Question 1

Which of the following would be added to the balance per books on a bank reconciliation?

Accepted Answer

A) Notes collected by the bank 
B) Deposits in transit 
C) Service charges 
D) Outstanding checks 
A) Notes collected by the bank 
B) Deposits in transit 
C) Service charges 
D) Outstanding checks

Question 2

A result of a separation of duties is that

Accepted Answer

A) operations become extremely inefficient because of constant training of employees. 
B) more employees will need to be bonded. 
C) theft by employees becomes impossible. 
D) theft is possible only if several employees scheme together. 
A) operations become extremely inefficient because of constant training of employees. 
B) more employees will need to be bonded. 
C) theft by employees becomes impossible. 
D) theft is possible only if several employees scheme together.

Question 3

The use of prenumbered documents is important to a good system of internal control.

Accepted Answer

A) True 
 B)False

Question 4

Use the following information regarding Larson Company to answer the question below. 
1)Established a petty cash fund in the amount of $250.
2)Reimbursed the petty cash fund given the following petty cash fund disbursements:
A.Payment for postage,$20.
B.Payment for supplies,$70.
3)Increased the petty cash fund to $300.
4)Cash over at the end of the first period was $5.
-The entry to establish the petty cash fund would include a

Accepted Answer

A) debit to the Cash account for $250. 
B) debit to the Petty Cash account for $250. 
C) memorandum entry only in the ledger. 
D) credit to the Petty Cash account for $250. 
A) debit to the Cash account for $250. 
B) debit to the Petty Cash account for $250. 
C) memorandum entry only in the ledger. 
D) credit to the Petty Cash account for $250.

Question 5

Separation of duties relates to a control activity in the accounting system.

Accepted Answer

A) True 
 B)False

Question 6

The degree of separation of duties varies with the size of the business.

Accepted Answer

A) True 
 B)False

Question 7

Cash Short or Over would be debited for a shortage.

Accepted Answer

A) True 
 B)False

Question 8

Merchandisers usually end their fiscal year during the peak season.

Accepted Answer

A) True 
 B)False

Question 9

In a purchase system,the most appropriate department to control goods upon arrival at the company is the

Accepted Answer

A) accounting department. 
B) receiving department. 
C) treasury department. 
D) requesting department. 
A) accounting department. 
B) receiving department. 
C) treasury department. 
D) requesting department.

Question 10

The petty cash fund of Writer Company was established on May 1 and appeared as follows on May 31:
 
a.Prepare the journal entry on May 1 to establish the fund (omit explanation).
b.Prepare the journal entry on May 31 to replenish the fund (omit explanation).

Accepted Answer

The answer of The petty cash fund of Writer Company...

Question 11

Under the perpetual inventory system,the entry to recognize inventory losses usually contains a

Accepted Answer

A) debit to Cost of Goods Sold. 
B) debit to Merchandise Inventory. 
C) credit to Gross Margin. 
D) credit to Cash. 
A) debit to Cost of Goods Sold. 
B) debit to Merchandise Inventory. 
C) credit to Gross Margin. 
D) credit to Cash.

Question 12

Chaney Company has established a petty cash fund for small expenditures.Prepare journal entries for the following transactions (omit explanations).

Accepted Answer

The answer of Chaney Company has established a petty cash...

Question 13

A remittance advice accompanies a check sent to a vendor or the vendor's bank.

Accepted Answer

A) True 
 B)False

Question 14

Internal control is weakened by all of the following except

Accepted Answer

A) collusion. 
B) separation of duties. 
C) human error. 
D) effects of changing conditions. 
A) collusion. 
B) separation of duties. 
C) human error. 
D) effects of changing conditions.

Question 15

The petty cash voucher should be kept by the person being reimbursed.

Accepted Answer

A) True 
 B)False

Question 16

The taking of a physical inventory is an example of periodic independent verification.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following sets of documents are in the correct sequence?

Accepted Answer

A) Purchase order,check,receiving report 
B) Purchase requisition,purchase order,invoice 
C) Purchase requisition,receiving report,purchase order 
D) Purchase order,purchase requisition,invoice 
A) Purchase order,check,receiving report 
B) Purchase requisition,purchase order,invoice 
C) Purchase requisition,receiving report,purchase order 
D) Purchase order,purchase requisition,invoice

Question 18

As the controller of a large company,you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished.You probably will want to

Accepted Answer

A) increase the amount of the fund. 
B) decrease the amount of the fund. 
C) find a new custodian for the fund. 
D) offer the custodian your congratulations. 
A) increase the amount of the fund. 
B) decrease the amount of the fund. 
C) find a new custodian for the fund. 
D) offer the custodian your congratulations.

Question 19

A check authorization would be prepared after a receiving report.

Accepted Answer

A) True 
 B)False

Question 20

When a petty cash fund is replenished,the entry requires a debit to Petty Cash.

Accepted Answer

A) True 
 B)False

Exam 7: Cash and Internal Control

Which of the following would be added to the balance per books on a bank reconciliation?

A result of a separation of duties is that

The use of prenumbered documents is important to a good system of internal control.

Separation of duties relates to a control activity in the accounting system.

The degree of separation of duties varies with the size of the business.

Cash Short or Over would be debited for a shortage.

Merchandisers usually end their fiscal year during the peak season.

In a purchase system,the most appropriate department to control goods upon arrival at the company is the

The petty cash fund of Writer Company was established on May 1 and appeared as follows on May 31: a.Prepare the journal entry on May 1 to establish the fund (omit explanation). b.Prepare the journal entry on May 31 to replenish the fund (omit explanation).

Under the perpetual inventory system,the entry to recognize inventory losses usually contains a

Chaney Company has established a petty cash fund for small expenditures.Prepare journal entries for the following transactions (omit explanations).

A remittance advice accompanies a check sent to a vendor or the vendor's bank.

Internal control is weakened by all of the following except

The petty cash voucher should be kept by the person being reimbursed.

The taking of a physical inventory is an example of periodic independent verification.

Which of the following sets of documents are in the correct sequence?

As the controller of a large company,you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished.You probably will want to

A check authorization would be prepared after a receiving report.

When a petty cash fund is replenished,the entry requires a debit to Petty Cash.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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