Question 1

A petty cash fund is established for small payments for which writing a check would be impractical.

Accepted Answer

A) True 
 B)False

Question 2

A very small company would have the most difficulty in implementing which of the following internal control activities?

Accepted Answer

A) Sound personnel procedures 
B) Periodic independent verification 
C) Limited access to assets 
D) Separation of duties 
A) Sound personnel procedures 
B) Periodic independent verification 
C) Limited access to assets 
D) Separation of duties

Question 3

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 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

Which of the following attributes of internal control would be violated if the purchasing department wrote checks to pay accounts payable?

Accepted Answer

A) Adequate design of documents 
B) Sound personnel procedures 
C) Periodic independent verification 
D) Separation of duties 
A) Adequate design of documents 
B) Sound personnel procedures 
C) Periodic independent verification 
D) Separation of duties

Question 6

Chaney Company has established a petty cash fund for small expenditures.Prepare journal entries for the following transactions (omit explanations).
June   5$\quad$$\quad$$\quad$Estabished a $250 petty cash fund with cash withdrawn from company checking account.
30$\quad$$\quad$$\quad$$\quad$ The petty cash fund has $12 remaining and is replenished. Expenditures for June were $75 for supplies, $60 for meals, $80 for postage, and $25 for freight-in.
July 31$\quad$$\quad$$\quad$The petty cash fund has $24 remaining and is replenished. Expenditures for July were $70 for postage, $45 for charitable contributions, $80 for supplies, and $30 for freight-in.

Accepted Answer

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

Question 7

Which of the following is not a goal of a system of internal control over merchandising transactions?

Accepted Answer

A) Keep credit losses as low as possible. 
B) Prevent the theft of cash and inventory. 
C) Keep the maximum amount of inventory on hand at all times. 
D) Keep enough cash on hand to take advantage of purchase discounts. 
A) Keep credit losses as low as possible. 
B) Prevent the theft of cash and inventory. 
C) Keep the maximum amount of inventory on hand at all times. 
D) Keep enough cash on hand to take advantage of purchase discounts.

Question 8

The Sarbanes-Oxley Act of 2002 requires all of the following to certify a public company's system of internal control,except for the

Accepted Answer

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

Question 9

Sound internal control activities dictate that extra cash should always be on hand.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an internal control activity for cash?

Accepted Answer

A) Unannounced audits of cash on hand should be made occasionally. 
B) The number of persons who have access to cash should be limited. 
C) The functions of recordkeeping and keeping custody of cash should be combined. 
D) All cash receipts should be recorded promptly. 
A) Unannounced audits of cash on hand should be made occasionally. 
B) The number of persons who have access to cash should be limited. 
C) The functions of recordkeeping and keeping custody of cash should be combined. 
D) All cash receipts should be recorded promptly.

Question 11

Effective internal control requires a department to purchase supplies on its own.

Accepted Answer

A) True 
 B)False

Question 12

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 13

On a bank reconciliation,$75 interest earned on a checking account would

Accepted Answer

A) appear as a deduction of $75 from the balance per books. 
B) appear as an addition of $75 to the balance per bank. 
C) appear as an addition of $75 to the balance per books. 
D) not appear as an adjustment on the bank reconciliation 
A) appear as a deduction of $75 from the balance per books. 
B) appear as an addition of $75 to the balance per bank. 
C) appear as an addition of $75 to the balance per books. 
D) not appear as an adjustment on the bank reconciliation

Question 14

The receiving department must compare goods received with goods purchased,as indicated on the purchase order.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following documents is mailed to the vendor (seller)of goods?

Accepted Answer

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

Question 16

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from the individual's bank account.

Accepted Answer

A) True 
 B)False

Question 17

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 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

When a company makes payment for goods or services,the check is prepared by the company's

Accepted Answer

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

Question 20

In a small business,active involvement by the owner can be a practical substitute for the separation of some duties.

Accepted Answer

A) True 
 B)False

Exam 8: Cash and Internal Control

A petty cash fund is established for small payments for which writing a check would be impractical.

A very small company would have the most difficulty in implementing which of the following internal control activities?

Internal control is weakened by all of the following except

Which of the following attributes of internal control would be violated if the purchasing department wrote checks to pay accounts payable?

Which of the following is not a goal of a system of internal control over merchandising transactions?

The Sarbanes-Oxley Act of 2002 requires all of the following to certify a public company's system of internal control,except for the

Sound internal control activities dictate that extra cash should always be on hand.

Which of the following is not an internal control activity for cash?

Effective internal control requires a department to purchase supplies on its own.

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

On a bank reconciliation,$75 interest earned on a checking account would

The receiving department must compare goods received with goods purchased,as indicated on the purchase order.

Which of the following documents is mailed to the vendor (seller)of goods?

When an individual uses a debit card to make a purchase,the amount of the purchase is deducted directly from the individual's bank account.

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).

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

When a company makes payment for goods or services,the check is prepared by the company's

In a small business,active involvement by the owner can be a practical substitute for the separation of some duties.

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

Filters