Question 1

The Sarbanes-Oxley Act has not stopped the occurrence of fraud,and additional guidance with regard to internal controls is expected to be issued.

Accepted Answer

A) True 
 B)False

Question 2

The periodic inventory system provides no means of identifying losses from spoilage,shoplifting,and theft.

Accepted Answer

A) True 
 B)False

Question 3

When the balance of a petty cash fund is increased,the entry would contain a credit to Petty Cash.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

Mandisa Sounds,Inc. ,a specialty retailer of customized audio systems for automobiles,installed a perpetual inventory system in the second quarter of 2011.The new system allowed the firm to adjust its merchandise inventories to sales patterns more effectively and to prepare monthly financial statements.Although the system led to an improvement in sales and income,the gross margin on the monthly income statements was falling below both management's expectations and the industry average.At the end of 2014,a physical inventory revealed that actual merchandise inventory was considerably lower than the perpetual inventory records indicated.The merchandise inventories of some stores were off more than others,but all had deficiencies.What probably caused these losses and what steps could be taken to prevent them in the future?

Accepted Answer

The merchandise inventory losses probabl

Question 6

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

Accepted Answer

A physical inventory must be taken to de

Question 7

An NSF check should appear in which section of the bank reconciliation?

Accepted Answer

A) Deductions from the balance per books 
B) Deductions from the balance per bank 
C) Additions to the balance per books 
D) Additions to the balance per bank 
A) Deductions from the balance per books 
B) Deductions from the balance per bank 
C) Additions to the balance per books 
D) Additions to the balance per bank

Question 8

Which of the following bank reconciliation items would not result in a journal entry?

Accepted Answer

A) Service charge 
B) NSF check of a customer 
C) Collection of a note by the bank 
D) Deposits in transit 
A) Service charge 
B) NSF check of a customer 
C) Collection of a note by the bank 
D) Deposits in transit

Question 9

A purchase order is sent from a company's

Accepted Answer

A) purchasing department to the supplier. 
B) requesting department to the supplier. 
C) requesting department to its accounting department. 
D) treasurer to the supplier. 
A) purchasing department to the supplier. 
B) requesting department to the supplier. 
C) requesting department to its accounting department. 
D) treasurer to the supplier.

Question 10

The financial statements of nonpublic companies are not required to be audited by an independent CPA.

Accepted Answer

A) True 
 B)False

Question 11

The purchasing department prepares a purchase requisition addressed to the vendor (seller)containing instructions related to the items ordered.

Accepted Answer

A) True 
 B)False

Question 12

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A) Deposit of $250 recorded by the bank as $25 
B) Deposit of $25 recorded by the bank as $250 
C) Check for $25 recorded in company books as $52 
D) Check for $52 recorded in company books as $25 
A) Deposit of $250 recorded by the bank as $25 
B) Deposit of $25 recorded by the bank as $250 
C) Check for $25 recorded in company books as $52 
D) Check for $52 recorded in company books as $25

Question 13

Which of the following would not be a valid reason for keeping currency on hand at a place of business?

Accepted Answer

A) To pay small,unforeseen expenses 
B) To make up for any imbalance in the books 
C) To advance money to sales reps for travel expenses 
D) To provide money for cash registers 
A) To pay small,unforeseen expenses 
B) To make up for any imbalance in the books 
C) To advance money to sales reps for travel expenses 
D) To provide money for cash registers

Question 14

When payment is received by mail,a detailed list of such receipts would not be retained by the

Accepted Answer

A) receiving department. 
B) accounting department. 
C) person who opens the mail. 
D) cashier. 
A) receiving department. 
B) accounting department. 
C) person who opens the mail. 
D) cashier.

Question 15

A check authorization is a document that permits the issuance of a check to pay an invoice.

Accepted Answer

A) True 
 B)False

Question 16

Compute the correct amount for each letter in the following table:

Accepted Answer

(a)$8,700 ($6,900 - $1,200 + $

Question 17

Cash received through the mail should be handled by only one employee to achieve effective internal control.

Accepted Answer

A) True 
 B)False

Question 18

One of the best ways to control a petty cash fund is through an imprest system.

Accepted Answer

A) True 
 B)False

Question 19

Merchandisers usually take a physical inventory when the volume of goods is at its lowest levels.

Accepted Answer

A) True 
 B)False

Question 20

Marta Company has the following bank items:   The adjusted book balance should be

Accepted Answer

A) $49,250 
B) $50,000 
C) $50,050 
D) $50,850 
A) $49,250 
B) $50,000 
C) $50,050 
D) $50,850

Exam 7: Cash and Internal Control

The Sarbanes-Oxley Act has not stopped the occurrence of fraud,and additional guidance with regard to internal controls is expected to be issued.

The periodic inventory system provides no means of identifying losses from spoilage,shoplifting,and theft.

When the balance of a petty cash fund is increased,the entry would contain a credit to Petty Cash.

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

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

An NSF check should appear in which section of the bank reconciliation?

Which of the following bank reconciliation items would not result in a journal entry?

A purchase order is sent from a company's

The financial statements of nonpublic companies are not required to be audited by an independent CPA.

The purchasing department prepares a purchase requisition addressed to the vendor (seller)containing instructions related to the items ordered.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Which of the following would not be a valid reason for keeping currency on hand at a place of business?

When payment is received by mail,a detailed list of such receipts would not be retained by the

A check authorization is a document that permits the issuance of a check to pay an invoice.

Compute the correct amount for each letter in the following table:

Cash received through the mail should be handled by only one employee to achieve effective internal control.

One of the best ways to control a petty cash fund is through an imprest system.

Merchandisers usually take a physical inventory when the volume of goods is at its lowest levels.

Marta Company has the following bank items: The adjusted book balance should be

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

Filters