Question 1

Which of the following documents would be prepared (by a buyer of goods)after the others?

Accepted Answer

A) Purchase order 
B) Check 
C) Purchase requisition 
D) Receiving report 
A) Purchase order 
B) Check 
C) Purchase requisition 
D) Receiving report

Question 2

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 3

Why is the separation of duties an important control activity in a good system of internal control?

Accepted Answer

When only one employee is responsible fo

Question 4

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 5

A purchase requisition is a document sent by a company to a vendor.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Why do businesses need to keep some currency on hand?

Accepted Answer

Businesses need to keep some currency on

Question 8

Which of the following would not be found in a good system of internal control?

Accepted Answer

A) Requiring all employees to take earned vacations 
B) Establishing a system of checks and balances 
C) Having one person handle all the responsibilities of a department 
D) Establishing an internal audit staff 
A) Requiring all employees to take earned vacations 
B) Establishing a system of checks and balances 
C) Having one person handle all the responsibilities of a department 
D) Establishing an internal audit staff

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Jasmine Company has established a petty cash fund for small expenditures.Prepare journal entries for the following transactions (omit explanations).
April  5$\quad$$\quad$ Estabished a $200 petty cash fund with cash withdrawn from company checking account.
30$\quad$$\quad$$\quad$ $\quad$The petty cash fund has $10 remaining and is replenished. Expenditures for April were $60 for supplies, $50 for meals, $65 for postage, and $20 for freight-in.
May 31$\quad$$\quad$ The petty cash fund has $20 remaining and is replenished. Expenditures for May were $55 for postage, $40 for charitable contributions, $56 for supplies, and $25 for freight-in.

Accepted Answer

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

Question 11

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

Accepted Answer

A) True 
 B)False

Question 12

A check for $236 is incorrectly recorded by the company as $263.On the bank reconciliation,the error would

Accepted Answer

A) appear as a deduction of $27 from the balance per books. 
B) appear as an addition of $27 to the balance per bank. 
C) appear as a deduction of $263 from the balance per books and an addition of $236 to the balance per bank. 
D) appear as an addition of $27 to the balance per books. 
A) appear as a deduction of $27 from the balance per books. 
B) appear as an addition of $27 to the balance per bank. 
C) appear as a deduction of $263 from the balance per books and an addition of $236 to the balance per bank. 
D) appear as an addition of $27 to the balance per books.

Question 13

Bonding means insuring a company against loss due to employee theft.

Accepted Answer

A) True 
 B)False

Question 14

Cash Short or Over would be debited for a shortage.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A purchase requisition is prepared after a purchase order.

Accepted Answer

A) True 
 B)False

Question 19

It is best that the receiving department not be given a copy of the purchase order or the invoice.

Accepted Answer

A) True 
 B)False

Question 20

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 record the reimbursement of the petty cash fund would include a

Accepted Answer

A) credit to Postage Expense for $20. 
B) debit to Petty Cash for $90. 
C) credit to Cash for $85. 
D) debit to cash for $5. 
A) credit to Postage Expense for $20. 
B) debit to Petty Cash for $90. 
C) credit to Cash for $85. 
D) debit to cash for $5.

Exam 8: Cash and Internal Control

Which of the following documents would be prepared (by a buyer of goods)after the others?

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

Why is the separation of duties an important control activity in a good system of internal control?

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

A purchase requisition is a document sent by a company to a vendor.

A purchase order is sent from a company's

Why do businesses need to keep some currency on hand?

Which of the following would not be found in a good system of internal control?

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

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

A check for $236 is incorrectly recorded by the company as $263.On the bank reconciliation,the error would

Bonding means insuring a company against loss due to employee theft.

Cash Short or Over would be debited for a shortage.

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

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

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

A purchase requisition is prepared after a purchase order.

It is best that the receiving department not be given a copy of the purchase order or the invoice.

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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