactions 
B)  is seldom used by businesses 
C)  transfers cash by electronic communication rather than by paper documents 
D)  uses forms such as checks and deposit tickets to transfer cash 
A)  does not include debit card transactions 
B)  is seldom used by businesses 
C)  transfers cash by electronic communication rather than by paper documents 
D)  uses forms such as checks and deposit tickets to transfer cash

Question 11

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Accepted Answer

A) True 
 B)False

Question 12

Which one of the following is TRUE of the bank reconciliation?

Accepted Answer

A)  It should not be prepared by an employee who handles cash transactions. 
B)  It is prepared in place of the cash ledger. 
C)  It is a financial statement. 
D)  It guarantees that no errors have been made. 
A)  It should not be prepared by an employee who handles cash transactions. 
B)  It is prepared in place of the cash ledger. 
C)  It is a financial statement. 
D)  It guarantees that no errors have been made.

Question 13

Which of the following items are reconciling items on the bank side of the reconciliation?

Accepted Answer

A)  outstanding checks and correction of book error 
B)  deposit in transit and NSF check 
C)  deposit in transit and outstanding checks 
D)  bank service charge and correction of book error 
A)  outstanding checks and correction of book error 
B)  deposit in transit and NSF check 
C)  deposit in transit and outstanding checks 
D)  bank service charge and correction of book error

Question 14

Reducing expenses to increase operating profit is representative of ________.

Accepted Answer

A)  safeguarding assets 
B)  following company policies 
C)  promoting operational efficiency 
D)  ensuring accurate, reliable accounting records 
A)  safeguarding assets 
B)  following company policies 
C)  promoting operational efficiency 
D)  ensuring accurate, reliable accounting records

Question 15

Refer to the following bank reconciliation.
   Journalize the adjusting entry for the fourth reconciling item: Bank service charge.Omit explanation

Accepted Answer

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

Question 16

There are three parties to a check: the depositor,the maker,and the bank.

Accepted Answer

A) True 
 B)False

Question 17

Define internal control.

Accepted Answer

Internal control is the organizational p

Question 18

The primary reason that businesses keep their cash in a bank account is the ability to earn interest.

Accepted Answer

A) True 
 B)False

Question 19

Match each term to its definition.
-Purchase Order

Accepted Answer

A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted. 
A) Sent by the vendor after the inventory has been shipped to the purchaser. 
B) Sent to the vendor when goods are ordered. 
C) Prepared by the purchaser when the goods are received. 
D) Sent to the vendor after all approving documents have been submitted.

Question 20

Strict internal controls must be implemented,regardless of the cost.

Accepted Answer

A) True 
 B)False

Exam 8: Internal Control and Cash

Which of the following items are reconciling items on the book side of the reconciliation?

List the five components of internal control.

Journal entries are required for the reconciling items on the book side because ________.

Match each term to its definition. -Receiving Report

The environment is the culture of a business,and it starts with the CEO or CFO and the top managers.

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 in petty cash tickets.Based on this information,which of the following statements is correct?

Which of the following is an attribute of the internal control component-monitoring of controls?

A company which sells merchandise or services can receive cash from customers ________.

Rearranging plain-text messages by a mathematical process is known as ________.

An electronic funds transfers system ________.

The use of computer firewalls is an essential element of good internal controls for e-commerce.

Which one of the following is TRUE of the bank reconciliation?

Which of the following items are reconciling items on the bank side of the reconciliation?

Reducing expenses to increase operating profit is representative of ________.

Refer to the following bank reconciliation. Journalize the adjusting entry for the fourth reconciling item: Bank service charge.Omit explanation

There are three parties to a check: the depositor,the maker,and the bank.

Define internal control.

The primary reason that businesses keep their cash in a bank account is the ability to earn interest.

Match each term to its definition. -Purchase Order

Strict internal controls must be implemented,regardless of the cost.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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