Question 1

The impact of technology on internal controls includes:

Accepted Answer

A)  Reduced processing errors.
B)  Elimination of the need for regular audits.
C)  Elimination of the need to bond employees.
D)  Elimination of separation of duties.
E)  Elimination of fraud. A

Question 2

The document that the purchasing department prepares and sends to the vendor to place an order is called the

Accepted Answer

A)  Purchase requisition.
B)  Purchase order.
C)  Invoice.
D)  Receiving report.
E)  Invoice approval. B

Question 3

At the end of the day,the cash register's record shows $1,050,but the count of cash in the cash register is $1,055.The correct entry to record the cash sales is

Accepted Answer

A)  Debit Cash $1,055;credit Sales $1,055.
B)  Debit Cash $1,055;credit Cash Over and Short $5;credit Sales $1,050.
C)  Debit Cash $1,050;credit Sales $1050.
D)  Debit Cash $1,050;debit Cash Over and Short $5;credit Sales $1,055.
E)  Debit Cash Over and Short $5,credit Sales $5. B

Question 4

A seller (or provider)of goods or services to a business organization,usually a manufacturer or wholesaler,is known as a:

Accepted Answer

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

Question 5

The entry to establish a petty cash fund includes:

Accepted Answer

A)  A debit to Cash and a credit to Petty Cash.
B)  A debit to Cash and a credit to Cash Over and Short.
C)  A debit to Petty Cash and a credit to Cash.
D)  A debit to Petty Cash and a credit to Accounts Receivable.
E)  A debit to Cash and a credit to Petty Cash Over and Short.

Question 6

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

Accepted Answer

A)  Debit Merchandise Inventory $392;credit Accounts Payable $392.
B)  Debit Merchandise Inventory $400;credit Discounts Lost $8;credit Accounts Payable $392.
C)  Debit Merchandise Inventory $392;credit Cash for $392.
D)  Debit Merchandise Inventory $392;debit Discounts Lost $8;credit Accounts Payable $400.
E)  Debit Accounts Payable $400;credit Discounts Lost $8;credit Cash $392.

Question 7

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

Accepted Answer

A)  Deduct the check amount from the book balance of cash.
B)  Add the check amount to the book balance of cash.
C)  Deduct the check amount from the bank balance.
D)  Add the check amount to the bank balance.
E)  Make a journal entry in the company records for an error.

Question 8

A key factor in a voucher system includes all of the following except:

Accepted Answer

A)  Only approved departments and individuals are authorized to incur an obligation that will result in the payment of cash.
B)  Procedures for purchasing,receiving and paying for merchandise are divided among several departments.
C)  The system limits the individuals that can incur cash payment obligations for a company.
D)  It is applied to purchases of merchandise inventory and all other expenses.
E)  It is not necessary if the supplier provides both receiving report and invoice with the merchandise shipped.

Question 9

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 10

The ________________________________ account is used to record the effects of cash overages and shortages from errors in making change or managing a petty cash fund.

Accepted Answer

The answer of The ________________________________ account is used to record...

Question 11

Quibble Company established a $300 petty cash fund by issuing a check to the custodian on February 1.On February 15,the petty cash fund was replenished and increased to $800 in total.The contents of the petty cash fund at the time of the February 15 replenishment were:  Prepare Quibble's general journal entry to record both the reimbursement and the increase of the petty fund on February 15.

Accepted Answer

The answer of Quibble Company established a $300 petty cash...

Question 12

Merchandise with an invoice price of $2,000 was purchased on February 3,terms 2/15,n/60.The company uses the net method to record purchases.The entry to record the cash payment of this purchase obligation on February 27 is:

Accepted Answer

A)  Debit Accounts Payable $1,960;credit Cash $1,960.
B)  Debit Accounts Payable $2,000;credit Cash $2,000.
C)  Debit Accounts Payable $1,960;debit Discounts Lost $40;credit Cash $2,000.
D)  Debit Accounts Payable $2,000;credit Merchandise Inventory $40;credit Cash $1,960.
E)  Debit Accounts Payable $2,000;credit Discounts Lost $40;credit Cash $1,960.

Question 13

The following information is available for Fenton Manufacturing Company at June 30:  Based on this information,Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Accepted Answer

A)  $28,495
B)  $29,286
C)  $23,286
D)  $12,095
E)  $22,495

Question 14

Plenty Co.established a petty cash fund of $150 on October 1.On October 10,the petty cash fund was replenished when there was $49 remaining and there were petty cash receipts for: office supplies,$47;transportation-in on inventory purchased,$32;and postage,$22.On October 15,the petty cash fund was decreased to $125 in total.Record the above transactions in general journal form.

Accepted Answer

The answer of Plenty Co.established a petty cash fund of...

Question 15

Two clerks sharing the same cash register is a violation of which internal control principle?

Accepted Answer

A)  Establish responsibilities.
B)  Maintain adequate records.
C)  Insure assets.
D)  Bond key employees.
E)  Apply technological controls.

Question 16

Ferguson Co.decides to establish a petty cash fund with a beginning balance of $200.The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system.The journal entry to record establishing the account is:

Accepted Answer

A)  Debit Cash $200 and credit Petty Cash $200.
B)  Debit Cash $200 and credit Cash Over and Short $200.
C)  Debit Petty Cash $200 and credit Cash $200.
D)  Debit Petty Cash $200;credit Cash $175;and credit Cash Over and Short $25.
E)  Debit Cash $200 and credit Petty Cash Over and Short $200.

Question 17

A company records purchases using the net method.On February 1,they purchased merchandise inventory on account for $7,300 with terms of 1/10,n/30.The February 1 journal entry to record this transaction would include a:

Accepted Answer

A)  Debit to Merchandise Inventory of $7,300.
B)  Debit to Merchandise Inventory of $7,227.
C)  Debit to Merchandise Inventory of $73.
D)  Credit to Merchandise Inventory of $73.
E)  Credit to Accounts Payable of $7,300.

Question 18

The document the purchasing department sends to the vendor that is used to place an order is the __________________________.

Accepted Answer

The answer of The document the purchasing department sends to...

Question 19

On June 1,a company established a $75 petty cash fund.On June 27,the petty cash fund contains $5.25 in cash and the following paid petty cash receipts: postage,$19.50;office supplies,$36.25;and miscellaneous expense $14.00.Give the general journal entry to reimburse the fund on June 27.

Accepted Answer

The answer of On June 1,a company established a $75...

Question 20

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.

Exam 8: Cash and Internal Controls