Question 1

Damaged goods that can be sold at a reduced price should be included in a company's merchandise inventory.

Accepted Answer

A) True 
 B)False

Question 2

In a small business,because it is often cost-prohibitive to hire extra employees,the lack of certain separations of duties can best be overcome by

Accepted Answer

A) bonding the employees. 
B) getting the owner actively involved. 
C) hiring only honest employees. 
D) holding one person responsible for a given set of transactions. 
A) bonding the employees. 
B) getting the owner actively involved. 
C) hiring only honest employees. 
D) holding one person responsible for a given set of transactions.

Question 3

Before a check authorization is issued,the following documents must be in agreement,except for the

Accepted Answer

A) purchase order. 
B) receiving report. 
C) remittance advice. 
D) invoice. 
A) purchase order. 
B) receiving report. 
C) remittance advice. 
D) invoice.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would be deducted from 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 6

Proper control procedures can guarantee the prevention of theft.

Accepted Answer

A) True 
 B)False

Question 7

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 increase in the Petty Cash account would include a

Accepted Answer

A) debit to the Petty Cash account for $50. 
B) credit to the Petty Cash account for $50. 
C) memorandum entry only in the ledger. 
D) debit to the Cash account for $50. 
A) debit to the Petty Cash account for $50. 
B) credit to the Petty Cash account for $50. 
C) memorandum entry only in the ledger. 
D) debit to the Cash account for $50.

Question 8

In addition to keeping the records of a purchase transaction,the accounting department should prepare and mail checks in payment of invoices.

Accepted Answer

A) True 
 B)False

Question 9

The materiality concept dictates that no internal controls be established over petty cash.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

Public companies are required to

Accepted Answer

A) have an independent audit of financial statements. 
B) have an audit of the internal control systems. 
C) fully document and certify the company's system of internal controls. 
D) do all of these. 
A) have an independent audit of financial statements. 
B) have an audit of the internal control systems. 
C) fully document and certify the company's system of internal controls. 
D) do all of these.

Question 12

A good system of internal control is designed to achieve all of the following except

Accepted Answer

A) efficiency of operations. 
B) reliability of financial reporting. 
C) compliance with relevant laws and regulations. 
D) attainment of target sales. 
A) efficiency of operations. 
B) reliability of financial reporting. 
C) compliance with relevant laws and regulations. 
D) attainment of target sales.

Question 13

A remittance advice is attached to a(n)

Accepted Answer

A) receiving report. 
B) check. 
C) purchase order. 
D) invoice. 
A) receiving report. 
B) check. 
C) purchase order. 
D) invoice.

Question 14

A company establishes a $150 petty cash fund.The fund is replenished in the amount of $136,after petty cash vouchers of $66 for transportation,$44 for supplies,and $22 for postage had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

Accepted Answer

$4 shortag

Question 15

Which of the following would be added to the balance per bank?

Accepted Answer

A) Outstanding checks 
B) Bank service charges 
C) Collection of a note receivable by the bank 
D) Deposits in transit 
A) Outstanding checks 
B) Bank service charges 
C) Collection of a note receivable by the bank 
D) Deposits in transit

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

An effective system of internal control centralizes functions in a single,capable individual.

Accepted Answer

A) True 
 B)False

Question 18

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

Accepted Answer

$22 overag

Question 19

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 20

The Sarbanes-Oxley Act has succeeded in

Accepted Answer

A) heightening awareness and diligence with respect to internal control. 
B) increasing transparency in privately owned companies. 
C) stopping fraud from occurring. 
D) all of these. 
A) heightening awareness and diligence with respect to internal control. 
B) increasing transparency in privately owned companies. 
C) stopping fraud from occurring. 
D) all of these.

Exam 8: Cash and Internal Control

Damaged goods that can be sold at a reduced price should be included in a company's merchandise inventory.

In a small business,because it is often cost-prohibitive to hire extra employees,the lack of certain separations of duties can best be overcome by

Before a check authorization is issued,the following documents must be in agreement,except for the

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

Which of the following would be deducted from the balance per books on a bank reconciliation?

Proper control procedures can guarantee the prevention of theft.

In addition to keeping the records of a purchase transaction,the accounting department should prepare and mail checks in payment of invoices.

The materiality concept dictates that no internal controls be established over petty cash.

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

Public companies are required to

A good system of internal control is designed to achieve all of the following except

A remittance advice is attached to a(n)

A company establishes a $150 petty cash fund.The fund is replenished in the amount of $136,after petty cash vouchers of $66 for transportation,$44 for supplies,and $22 for postage had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

Which of the following would be added to the balance per bank?

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

An effective system of internal control centralizes functions in a single,capable individual.

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

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

The Sarbanes-Oxley Act has succeeded in

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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