Question 1

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals: (Use 365 days a year.)

Accepted Answer

A)  8.0 days.
B)  7.4 days.
C)  45.8 days.
D)  58.9 days.
E)  45.2 days.F) A) and D)
G) B) and C)

Question 2

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

Accepted Answer

A) True 
 B)False

Question 3

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

Accepted Answer

A) True 
 B)False

Question 4

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. Plenty Co. uses the perpetual inventory system. Record the above transactions in general journal form.

Accepted Answer

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

Question 5

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227, how should this error be treated on the bank reconciliation?

Accepted Answer

A)  Subtract $45 from the bank's balance and add $45 to the book's balance.
B)  Subtract $45 from the bank's balance.
C)  Add $45 to the book balance.
D)  Subtract $45 from the book balance.
E)  Add $45 to the bank's balance.F) D) and E)
G) A) and E)

Question 6

Great Falls Co.'s bank reconciliation as of February 28 is shown below.   Bank balance $37,643 Book balance $38,153+ Deposit in transit 2,950 Note collection +745 - Outstanding checks −1,730‾ Check printing −35‾ Adjusted bank balance $38,863‾ Adjusted book balance $38,863\begin{array}{|l|r|l|r|}\hline 	ext { Bank balance } & \$ 37,643 & 	ext { Book balance } & \$ 38,153 \\hline+ 	ext { Deposit in transit } & 2,950 & 	ext { Note collection } & +745 \\hline 	ext { - Outstanding checks } & \underline{-1,730} & 	ext { Check printing } & \underline{-35} \\hline 	ext { Adjusted bank balance } & \underline{\$ 38,863} & 	ext { Adjusted book balance } & \$ 38,863 \\hline\end{array} Bank balance + Deposit in transit  - Outstanding checks  Adjusted bank balance ​$37,6432,950−1,730​$38,863​​ Book balance  Note collection  Check printing  Adjusted book balance ​$38,153+745−35​$38,863​​  One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes:

Accepted Answer

A)  Debit Miscellaneous Expense $35; credit Accounts Payable $35.
B)  Debit Note Payable $745; credit Cash $745.
C)  Debit Cash $2,950; credit Accounts Receivable $2,950.
D)  Debit Cash $2,950; credit Sales $2,950.
E)  Debit Cash $745; credit Note Receivable $745. F) All of the above
G) D) and E)

Question 7

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Accepted Answer

A) True 
 B)False

Question 8

Internal control of cash receipts aims to ensure that all cash received is properly recorded and deposited.

Accepted Answer

A) True 
 B)False

Question 9

When a petty cash fund is in use:

Accepted Answer

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

Question 10

The impact of technology on internal controls includes:

Accepted Answer

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

Question 11

Define an internal control system and describe its purpose.

Accepted Answer

An internal control system refers to the...

Question 12

The voucher system of control:

Accepted Answer

A)  Is a set of procedures and approvals designed to control cash receipts and the acceptance of obligations.
B)  Applies only when multiple purchases are made from the same supplier.
C)  Establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.
D)  Is required in large companies but not beneficial for small to mid-sized companies.
E)  Establishes procedures for receiving checks for the sale of verified, approved, and recorded activities.F) A) and E)
G) B) and D)

Question 13

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Accepted Answer

A)  The employees handling the cash receipts are bonded.
B)  For safety, only one person should open the mail, and that person should immediately deposit the cash received in the bank.
C)  The cashier deposits the money in the bank and the recordkeeper records the amounts received in the accounting records.
D)  After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the sender's name, the amount, and an explanation of why the money is sent.
E)  The bank reconciliation is prepared by a person who does not handle cash or record cash receipts.F) B) and D)
G) A) and B)

Question 14

If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period, in preparing this period's reconciliation, the amount of this check should be:

Accepted Answer

A)  Added to the book balance of cash as an outstanding check.
B)  Deducted from the bank balance of cash as an outstanding check.
C)  Deducted from the book balance of cash as an outstanding check.
D)  Ignored in preparing the period's bank reconciliation as an outstanding check.
E)  Added to the bank balance of cash as an outstanding check.F) A) and E)
G) A) and D)

Question 15

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Accepted Answer

A) True 
 B)False

Question 16

The Cash Over and Short account:

Accepted Answer

A)  Is used to record the income effects of errors in making change and/or processing petty cash transactions.
B)  Can never have a debit balance.
C)  Can never have a credit balance.
D)  Is not necessary in a computerized accounting system.
E)  Is used when the cash account reports a credit balance.F) C) and E)
G) B) and C)

Question 17

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Accepted Answer

A)  Added to the book balance of cash.
B)  Deducted from the book balance of cash.
C)  Deducted from the bank balance of cash.
D)  Noted as a memorandum only.
E)  Added to the bank balance of cash.F) A) and B)
G) D) and E)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The internal document prepared to notify the appropriate persons that goods ordered have been received, describing the quantities and condition of the goods is the:

Accepted Answer

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

Question 20

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.

Accepted Answer

A) True 
 B)False

Exam 8: Cash and Internal Controls

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Correct Answer
verified

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Correct Answer
verified

Correct Answer
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Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

Correct Answer
verified

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227, how should this error be treated on the bank reconciliation?

Correct Answer
verified

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

Correct Answer
verified

Correct Answer
verified

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.

Correct Answer
verified

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Correct Answer
verified

The voucher system of control:

Correct Answer
verified

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

Correct Answer
verified

The Cash Over and Short account:

Correct Answer
verified

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals: (Use 365 days a year.)

Correct Answer
verified

The internal document prepared to notify the appropriate persons that goods ordered have been received, describing the quantities and condition of the goods is the:

Correct Answer
verified

The impact of technology on internal controls includes:

Correct Answer
verified

If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period, in preparing this period's reconciliation, the amount of this check should be:

Correct Answer
verified

Internal control of cash receipts aims to ensure that all cash received is properly recorded and deposited.

Correct Answer
verified

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Correct Answer
verified

Define an internal control system and describe its purpose.

Correct Answer
verified
An internal control system refers to the...
View Answer

When a petty cash fund is in use:

Correct Answer
verified

Exam 8: Cash and Internal Controls

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Correct AnswerverifiedShow Answer

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

Correct AnswerverifiedShow Answer

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227, how should this error be treated on the bank reconciliation?

Correct AnswerverifiedShow Answer

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.

Correct AnswerverifiedShow Answer

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Correct AnswerverifiedShow Answer

The voucher system of control:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Cash Over and Short account:

Correct AnswerverifiedShow Answer

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals: (Use 365 days a year.)

Correct AnswerverifiedShow Answer

The internal document prepared to notify the appropriate persons that goods ordered have been received, describing the quantities and condition of the goods is the:

Correct AnswerverifiedShow Answer

The impact of technology on internal controls includes:

Correct AnswerverifiedShow Answer

If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period, in preparing this period's reconciliation, the amount of this check should be:

Correct AnswerverifiedShow Answer

Internal control of cash receipts aims to ensure that all cash received is properly recorded and deposited.

Correct AnswerverifiedShow Answer

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

Correct AnswerverifiedShow Answer

Define an internal control system and describe its purpose.

Correct AnswerverifiedAn internal control system refers to the...View AnswerShow Answer

When a petty cash fund is in use:

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
An internal control system refers to the...
View Answer

Correct Answer
verified