Question 1

The items listed below were identified while preparing a bank reconciliation for the company's checking account as of March 31.Cash balance according to the general ledger

-Refer to Dance Town Academy. How will the interest earned on the checking account be handled on a bank reconciliation?

Accepted Answer

A) add to the balance from the company records 
B) subtract from the balance from the company records 
C) add to the bank statement balance 
D) subtract from the bank statement balance

Question 2

The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.)
-Although department supervisors can request a preferred supplier or vendor, the purchasing department has the responsibility for making the final decisions on a vendor.

Accepted Answer

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

Question 3

Cash equivalents typically appear in the long-term investments section of a balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list.
-Safeguards over assets and records

Accepted Answer

A) One employee or department should verify the work of another. 
B) Specific approval is given by management for the performance of activities. 
C) Accounting and cash collections should be properly separated. 
D) Blank checks should be stored in a locked location. 
E) Initial entry into the accounting system should be from a consistent source with complete information.

Question 5

Match the following terms with their correct definitions.
-Collective term for procedures put into place to ensure that employees operate within the scope of their assigned responsibilities and act for the good of the business

Accepted Answer

A) Accounting system 
B) Business process risks 
C) Control activities 
D) Control environment 
E) Internal control system
F)Safeguarding
G)Segregation of duties
H)Strategic risks

Question 6

Which of the following items would not be a reconciling item on a bank reconciliation?

Accepted Answer

A) canceled checks 
B) NSF checks 
C) outstanding checks 
D) bounced checks

Question 7

A debit memo may be issued in the monthly bank statement in order for the bank to notify a company that a service charge has been assessed on the company's account.

Accepted Answer

A) True 
 B)False

Question 8

Deal Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for December 2019 indicated the following:  The correct amount of check # 267 is $340, but it was recorded as a cash disbursement of $430. The check was issued to pay for merchandise purchased. The check was written correctly and appeared on the bank statement correctly.
A)Prepare a bank reconciliation in proper form for December 31, 2019.
B)What amount would Deal report its cash balance on its December 31, 2019, balance sheet?
C)What adjusting entries will Deal record as a result of this bank reconciliation process?

Accepted Answer

The answer of Deal Corp. prepares monthly bank reconciliations of...

Question 9

Delco Construction
The following items relate to the company's March bank reconciliation:
 
-Refer to Delco Construction. What is net amount of the adjustments to the company's cash balance as a result of the bank reconciliation?

Accepted Answer

A) $400 increase 
B) $400 decrease 
C) $900 increase 
D) No adjustments are needed.

Question 10

The control activity "segregation of duties" is most effective in

Accepted Answer

A) increasing cost of sales. 
B) preventing collusion. 
C) assisting employees in performing risk assessment procedures. 
D) increasing the likelihood of embezzlement.

Question 11

The accountant prepared the firm's bank reconciliation and noted several reconciling items as listed below. Indicate whether the firm should add or subtract each item below on its balance of cash or on its bank balance.

Accepted Answer

The answer of The accountant prepared the firm's bank reconciliation...

Question 12

When reconciling a bank account, the company has to prepare an adjusting entry for outstanding checks.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would not appear on a bank statement for a checking account?

Accepted Answer

A) service charges 
B) outstanding checks 
C) credit memos 
D) interest earned

Question 14

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records?

Accepted Answer

A) outstanding checks 
B) deposits in transit 
C) bank service charges 
D) interest earned on the bank account

Question 15

The elapsed time between the purchase of goods for resale and the collection of cash from customers is referred to as the ____________________ cycle.

Accepted Answer

The answer of The elapsed time between the purchase of...

Question 16

Which of the following is an example of a credit memo?

Accepted Answer

A) notice of a bank service charge 
B) notice of interest earned on a checking account 
C) outstanding checks 
D) a company's transposition error in the recording of a customer's check

Question 17

A(n) ____________________ is the process used by an accountant to ensure consistency between the balance shown on the bank statement for a particular account and the balance shown on the accounting records.

Accepted Answer

The answer of A(n) ____________________ is the process used by...

Question 18

The items listed below were identified while preparing a bank reconciliation for the company's checking account as of March 31.Cash balance according to the general ledger

-Refer to Dance Town Academy. Determine the amount of the company's adjusted cash balance.

Accepted Answer

A) $16,800 
B) $20,200 
C) $ 1,700 
D) Cannot be determined.

Question 19

The accountant for a local manufacturing company is reconciling the company’s bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.)
-Interest earned on the checking account for May

Accepted Answer

A) Addition to bank balance 
B) Subtraction from bank balance 
C) Addition to company balance 
D) Subtraction from company balance 
E) Not included on the reconciliation

Question 20

Which one of the following statements regarding internal control is false?

Accepted Answer

A) It is not possible to design a system of internal controls that is foolproof. 
B) A well-designed system of internal controls should be the goal of every organization whether for profit or not-for-profit. 
C) Separation of duties is the easiest control activity to implement in small companies. 
D) It is easiest to implement effective internal controls in large companies which are able to devote substantial resources to those systems.

Exam 4: Internal Control And Cash

The items listed below were identified while preparing a bank reconciliation for the company's checking account as of March 31.Cash balance according to the general ledger -Refer to Dance Town Academy. How will the interest earned on the checking account be handled on a bank reconciliation?

Cash equivalents typically appear in the long-term investments section of a balance sheet.

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. -Safeguards over assets and records

Match the following terms with their correct definitions. -Collective term for procedures put into place to ensure that employees operate within the scope of their assigned responsibilities and act for the good of the business

Which of the following items would not be a reconciling item on a bank reconciliation?

A debit memo may be issued in the monthly bank statement in order for the bank to notify a company that a service charge has been assessed on the company's account.

Delco Construction The following items relate to the company's March bank reconciliation: -Refer to Delco Construction. What is net amount of the adjustments to the company's cash balance as a result of the bank reconciliation?

The control activity "segregation of duties" is most effective in

The accountant prepared the firm's bank reconciliation and noted several reconciling items as listed below. Indicate whether the firm should add or subtract each item below on its balance of cash or on its bank balance.

When reconciling a bank account, the company has to prepare an adjusting entry for outstanding checks.

Which of the following would not appear on a bank statement for a checking account?

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records?

The elapsed time between the purchase of goods for resale and the collection of cash from customers is referred to as the ____________________ cycle.

Which of the following is an example of a credit memo?

A(n) ____________________ is the process used by an accountant to ensure consistency between the balance shown on the bank statement for a particular account and the balance shown on the accounting records.

The items listed below were identified while preparing a bank reconciliation for the company's checking account as of March 31.Cash balance according to the general ledger -Refer to Dance Town Academy. Determine the amount of the company's adjusted cash balance.

The accountant for a local manufacturing company is reconciling the company’s bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.) -Interest earned on the checking account for May

Which one of the following statements regarding internal control is false?