Question 1

An internal control system consists of all of the following policies and procedures except ones designed to:

Accepted Answer

A)  Protect assets. 
B)  Ensure reliable accounting. 
C)  Guarantee a return to investors. 
D)  Urge adherence to company policies. 
E)  Promote efficient operations. 
A)  Protect assets. 
B)  Ensure reliable accounting. 
C)  Guarantee a return to investors. 
D)  Urge adherence to company policies. 
E)  Promote efficient operations.

Question 2

When merchandise is needed, a department manager must inform the purchasing department of its needs by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

Accepted Answer

A) True 
 B)False

Question 3

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

Accepted Answer

The answer of A ________ is an internal document (or...

Question 4

________________ includes currency, coins, and amounts on deposit in checking accounts and many savings accounts.

Accepted Answer

The answer of ________________ includes currency, coins, and amounts on...

Question 5

Electronic funds transfer (EFT) is the electronic transfer of cash from one party to another.

Accepted Answer

A) True 
 B)False

Question 6

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

Accepted Answer

A) True 
 B)False

Question 7

On June 3, a company received and recorded a $4,500 invoice for merchandise on which the terms were 2/10, n/60. The company records invoices at net amounts. On June 23, the company discovered that the invoice had been incorrectly filed and the discount lost. Prepare the June 3 general journal entry to record the purchase, the June 23 entry to record the discount lost, and the August 2 entry to record payment of the invoice.

Accepted Answer

The answer of On June 3, a company received and...

Question 8

Two important limitations of internal control systems are (1) human error or human fraud, and (2) cost-benefit.

Accepted Answer

A) True 
 B)False

Question 9

Maxtel had net sales of $4,235 million and ending accounts receivable of $775 million. Its days' sales uncollected equals:

Accepted Answer

A)  298 days. 
B)  66.8 days. 
C)  19.4 days. 
D)  81.8 days. 
E)  65.2 days. 
A)  298 days. 
B)  66.8 days. 
C)  19.4 days. 
D)  81.8 days. 
E)  65.2 days.

Question 10

An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

Accepted Answer

The answer of An employee is __________ when a company...

Question 11

What is a voucher system?

Accepted Answer

A voucher system is a set of procedures

Question 12

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035. The proper entry to account for this excess includes a:

Accepted Answer

A)  Credit to Cash for $35. 
B)  Debit to Cash for $35. 
C)  Credit to Cash Over and Short for $35. 
D)  Debit to Cash Over and Short for $35. 
E)  Debit to Petty Cash for $35. 
A)  Credit to Cash for $35. 
B)  Debit to Cash for $35. 
C)  Credit to Cash Over and Short for $35. 
D)  Debit to Cash Over and Short for $35. 
E)  Debit to Petty Cash for $35.

Question 13

Prenumbered printed checks are an example of which internal control principle?

Accepted Answer

A)  Technological controls. 
B)  Maintain adequate records. 
C)  Perform regular and independent reviews. 
D)  Establish responsibilities. 
E)  Divide responsibility for related transactions. 
A)  Technological controls. 
B)  Maintain adequate records. 
C)  Perform regular and independent reviews. 
D)  Establish responsibilities. 
E)  Divide responsibility for related transactions.

Question 14

Define an internal control system and describe its purpose.

Accepted Answer

An internal control system refers to the

Question 15

________________________ are checks written (or drawn) by the depositor, deducted on the depositor's records, and sent to the payee, but not yet recorded by the bank for payment at the bank statement date.

Accepted Answer

The answer of ________________________ are checks written (or drawn) by...

Question 16

A properly designed internal control system is a key part of systems design, analysis, and performance.

Accepted Answer

A) True 
 B)False

Question 17

Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

Accepted Answer

A) True 
 B)False

Question 18

The gross method of recording purchases refers to the method of recording:

Accepted Answer

A)  Purchases at the invoice price less any cash discounts. 
B)  Specified amounts and timing of payments that a buyer agrees to make in return for being granted credit. 
C)  Purchases at the full invoice price, without deducting any cash discounts. 
D)  Inventory at its selling price. 
E)  Inventory at the lower of cost or market. 
A)  Purchases at the invoice price less any cash discounts. 
B)  Specified amounts and timing of payments that a buyer agrees to make in return for being granted credit. 
C)  Purchases at the full invoice price, without deducting any cash discounts. 
D)  Inventory at its selling price. 
E)  Inventory at the lower of cost or market.

Question 19

When a petty cash fund is in use:

Accepted Answer

A)  Expenses paid with petty cash are recorded when the fund is replenished. 
B)  Petty Cash is debited when funds are replenished. 
C)  Petty Cash is credited when funds are replenished. 
D)  Expenses are not recorded. 
E)  Cash is debited when funds are replenished. 
A)  Expenses paid with petty cash are recorded when the fund is replenished. 
B)  Petty Cash is debited when funds are replenished. 
C)  Petty Cash is credited when funds are replenished. 
D)  Expenses are not recorded. 
E)  Cash is debited when funds are replenished.

Question 20

The payee is the person who signs a check, authorizing its payment.

Accepted Answer

A) True 
 B)False

Exam 8: Cash and Internal Controls

An internal control system consists of all of the following policies and procedures except ones designed to:

When merchandise is needed, a department manager must inform the purchasing department of its needs by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

________________ includes currency, coins, and amounts on deposit in checking accounts and many savings accounts.

Electronic funds transfer (EFT) is the electronic transfer of cash from one party to another.

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

Two important limitations of internal control systems are (1) human error or human fraud, and (2) cost-benefit.

Maxtel had net sales of $4,235 million and ending accounts receivable of $775 million. Its days' sales uncollected equals:

An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

What is a voucher system?

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035. The proper entry to account for this excess includes a:

Prenumbered printed checks are an example of which internal control principle?

Define an internal control system and describe its purpose.

________________________ are checks written (or drawn) by the depositor, deducted on the depositor's records, and sent to the payee, but not yet recorded by the bank for payment at the bank statement date.

A properly designed internal control system is a key part of systems design, analysis, and performance.

Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

The gross method of recording purchases refers to the method of recording:

When a petty cash fund is in use:

The payee is the person who signs a check, authorizing its payment.

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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