Question 1

A $200 petty cash fund has cash of $20 and valid receipts of $164.The entry to replenish the fund would be:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 2

One example of a periodic independent verification is the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 3

Management is responsible for establishing a satisfactory system of internal control.

Accepted Answer

A) True 
 B)False

Question 4

An accountant is responsible for the following activities: (1)receiving all cash; (2)maintaining the general ledger; (3)maintaining the accounts receivable subsidiary ledger that includes the individual records of each customer; (4)maintaining the journals for recording sales,purchases,and cash receipts;and (5)preparing monthly statements to be sent to customers.As a service to customers and employees,the company allows the accountant to cash checks of up to $75 with money from the cash receipts.When deposits are made,the checks are included in place of the cash receipts.What weaknesses in internal control exist in this system?

Accepted Answer

In this case,the principle of separation

Question 5

When a petty cash fund is established,the entry contains a credit to Cash.

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

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 8

A physical inventory is usually taken

Accepted Answer

A) in the middle of the fiscal year. 
B) at the peak of the busy season. 
C) at the end of the fiscal year. 
D) at December 31. 
A) in the middle of the fiscal year. 
B) at the peak of the busy season. 
C) at the end of the fiscal year. 
D) at December 31.

Question 9

Annual reports of public companies will include statements from both management and independent auditors regarding the adequacy of internal control.

Accepted Answer

A) True 
 B)False

Question 10

A formal request for a purchase from a requesting department of a business is known as a purchase order.

Accepted Answer

A) True 
 B)False

Question 11

On a balance sheet,what items normally are included in Cash?

Accepted Answer

The items normally included in Cash are

Question 12

Taking a physical inventory is not necessary under a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 13

Cash equivalents are defined as investments that carry terms of 90 days or less.

Accepted Answer

A) True 
 B)False

Question 14

Public companies must have their financial statements audited,but are not required to have their internal control systems audited.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The entry for establishing a $300 petty cash fund would be:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 17

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 as $52 
D) Check for $52 recorded 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 as $52 
D) Check for $52 recorded as $25

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A company's merchandise inventory includes all of the following,except

Accepted Answer

A) goods in warehouses. 
B) goods sold,but not yet delivered. 
C) goods in transit from suppliers,if title has passed to the merchandiser. 
D) goods in trucks between the warehouse and the store. 
A) goods in warehouses. 
B) goods sold,but not yet delivered. 
C) goods in transit from suppliers,if title has passed to the merchandiser. 
D) goods in trucks between the warehouse and the store.

Question 20

The following is a quote found in a company's annual report: 
In our opinion,the Company maintained,in all material respects,effective internal control over financial reporting...
This statement would have been made by

Accepted Answer

A) the company's independent auditors. 
B) the chief financial officer. 
C) the chief executive officer. 
D) the board of directors. 
A) the company's independent auditors. 
B) the chief financial officer. 
C) the chief executive officer. 
D) the board of directors.

Exam 8: Cash and Internal Control

A $200 petty cash fund has cash of $20 and valid receipts of $164.The entry to replenish the fund would be:

One example of a periodic independent verification is the bank reconciliation.

Management is responsible for establishing a satisfactory system of internal control.

When a petty cash fund is established,the entry contains a credit to Cash.

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

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

A physical inventory is usually taken

Annual reports of public companies will include statements from both management and independent auditors regarding the adequacy of internal control.

A formal request for a purchase from a requesting department of a business is known as a purchase order.

On a balance sheet,what items normally are included in Cash?

Taking a physical inventory is not necessary under a perpetual inventory system.

Cash equivalents are defined as investments that carry terms of 90 days or less.

Public companies must have their financial statements audited,but are not required to have their internal control systems audited.

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

The entry for establishing a $300 petty cash fund would be:

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

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

A company's merchandise inventory includes all of the following,except

The following is a quote found in a company's annual report: In our opinion,the Company maintained,in all material respects,effective internal control over financial reporting... This statement would have been made by

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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