Question 1

Which one of the following procedures is incorrect for setting up and maintaining a petty cash fund?

Accepted Answer

A) A check is prepared for a fixed amount;when the check is cashed,the money is entrusted to a petty cash custodian. 
B) An entry is recorded to establish the fund and obtain the cash. 
C) When appropriate documentation is presented,cash payments are made from the fund;the petty cash custodian retains the documentation. 
D) When the petty cash fund is replenished,an entry is recorded to recognize an increase in the petty cash account. 
A) A check is prepared for a fixed amount;when the check is cashed,the money is entrusted to a petty cash custodian. 
B) An entry is recorded to establish the fund and obtain the cash. 
C) When appropriate documentation is presented,cash payments are made from the fund;the petty cash custodian retains the documentation. 
D) When the petty cash fund is replenished,an entry is recorded to recognize an increase in the petty cash account.

Question 2

No special internal control procedures are necessary with a petty cash account because the amount is usually so small.

Accepted Answer

A) True 
 B)False

Question 3

The following set of items describes activities completed by a company in collecting cash for merchandise sales.For each activity,identify whether or not the activity adheres to or violates sound internal control procedures. Monthly statements,indicating the current balance due,are mailed to customers.

Accepted Answer

A) Adheres to sound internal control procedures 
B) Violates sound internal control procedures 
C) Neither strengthens nor violates internal control 
A) Adheres to sound internal control procedures 
B) Violates sound internal control procedures 
C) Neither strengthens nor violates internal control

Question 4

The documentation with the bank statement shows a debit memo for bank service charges.Based on this,what possible entry would be made in the company's accounts?

Accepted Answer

A) debit Miscellaneous Administrative Expense;credit Cash 
B) debit Cash;credit Other Income 
C) debit Cash;credit Accounts Payable 
D) debit Accounts Payable;credit Cash 
A) debit Miscellaneous Administrative Expense;credit Cash 
B) debit Cash;credit Other Income 
C) debit Cash;credit Accounts Payable 
D) debit Accounts Payable;credit Cash

Question 5

Flake Company accepted a check from Ramos Company as payment for services rendered by Flake Company.Later Flake's bank statement revealed that Ramos' check was an NSF check.Recognizing the NSF check on Flake's books would act to:

Accepted Answer

A) Decrease total assets 
B) Decrease total owners' equity 
C) Both a.and b. 
D) Have no effect on Total Assets 
A) Decrease total assets 
B) Decrease total owners' equity 
C) Both a.and b. 
D) Have no effect on Total Assets

Question 6

Items that are included on a bank statement and decrease the bank account balance are called _________________________.

Accepted Answer

The answer of Items that are included on a bank...

Question 7

As part of good internal control,disbursements can be made either by check or cash.

Accepted Answer

A) True 
 B)False

Question 8

While reconciling the checking account,an accountant with Sonic Corporation noticed that an error had been made in recording a check received by the company.Sonic recorded the receipt as $729 and the correct amount of the check was $279.What reconciling adjustment is required?

Accepted Answer

A) Add $450 to the company's book balance 
B) Deduct $450 from the company's book balance 
C) Add $450 to the bank statement balance 
D) Deduct $450 from the bank statement balance 
A) Add $450 to the company's book balance 
B) Deduct $450 from the company's book balance 
C) Add $450 to the bank statement balance 
D) Deduct $450 from the bank statement balance

Question 9

Only one copy of the prelist should be prepared when an employee opens mail with customer payments to avoid complexity in the accounting system and maintain control.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following items is a reconciling item on the bank side of a bank reconciliation?

Accepted Answer

A) Canceled checks 
B) Outstanding checks 
C) NSF checks 
D) Service charge 
A) Canceled checks 
B) Outstanding checks 
C) NSF checks 
D) Service charge

Question 11

On a bank reconciliation,bank charges for the month are added to the cash balance per the books.

Accepted Answer

A) True 
 B)False

Question 12

Checks received from customers are considered to be cash in the company's books.

Accepted Answer

A) True 
 B)False

Question 13

What are at least four important internal control procedures?

Accepted Answer

Student answers may vary but can include

Question 14

If a credit memo appears on a bank reconciliation,this could be an indication that:

Accepted Answer

A) there has been a decrease the company's bank account 
B) there has been a bank service charge 
C) there has been a deposit of a customer's NSF check 
D) there has been a note receivable for the company that was collected by the bank. 
A) there has been a decrease the company's bank account 
B) there has been a bank service charge 
C) there has been a deposit of a customer's NSF check 
D) there has been a note receivable for the company that was collected by the bank.

Question 15

Which one of the following items is not included in cash?

Accepted Answer

A) A bank certificate of deposit for one year 
B) A savings account at the bank 
C) A checking account at the bank 
D) All of the above are included in cash 
A) A bank certificate of deposit for one year 
B) A savings account at the bank 
C) A checking account at the bank 
D) All of the above are included in cash

Question 16

How would interest earned on a checking account be dealt with in a bank reconciliation?

