Question 1

________________ reflects the liquidity of a company's accounts receivable.

Accepted Answer

Days' sale

Question 2

A check involves three parties:

Accepted Answer

A)  The writer, the cashier, and the bank. 
B)  The maker, the payee, and the bank. 
C)  The maker, the manager, and the payee. 
D)  The bookkeeper, the payee, and the bank. 
E)  The signer, the cashier, and the company. 
A)  The writer, the cashier, and the bank. 
B)  The maker, the payee, and the bank. 
C)  The maker, the manager, and the payee. 
D)  The bookkeeper, the payee, and the bank. 
E)  The signer, the cashier, and the company.

Question 3

An invoice is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of sale.

Accepted Answer

A) True 
 B)False

Question 4

A company that uses the net method of recording invoices made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would include:

Accepted Answer

A)  A debit to Merchandise Inventory for $392. 
B)  A credit to Discounts Lost for $8. 
C)  A credit to Cash for $392. 
D)  A debit to Discounts Lost for $8. 
E)  A debit to Cash for $392. 
A)  A debit to Merchandise Inventory for $392. 
B)  A credit to Discounts Lost for $8. 
C)  A credit to Cash for $392. 
D)  A debit to Discounts Lost for $8. 
E)  A debit to Cash for $392.

Question 5

Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.

Accepted Answer

A) True 
 B)False

Question 6

A properly designed internal control system:

Accepted Answer

A)  Lowers the company's risk of loss. 
B)  Insures profitable operations. 
C)  Eliminates the need for an audit. 
D)  Requires the use of non-computerized systems. 
E)  Is not necessary if the company uses a computerized system. 
A)  Lowers the company's risk of loss. 
B)  Insures profitable operations. 
C)  Eliminates the need for an audit. 
D)  Requires the use of non-computerized systems. 
E)  Is not necessary if the company uses a computerized system.

Question 7

The principles of internal control include:

Accepted Answer

A)  Establish responsibilities. 
B)  Maintain minimal records. 
C)  Use only computerized systems. 
D)  Bond all employees. 
E)  Require automated sales systems. 
A)  Establish responsibilities. 
B)  Maintain minimal records. 
C)  Use only computerized systems. 
D)  Bond all employees. 
E)  Require automated sales systems.

Question 8

The treasurer of a company is responsible for cash management. List five cash management principles that are essential for effective cash management.

Accepted Answer

Encourage collection of receivables (off

Question 9

For which item does a bank NOT issue a debit memorandum?

Accepted Answer

A)  To notify a depositor of all withdrawals through an ATM. 
B)  To notify a depositor of a fee assessed to the depositor's account. 
C)  To notify a depositor of an uncollectible check. 
D)  To notify a depositor of periodic payments arranged in advance, by a depositor. 
E)  To notify a depositor of a deposit to their account. 
A)  To notify a depositor of all withdrawals through an ATM. 
B)  To notify a depositor of a fee assessed to the depositor's account. 
C)  To notify a depositor of an uncollectible check. 
D)  To notify a depositor of periodic payments arranged in advance, by a depositor. 
E)  To notify a depositor of a deposit to their account.

Question 10

A company had the following transactions during January:
Using the net method of recording purchases, prepare the journal entries to record these January transactions.

Accepted Answer

The answer of A company had the following transactions during...

Question 11

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

Accepted Answer

A) True 
 B)False

Question 12

The following information is available for the Avisa Company for the month of November.
a. On November 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $27,202.
b. The company's bank statement shows a balance on November 30 of $29,279.
c. Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459.
d. A credit memo included with the bank statement indicates that the bank collected $780 on a noninterest-bearing note receivable for Avisa. The bank deducted a $10 collection fee, and credited the remainder of $770 to Avisa's account.
e. A debit memo included with the bank statement shows a $67 NSF check from a customer, J. Brown.
f. A deposit placed in the bank's night depository on November 30 totaled $1,675, and did not appear on the bank statement.
g. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540.
h. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded on the company's books.
1. Prepare the November bank reconciliation for the Avisa Company.
2. Prepare the general journal entries to bring the company's book balance of cash into conformity with the reconciled balance as of November 30.

Accepted Answer

The answer of The following information is available for the...

Question 13

The days' sales uncollected ratio measures a company's ability to manage its debt.

Accepted Answer

A) True 
 B)False

Question 14

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:

Accepted Answer

A)  Vendor. 
B)  Payee. 
C)  Vendee. 
D)  Creditor. 
E)  Debtor. 
A)  Vendor. 
B)  Payee. 
C)  Vendee. 
D)  Creditor. 
E)  Debtor.

Question 15

The Cash Over and Short account:

Accepted Answer

A)  Is used to record a credit balance in the cash account. 
B)  Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and/or from errors in processing petty cash transactions. 
C)  Is not necessary in a computerized accounting system. 
D)  Can never have a debit balance. 
E)  Can never have a credit balance. 
A)  Is used to record a credit balance in the cash account. 
B)  Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and/or from errors in processing petty cash transactions. 
C)  Is not necessary in a computerized accounting system. 
D)  Can never have a debit balance. 
E)  Can never have a credit balance.

Question 16

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation.

Accepted Answer

The answer of Identify whether each of the following items...

Question 17

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Accepted Answer

A) True 
 B)False

Question 18

Cash equivalents:

Accepted Answer

A)  Are readily convertible to a known cash amount. 
B)  Include short-term investments purchased within 3 months of their maturity dates. 
C)  Have a market value that is not sensitive to interest rate changes. 
D)  Include short-term U.S. treasury bills. 
E)  All of these. 
A)  Are readily convertible to a known cash amount. 
B)  Include short-term investments purchased within 3 months of their maturity dates. 
C)  Have a market value that is not sensitive to interest rate changes. 
D)  Include short-term U.S. treasury bills. 
E)  All of these.

Question 19

Money orders, cashier's checks, and certified checks are examples of cash equivalents.

Accepted Answer

A) True 
 B)False

Question 20

Liquidity refers to a company's ability to pay its near-term obligations.

Accepted Answer

A) True 
 B)False

Exam 8: Cash and Internal Controls

________________ reflects the liquidity of a company's accounts receivable.

A check involves three parties:

An invoice is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of sale.

A company that uses the net method of recording invoices made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would include:

Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.

A properly designed internal control system:

The principles of internal control include:

The treasurer of a company is responsible for cash management. List five cash management principles that are essential for effective cash management.

For which item does a bank NOT issue a debit memorandum?

A company had the following transactions during January: Using the net method of recording purchases, prepare the journal entries to record these January transactions.

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

The days' sales uncollected ratio measures a company's ability to manage its debt.

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:

The Cash Over and Short account:

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation.

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Cash equivalents:

Money orders, cashier's checks, and certified checks are examples of cash equivalents.

Liquidity refers to a company's ability to pay its near-term obligations.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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