Question 1

Money orders are considered cash.

Accepted Answer

A) True 
 B)False

Question 2

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a:

Accepted Answer

A)  debit to Accounts Receivable. 
B)  debit to Cash. 
C)  debit to Accounts Payable. 
D)  credit to Accounts Payable. 
A)  debit to Accounts Receivable. 
B)  debit to Cash. 
C)  debit to Accounts Payable. 
D)  credit to Accounts Payable.

Question 3

Internal controls are important because they:

Accepted Answer

A)  deter fraud and prevent misleading financial statements. 
B)  eliminate fraud. 
C)  ensure that the company maintains a compensating balance. 
D)  guarantee accurate financial statements. 
A)  deter fraud and prevent misleading financial statements. 
B)  eliminate fraud. 
C)  ensure that the company maintains a compensating balance. 
D)  guarantee accurate financial statements.

Question 4

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n):

Accepted Answer

A)  addition to the cash balance per books. 
B)  addition to the cash balance per bank. 
C)  deduction from the cash balance per bank. 
D)  deduction from the cash balance per books. 
A)  addition to the cash balance per books. 
B)  addition to the cash balance per bank. 
C)  deduction from the cash balance per bank. 
D)  deduction from the cash balance per books.

Question 5

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Accepted Answer

A) True 
 B)False

Question 6

The purpose of the Sarbanes-Oxley Act of 2002 is to:

Accepted Answer

A)  restore public confidence and trust in the financial statements of publicly held companies. 
B)  require all companies to prepare financial statements. 
C)  protect companies from demands of investors, stockholders, and creditors. 
D)  do all of these. 
A)  restore public confidence and trust in the financial statements of publicly held companies. 
B)  require all companies to prepare financial statements. 
C)  protect companies from demands of investors, stockholders, and creditors. 
D)  do all of these.

Question 7

On the bank's accounting records, customers' accounts are normally shown as a(n):

Accepted Answer

A)  revenue. 
B)  liability. 
C)  asset. 
D)  expenses. 
A)  revenue. 
B)  liability. 
C)  asset. 
D)  expenses.

Question 8

A voucher:

Accepted Answer

A)  is received from customers to explain the purpose of a payment. 
B)  is normally prepared in the Accounting Department. 
C)  system is used to control cash receipts. 
D)  system is an internal control procedure to verify that the assets in the records are the ones the company owns. 
A)  is received from customers to explain the purpose of a payment. 
B)  is normally prepared in the Accounting Department. 
C)  system is used to control cash receipts. 
D)  system is an internal control procedure to verify that the assets in the records are the ones the company owns.

Question 9

A special cash fund used to make small payments that occur frequently is called a(n):

Accepted Answer

A)  operating expenses fund. 
B)  change fund. 
C)  market fund. 
D)  petty cash fund. 
A)  operating expenses fund. 
B)  change fund. 
C)  market fund. 
D)  petty cash fund.

Question 10

A credit memorandum from the bank :

Accepted Answer

A)  decreases a bank customer's account. 
B)  is used to show a bank service charge. 
C)  shows that a company has deposited a customer's NSF check. 
D)  shows the bank has collected a note receivable for the customer. 
A)  decreases a bank customer's account. 
B)  is used to show a bank service charge. 
C)  shows that a company has deposited a customer's NSF check. 
D)  shows the bank has collected a note receivable for the customer.

Question 11

What adjustment is required in the depositor's accounts to record outstanding checks?

Accepted Answer

A)  None 
B)  Increase Cash; decrease Accounts Receivable 
C)  Increase Cash; increase Accounts Payable 
D)  Increase Accounts Receivable; decrease Cash 
A)  None 
B)  Increase Cash; decrease Accounts Receivable 
C)  Increase Cash; increase Accounts Payable 
D)  Increase Accounts Receivable; decrease Cash

Question 12

Outstanding checks are checks that have been issued but have not cleared by the bank.

Accepted Answer

A) True 
 B)False

Question 13

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Increase Notes Receivable; decrease Cash 
B)  Increase Cash; increase Miscellaneous Income 
C)  Increase Cash; decrease Notes Receivable 
D)  Increase Accounts Receivable; decrease Cash 
A)  Increase Notes Receivable; decrease Cash 
B)  Increase Cash; increase Miscellaneous Income 
C)  Increase Cash; decrease Notes Receivable 
D)  Increase Accounts Receivable; decrease Cash

Question 14

Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Increase Miscellaneous Expense; decrease Cash 
B)  Increase Cash; increase Other Income 
C)  Increase Cash; increase Accounts Payable 
D)  Decrease Accounts Payable; decrease Cash 
A)  Increase Miscellaneous Expense; decrease Cash 
B)  Increase Cash; increase Other Income 
C)  Increase Cash; increase Accounts Payable 
D)  Decrease Accounts Payable; decrease Cash

Question 15

Using the following information, prepare a bank reconciliation for Wilkes Co. for May 31, 2013:
 (a)The bank statement balance is $ \$ 3,512 $.
(b)The cash ac count balance is $ \$ 3,165 $.
(c)Outstanding checks amounted to $ \$ 590 $.
(d)Deposits in transit are $ \$ 204 $.
(e)The bank service charge is $ \$ 30 $.
(f)A check for $ \$ 76 $ for supplieswasrecorded on the depositor's books as $ \$ 67 $.

Accepted Answer

The answer of Using the following information, prepare a bank...

Question 16

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

Accepted Answer

A) True 
 B)False

Question 17

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Accepted Answer

A) True 
 B)False

Question 18

In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 19

A business that requires all cash payments be made by check cannot use a petty cash system.

Accepted Answer

A) True 
 B)False

Question 20

A customer's check received in settlement of an account receivable is considered cash.

Accepted Answer

A) True 
 B)False

Money orders are considered cash.

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a:

Internal controls are important because they:

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n):

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

The purpose of the Sarbanes-Oxley Act of 2002 is to:

On the bank's accounting records, customers' accounts are normally shown as a(n):

A voucher:

A special cash fund used to make small payments that occur frequently is called a(n):

A credit memorandum from the bank :

What adjustment is required in the depositor's accounts to record outstanding checks?

Outstanding checks are checks that have been issued but have not cleared by the bank.

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor's accounts?

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the cash balance per books.

A business that requires all cash payments be made by check cannot use a petty cash system.

A customer's check received in settlement of an account receivable is considered cash.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 5: Sarbanes-Oxley, Internal Control, and Cash

Money orders are considered cash.

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a:

Internal controls are important because they:

Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n):

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

The purpose of the Sarbanes-Oxley Act of 2002 is to:

On the bank's accounting records, customers' accounts are normally shown as a(n):

A voucher:

A special cash fund used to make small payments that occur frequently is called a(n):

A credit memorandum from the bank :

What adjustment is required in the depositor's accounts to record outstanding checks?

Outstanding checks are checks that have been issued but have not cleared by the bank.

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor's accounts?

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the cash balance per books.

A business that requires all cash payments be made by check cannot use a petty cash system.

A customer's check received in settlement of an account receivable is considered cash.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters