Question 1

An effective voucher system has limited ability to prevent a dishonest employee from colluding with a dishonest supplier to fraudulently acquire cash payments for goods and services not received.

Accepted Answer

A) True 
 B)False

Question 2

Internal control systems used to monitor and control operations are a low priority for managers within the company.

Accepted Answer

A) True 
 B)False

Question 3

The accountant for Gotham Inc.prepared the bank reconciliation when the June 30 bank statement was received in the mail.A debit memorandum enclosed with the bank statement listed service charges in the amount of $50.These charges were not recorded by Gotham prior to receiving the bank statement.How would the company record the required adjusting entry for this item?

Accepted Answer

A) Debit Bank Service Charges for $50 and credit Cash for $50. 
B) Debit Cash for $50 and credit Bank Service Charges for $50. 
C) Debit Outstanding Checks Expense for $50 and credit Cash for $50. 
D) Debit Cash for $50 and credit Outstanding Checks Expense for $50. 
E) Debit Bank Statement Expenses for $50 and credit Cash for $50.

Question 4

Match between columns
                        Premises: Liquid asset
Petty cash fund
Internal control system
Cash
Outstanding checks
Cash equivalent
Purchase requisition
Check
Invoice
Vendor

Accepted Answer

The Answer of Currency, coins, and amounts on deposit in is...

Question 5

At the end of the day,the cash register's record shows $1,250,but the count of cash in the cash register is $1,245.The correct entry to record the cash sales for the day is:

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 6

Identify whether each of the following items 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 7

The use of internal controls provides guaranteed protection against losses due to operating activities.

Accepted Answer

A) True 
 B)False

Question 8

A customer's check is deposited by a company.The check is uncollectible because the balance in the customer's account is not large enough to cover the check.This check is referred to as a __________ check.

Accepted Answer

The answer of A customer's check is deposited by a...

Question 9

The days' sales uncollected ratio reflects the liquidity of accounts receivable.

Accepted Answer

A) True 
 B)False

Question 10

_________________________ is the electronic transfer of cash from one party to another.

Accepted Answer

The answer of _________________________ is the electronic transfer of cash...

Question 11

For good internal controls over cash,all payments should be made from the petty cash,except for very large payments.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is the most serious limitation of internal controls?

Accepted Answer

A) Computer error 
B) Human fraud or human error 
C) Cost-benefit principle 
D) Cybercrime 
E) Management fraud

Question 13

A __________________________ is a document explaining the payment of a check.

Accepted Answer

The answer of A __________________________ is a document explaining the...

Question 14

A company established a petty cash fund of $100 on September 1.On September 10,the petty cash fund was replenished when there was $16 remaining and there were petty cash receipts for: office supplies,$27; courier,$32; and postage,$22.On September 15,the petty cash fund was increased to $125 in total.Record the above transactions in general journal form.

Accepted Answer

The answer of A company established a petty cash fund...

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

Given the following information:

What is the amount that needs to be recorded for cash over and short?

Accepted Answer

A) Debit $23.29. 
B) Credit $23.29. 
C) Debit $18.78. 
D) No cash over and short is necessary. 
E) Credit $18.78.

Question 17

________________ 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 deposit in...

Question 18

When merchandise is needed,a department manager must inform the purchasing department of this need 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 19

Based on the following information,prepare the November bank reconciliation for the Avisa Company.
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 was 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.

Accepted Answer

The answer of Based on the following information,prepare the November...

Question 20

Cash,not including cash equivalents,includes:

Accepted Answer

A) Postage stamps. 
B) Coins,currency,and checking accounts. 
C) IOUs. 
D) Two-year certificates of deposit. 
E) Money market funds.

Exam 6: Reporting and Analyzing Cash and Internal Controls

An effective voucher system has limited ability to prevent a dishonest employee from colluding with a dishonest supplier to fraudulently acquire cash payments for goods and services not received.

Internal control systems used to monitor and control operations are a low priority for managers within the company.

Match the following terms with the appropriate definition:.

At the end of the day,the cash register's record shows $1,250,but the count of cash in the cash register is $1,245.The correct entry to record the cash sales for the day is:

Identify whether each of the following items would on appear on the bank side or the book side of a bank reconciliation:

The use of internal controls provides guaranteed protection against losses due to operating activities.

A customer's check is deposited by a company.The check is uncollectible because the balance in the customer's account is not large enough to cover the check.This check is referred to as a __________ check.

The days' sales uncollected ratio reflects the liquidity of accounts receivable.

_________________________ is the electronic transfer of cash from one party to another.

For good internal controls over cash,all payments should be made from the petty cash,except for very large payments.

Which of the following is the most serious limitation of internal controls?

A __________________________ is a document explaining the payment of a check.

________________________ 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.

Given the following information: What is the amount that needs to be recorded for cash over and short?

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

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

Cash,not including cash equivalents,includes: