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At June 30,2012,the bank reconciliation of Stein Company reveals outstanding checks of $820. At June 30,2012,the bank reconciliation of Stein Company reveals outstanding checks of $820.

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Wren Company accepted a check from Jay Company as payment for services rendered.Wren's bank statement revealed that the Jay check was an NSF check.What effect will the entry to record the NSF check have on the accounting equation of Wren Company? Wren Company accepted a check from Jay Company as payment for services rendered.Wren's bank statement revealed that the Jay check was an NSF check.What effect will the entry to record the NSF check have on the accounting equation of Wren Company? A) Choice A B) Choice B C) Choice C D) Choice D


A) Choice A
B) Choice B
C) Choice C
D) Choice D

E) All of the above
F) None of the above

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Which of the following statements accurately describes a fidelity bond?


A) Insurance that the company buys to protect itself from loss due to employee dishonesty.
B) Proper procedures for processing accounting transactions.
C) Procedures to provide reasonable assurance that the objectives of a company are accomplished.
D) Guidelines that limit the actions and authority of different levels of management.

E) C) and D)
F) B) and D)

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What are the primary roles of the independent auditor?

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1)Conduct a financial audit 2)Assumes bo...

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How will a certified check be treated in a company's bank reconciliation?


A) As a deduction to the company's unadjusted book balance.
B) As an increase to the bank's unadjusted bank balance.
C) As a deduction to the bank's unadjusted bank balance.
D) None of these.

E) B) and D)
F) All of the above

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When a customer's NSF check is returned to a business with its bank statement,the business should make a journal entry increasing


A) Cash.
B) Accounts Receivable.
C) A net loss.
D) Expense for Bad Debts.

E) A) and D)
F) A) and C)

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The unadjusted cash account balance for Few Company at December 31,2012 is $21,380.The bank statement showed an ending balance of $27,388 on that date.The following information is available: The unadjusted cash account balance for Few Company at December 31,2012 is $21,380.The bank statement showed an ending balance of $27,388 on that date.The following information is available: Check #433 for the purchase of inventory was written correctly and paid by the bank correctly for $234,but was recorded on the books at $432.Few uses the perpetual inventory system. Required: Prepare a bank reconciliation as of December 31,2012. Check #433 for the purchase of inventory was written correctly and paid by the bank correctly for $234,but was recorded on the books at $432.Few uses the perpetual inventory system. Required: Prepare a bank reconciliation as of December 31,2012.

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The most negative opinion that an auditor can express is the


A) Unqualified opinion
B) Qualified opinion
C) Adverse opinion
D) Disclaimer

E) All of the above
F) C) and D)

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The most effective way to reduce opportunities for ethical or criminal misconduct is:


A) to obtain fidelity bonds for all employees
B) to perform random physical counts frequently
C) to implement an effective system of internal controls
D) to perform extensive background checks before hiring employees

E) All of the above
F) B) and D)

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Rich Company's unadjusted book balance at October 31,2012 is $2,550.The following information is available for the bank reconciliation. Outstanding checks,$600 Deposits in transit,$450 Bank service charges,$90 Bank collected an accounts receivable for Rich Company,$1,000 NSF check written by one of Rich's customers,$600. Based on this information Rich's true cash balance is:


A) $1,050.
B) $3,590.
C) $2,810.
D) $2,860.

E) A) and B)
F) None of the above

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Check no.147 for $200 was outstanding as of September 30.In performing the September bank reconciliation,this outstanding check should be


A) subtracted from the unadjusted book balance.
B) subtracted from the unadjusted bank balance.
C) added to the unadjusted bank balance.
D) added to the unadjusted book balance.

E) B) and D)
F) B) and C)

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In preparing a bank reconciliation,typical adjustments to the book balance include bank service charges,customer NSF checks,and interest earned on the account.

A) True
B) False

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Which of the item(s) would be added to the company's unadjusted book balance to determine the true cash balance?


A) Item numbers 5 and 6
B) Item number 2
C) Item numbers 1 and 3
D) Item number 5

E) A) and B)
F) A) and C)

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While performing the monthly bank reconciliation,the bookkeeper for Grace Corporation noted that a deposit of $100 (received from a customer on account) was recorded in the company books as $1,000.Which of the following shows the effect of the correcting entry on the financial statements? While performing the monthly bank reconciliation,the bookkeeper for Grace Corporation noted that a deposit of $100 (received from a customer on account) was recorded in the company books as $1,000.Which of the following shows the effect of the correcting entry on the financial statements? A) Choice A B) Choice B C) Choice C D) Choice D


A) Choice A
B) Choice B
C) Choice C
D) Choice D

E) C) and D)
F) B) and C)

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An unqualified audit opinion:


A) Should be ignored by investors because the person issuing the opinion does not have the qualifications required to analyze financial statements.
B) Is the most favorable opinion auditors can express.
C) Is issued to alert investors to potential financial problems.
D) Is not issued by auditors who hold CPA certification.

E) A) and B)
F) All of the above

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In preparing a bank reconciliation,typical adjustments to the bank balance are deposits in transit and bank service charges.

A) True
B) False

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Martha Hanson operates a small gift shop that sells various antiques,such as glassware.She employs two clerks who make sales to customers,accept returns when a customer is dissatisfied with merchandise,and put new merchandise on display.One of the clerks,Jill Hays,was hired recently.Martha had always done all the accounting for the store and had made bank deposits.However,Jill has offered to do the accounting for the store during slow periods when there are no customers in the store; she also has begun making bank deposits as she leaves for the day.Having Jill take these responsibilities allows Martha more time for acquiring merchandise for the store and for personal errands.What potential risks for the success of Martha's business are present in this situation?

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This situation is risky because it viola...

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As of May 31,2012,the bank statement for Feldman Corporation showed an ending balance of $17,632.52.The following information was available: As of May 31,2012,the bank statement for Feldman Corporation showed an ending balance of $17,632.52.The following information was available: Required: Compute the true cash balance at May 31,2012. Required: Compute the true cash balance at May 31,2012.

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Explain why it is impossible to have a foolproof internal control system.

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A system of internal controls is designe...

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What is a "material misstatement"?

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A misstatement,which is an err...

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