Accepted Answer

A) added to company's book balance 
B) deducted from company's book balance 
C) added to bank statement balance 
D) deducted from bank statement balance 
A) added to company's book balance 
B) deducted from company's book balance 
C) added to bank statement balance 
D) deducted from bank statement balance

Question 17

A good system of internal control is important to make a company's accounting records completely foolproof.

Accepted Answer

A) True 
 B)False

Question 18

A company prepares adjusting entries for debit memorandums but not for credit memorandums

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following statements best describes the term "outstanding check?"

Accepted Answer

A) A check written by the company and presented to the bank for payment. 
B) A check written by the company but not yet presented to the bank for payment. 
C) A check written by a customer that has been presented to the bank for payment. 
D) A check written by a customer that has not yet been presented to the bank for payment. 
A) A check written by the company and presented to the bank for payment. 
B) A check written by the company but not yet presented to the bank for payment. 
C) A check written by a customer that has been presented to the bank for payment. 
D) A check written by a customer that has not yet been presented to the bank for payment.

Question 20

The Dinho Corporation identified the following data when preparing their April bank reconciliation:   In addition,Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200.
What is the adjusted cash balance at the end of April?

Accepted Answer

A) $44,300 
B) $45,500 
C) $45,000 
D) $45,700 
A) $44,300 
B) $45,500 
C) $45,000 
D) $45,700

Which one of the following procedures is incorrect for setting up and maintaining a petty cash fund?

No special internal control procedures are necessary with a petty cash account because the amount is usually so small.

The documentation with the bank statement shows a debit memo for bank service charges.Based on this,what possible entry would be made in the company's accounts?

Flake Company accepted a check from Ramos Company as payment for services rendered by Flake Company.Later Flake's bank statement revealed that Ramos' check was an NSF check.Recognizing the NSF check on Flake's books would act to:

Items that are included on a bank statement and decrease the bank account balance are called _________________________.

As part of good internal control,disbursements can be made either by check or cash.

While reconciling the checking account,an accountant with Sonic Corporation noticed that an error had been made in recording a check received by the company.Sonic recorded the receipt as $729 and the correct amount of the check was $279.What reconciling adjustment is required?

Only one copy of the prelist should be prepared when an employee opens mail with customer payments to avoid complexity in the accounting system and maintain control.

Which one of the following items is a reconciling item on the bank side of a bank reconciliation?

On a bank reconciliation,bank charges for the month are added to the cash balance per the books.

Checks received from customers are considered to be cash in the company's books.

What are at least four important internal control procedures?

If a credit memo appears on a bank reconciliation,this could be an indication that:

Which one of the following items is not included in cash?

How would interest earned on a checking account be dealt with in a bank reconciliation?

A good system of internal control is important to make a company's accounting records completely foolproof.

A company prepares adjusting entries for debit memorandums but not for credit memorandums

Which one of the following statements best describes the term "outstanding check?"

The Dinho Corporation identified the following data when preparing their April bank reconciliation: In addition,Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200. What is the adjusted cash balance at the end of April?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 6: Cash and Internal Control

Which one of the following procedures is incorrect for setting up and maintaining a petty cash fund?

No special internal control procedures are necessary with a petty cash account because the amount is usually so small.

The documentation with the bank statement shows a debit memo for bank service charges.Based on this,what possible entry would be made in the company's accounts?

Flake Company accepted a check from Ramos Company as payment for services rendered by Flake Company.Later Flake's bank statement revealed that Ramos' check was an NSF check.Recognizing the NSF check on Flake's books would act to:

Items that are included on a bank statement and decrease the bank account balance are called _________________________.

As part of good internal control,disbursements can be made either by check or cash.

While reconciling the checking account,an accountant with Sonic Corporation noticed that an error had been made in recording a check received by the company.Sonic recorded the receipt as $729 and the correct amount of the check was $279.What reconciling adjustment is required?

Only one copy of the prelist should be prepared when an employee opens mail with customer payments to avoid complexity in the accounting system and maintain control.

Which one of the following items is a reconciling item on the bank side of a bank reconciliation?

On a bank reconciliation,bank charges for the month are added to the cash balance per the books.

Checks received from customers are considered to be cash in the company's books.

What are at least four important internal control procedures?

If a credit memo appears on a bank reconciliation,this could be an indication that:

Which one of the following items is not included in cash?

How would interest earned on a checking account be dealt with in a bank reconciliation?

A good system of internal control is important to make a company's accounting records completely foolproof.

A company prepares adjusting entries for debit memorandums but not for credit memorandums

Which one of the following statements best describes the term "outstanding check?"

The Dinho Corporation identified the following data when preparing their April bank reconciliation: In addition,Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200. What is the adjusted cash balance at the end of April?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters