Question 1

The debit recorded in the journal to reimburse the petty cash fund is to

Accepted Answer

A)  Petty Cash 
B)  Accounts Receivable 
C)  Cash 
D)  various accounts for which the petty cash was disbursed 
A)  Petty Cash 
B)  Accounts Receivable 
C)  Cash 
D)  various accounts for which the petty cash was disbursed

Question 2

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 ledger 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 ledger are the ones the company owns

Question 3

The bank reconciliation

Accepted Answer

A)  should be prepared by an employee who records cash transactions 
B)  is part of the internal control system 
C)  is for information purposes only 
D)  is sent to the bank for verification 
A)  should be prepared by an employee who records cash transactions 
B)  is part of the internal control system 
C)  is for information purposes only 
D)  is sent to the bank for verification

Question 4

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

Accepted Answer

A)  accounting controls 
B)  cash controls 
C)  preventive controls 
D)  detective controls 
A)  accounting controls 
B)  cash controls 
C)  preventive controls 
D)  detective controls

Question 5

Money orders are considered cash.

Accepted Answer

A) True 
 B)False

Question 6

You began your new job as the accountant at Bolivar Industries during the month of December. During your first month, you found several interesting issues.
1) While looking through the invoices, you found Invoices 213-242, 245-271, and 275-290. It appears that invoices 243, 244, 272, 273, and 274 are missing.
2) During the month, Clerk # 3 issued $250 in refunds as compared to Clerks #1, #2, and #4 who issued less than $50 each.
3) The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month.
4) Business is generally brisk during the holiday season, but two weeks before Christmas there was a sudden increase in slow payments.
REQUIRED:
Part A: What kind of warning signs could be associated with these issues?
Part B: What control could you put in place regarding cash refunds mentioned in Part A (2)?

Accepted Answer

Part A:
1) Missing invoices or gaps in t

Question 7

During 2010, Tempo Inc has monthly cash expenses of $115,000. On December 31, 2010, their cash balance is $1,437,500. The ratio of cash to monthly cash expenses is

Accepted Answer

A)  8.0 
B)  12.5 
C)  87.5 
D)  11.5 
A)  8.0 
B)  12.5 
C)  87.5 
D)  11.5

Question 8

Roper Electronics received its bank statement for the month of August with an ending balance of $11,740.00. Roper determined that check #613 for $155.00 and check #601 for $420.00 were both outstanding. Also, a $6,900.00 deposit for August 30th was in transit as of the end of the month. Northern Regional Bank also collected a $5,000.00 notes receivable on August 1st that was issued March 1st at 12% annual interest. No interest revenue has been accrued on this note and Northern Regional Bank charged a $35.00 fee for the collection service.The bank statement reveals a bank service charge of $20.00. A customer check for $68.00 was returned with the bank statement marked "NSF". The ending balance of the Roper cash account is $12,938.00.
Complete a bank/account reconciliation and prepare any necessary journal entries for the reconciliation.

Accepted Answer

@#IMG-DLM&_TB2013_00

Question 9

The notification accompanying a check that indicates the specific invoice being paid is called a

Accepted Answer

A)  remittance advice 
B)  voucher 
C)  debit memo 
D)  credit memo 
A)  remittance advice 
B)  voucher 
C)  debit memo 
D)  credit memo

Question 10

Harris Company had checks outstanding totaling $15,400 on its May bank reconciliation. In June, Harris Company issued checks totaling $64,900. The June bank statement shows that $47,600 in checks cleared the bank in June. A check from one of Harris Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Harris Company's June bank reconciliation should be

Accepted Answer

A)  $49,500 
B)  $63,000 
C)  $47,600 
D)  $32,700 
A)  $49,500 
B)  $63,000 
C)  $47,600 
D)  $32,700

Question 11

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

Accepted Answer

A)  Service charges 
B)  Outstanding checks 
C)  Deposits in transit 
D)  Notes collected by the bank 
A)  Service charges 
B)  Outstanding checks 
C)  Deposits in transit 
D)  Notes collected by the bank

Question 12

In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records.

Accepted Answer

A) True 
 B)False

Question 13

When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

Accepted Answer

A)  risk assessment 
B)  monitoring 
C)  proofs and security measures 
D)  separating responsibilities for related operations 
A)  risk assessment 
B)  monitoring 
C)  proofs and security measures 
D)  separating responsibilities for related operations

Question 14

Cash equivalents

Accepted Answer

A)  are illegal in some states 
B)  will be converted to cash within two years 
C)  will be converted to cash within 90 days 
D)  will be converted to cash within 120 days 
A)  are illegal in some states 
B)  will be converted to cash within two years 
C)  will be converted to cash within 90 days 
D)  will be converted to cash within 120 days

Question 15

Which one of the following would not cause a bank to debit a company's account?

Accepted Answer

A)  Bank service charge 
B)  Collection of a note receivable 
C)  Checks marked NSF 
D)  Wiring of funds to other locations 
A)  Bank service charge 
B)  Collection of a note receivable 
C)  Checks marked NSF 
D)  Wiring of funds to other locations

Question 16

Which of the following items that appeared on the bank reconciliation did not require an adjusting entry?

Accepted Answer

A)  bank service charges 
B)  deposits in transit 
C)  NSF checks 
D)  A check for $630, recorded in the check register for $360. 
A)  bank service charges 
B)  deposits in transit 
C)  NSF checks 
D)  A check for $630, recorded in the check register for $360.

Question 17

Cash equivalents include

Accepted Answer

A)  checks 
B)  coins and currency 
C)  money market accounts and commercial paper 
D)  stocks and short-term bonds 
A)  checks 
B)  coins and currency 
C)  money market accounts and commercial paper 
D)  stocks and short-term bonds

Question 18

Distinguish preventive controls from detective controls and give examples of each as they relate to cash.

Accepted Answer

Preventive controls are to protect cash

Question 19

The term cash includes

Accepted Answer

A)  coins, currency (paper money), checks 
B)  money orders, and money on deposit that is available for unrestricted withdrawal 
C)  short-term receivables 
D)  both a and b 
A)  coins, currency (paper money), checks 
B)  money orders, and money on deposit that is available for unrestricted withdrawal 
C)  short-term receivables 
D)  both a and b

Question 20

Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus prevent fraud and misleading financial statements.

Accepted Answer

A) True 
 B)False

Exam 8: Sarbanes-Oxley, Internal Control, and Cash

The debit recorded in the journal to reimburse the petty cash fund is to

A voucher

The bank reconciliation

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

Money orders are considered cash.

During 2010, Tempo Inc has monthly cash expenses of $115,000. On December 31, 2010, their cash balance is $1,437,500. The ratio of cash to monthly cash expenses is

The notification accompanying a check that indicates the specific invoice being paid is called a

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

In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records.

When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

Cash equivalents

Which one of the following would not cause a bank to debit a company's account?

Which of the following items that appeared on the bank reconciliation did not require an adjusting entry?

Cash equivalents include

Distinguish preventive controls from detective controls and give examples of each as they relate to cash.

The term cash includes

Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus prevent fraud and misleading financial statements.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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