Question 1

A company wants to decrease its $200 petty cash fund to $175.The entry to reduce the fund is:

Accepted Answer

A)  Debit Cash Over and Short for $25;credit Petty Cash $25.
B)  Debit to Cash $25;credit Petty Cash $25.
C)  Debit Miscellaneous Expenses $25;credit Cash $25.
D)  Debit Petty Cash for $175;debit Cash Over and Short $25;credit Cash $200.
E)  Debit Petty Cash $25;credit Cash $25.F) B) and D)
G) C) and D)

Question 2

A sales system with pre-numbered,controlled sales slips is an example of the internal control principle of _______________________.

Accepted Answer

maintain a...

Question 3

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ___________________.

Accepted Answer

perform re...

Question 4

Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check.At the close of business on May 31,its Cash account shows a debit balance of $17,025.Clayborn's May bank statement shows $15,800 on deposit in the bank.Determine the adjusted cash balance using the following information:  The adjusted cash balance should be:

Accepted Answer

A)  $16,400
B)  $11,200
C)  $21,000
D)  $16,425
E)  $17,000F) B) and D)
G) A) and B)

Question 5

Deposits made and recorded by the depositor but not yet recorded on the bank statement are called _______________________.

Accepted Answer

The answer of Deposits made and recorded by the depositor...

Question 6

The gross method of recording purchases refers to recording:

Accepted Answer

A)  Purchases at the invoice price less any cash discounts.
B)  Specified amounts and timing of payments that a buyer agrees to in return for being granted credit.
C)  Purchases at the full invoice price,without deducting any cash discounts.
D)  Inventory at its selling price.
E)  Inventory at the lower of cost or market.F) A) and D)
G) C) and E)

Question 7

The use of electronic communication to transfer cash from one party to another is called __________________________________.

Accepted Answer

electronic...

Question 8

Havermill Co.establishes a $250 petty cash fund on September 1.On September 30,the fund is replenished.The accumulated receipts on that date represent $73 for Office Supplies,$137 for merchandise inventory,and $22 for miscellaneous expenses.The fund has a balance of $18.On October 1,the accountant determines that the fund should be increased by $50.The journal entry to record the establishment of the fund on September 1 is:

Accepted Answer

A)  Debit Cash $250;credit Petty Cash $250.
B)  Debit Petty Cash $250;credit Accounts Payable $250.
C)  Debit Miscellaneous Expense $250;credit Cash $250.
D)  Debit Petty Cash $250;credit Cash $250.
E)  Debit Cash $250;credit Accounts Payable $250.F) A) and B)
G) A) and C)

Question 9

On a bank reconciliation,the amount of an unrecorded bank service charge should be:

Accepted Answer

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

Question 10

Two limitations of internal control systems are ______________ and ________________.
answers can appear in any order

Accepted Answer

human error/human fr...

Question 11

Which internal control principle prescribes the use of pre-numbered printed checks?

Accepted Answer

A)  Technological controls.
B)  Maintain adequate records.
C)  Perform regular and independent reviews.
D)  Establish responsibilities.
E)  Divide responsibility for related transactions.F) None of the above
G) A) and B)

Question 12

A ________________ fund is used to make cash disbursements of small amounts to avoid the time and cost of writing checks.

Accepted Answer

The answer of A ________________ fund is used to make...

Question 13

Principles of internal control include all of the following except:

Accepted Answer

A)  Apply technological controls.
B)  Maintaining security by having one person track and record assets.
C)  Perform regular and independent reviews.
D)  Separate recordkeeping from custody of assets.
E)  Divide responsibilities for related transactions.F) C) and D)
G) B) and C)

Question 14

The following information is available for Birch Company at December 31:  Based on this information,Birch Company should report Cash and Cash Equivalents on December 31 of:

Accepted Answer

A)  $29,420
B)  $41,345
C)  $31,345
D)  $39,420
E)  $38,770F) A) and D)
G) None of the above

Question 15

All of the following are considered effective cash management principles except:

Accepted Answer

A)  Encouraging collection of receivables by offering discounts for early payments.
B)  Keeping only necessary levels of assets.
C)  Planning expenditures.
D)  Retaining excess cash for unexpected expenditures.
E)  Delaying payment of liabilities until the last possible day.F) C) and E)
G) A) and E)

Question 16

________________ are checks written by the depositor,deducted on the depositor's records,and sent to the payee,but not yet recorded by the bank at the bank statement date.

Accepted Answer

The answer of ________________ are checks written by the depositor,deducted...

Question 17

A company records purchase invoices at net amounts.On March 5,the company recorded merchandise purchased,invoice price $17,000,terms 2/15,n/60.On March 24,this company discovered that the invoice had been incorrectly filed and the discount had been lost.The invoice was paid on April 1.Prepare journal entries to record these events.

Accepted Answer

The answer of A company records purchase invoices at net...

Question 18

The number of days' sales uncollected:

Accepted Answer

A)  Is used to evaluate the liquidity of receivables.
B)  Is calculated by dividing accounts receivable by sales.
C)  Measures a company's ability to pay its bills on time.
D)  Measures a company's debt to income.
E)  Is calculated by dividing sales by accounts receivable.F) A) and B)
G) A) and D)

Question 19

Internal control systems are:

Accepted Answer

A)  Developed by the Securities and Exchange Commission for public companies.
B)  Developed by the Small Business Administration for non-public companies.
C)  Developed by the Internal Revenue Service for all U.S.companies.
D)  Required by Sarbanes-Oxley (SOX) to be documented and certified if the company's stock is traded on an exchange.
E)  Required only if a company plans to engage in interstate commerce.F) A) and C)
G) A) and B)

Question 20

Cash equivalents meet all of the following criteria except:

Accepted Answer

A)  Are readily convertible to a known cash amount.
B)  Include short-term investments purchased within 3 months of their maturity dates.
C)  Have a market value that is not sensitive to interest rate changes.
D)  Include short-term U.S.treasury bills.
E)  Are more liquid than cash.F) C) and E)
G) A) and B)

Exam 8: Cash and Internal Controls

Correct Answer
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Deposits made and recorded by the depositor but not yet recorded on the bank statement are called _______________________.

Correct Answer
verified

The number of days' sales uncollected:

Correct Answer
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A sales system with pre-numbered,controlled sales slips is an example of the internal control principle of _______________________.

Correct Answer
verified
maintain a...
View Answer

A company wants to decrease its $200 petty cash fund to $175.The entry to reduce the fund is:

Correct Answer
verified

Correct Answer
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The use of electronic communication to transfer cash from one party to another is called __________________________________.

Correct Answer
verified
electronic...
View Answer

Two limitations of internal control systems are and __. answers can appear in any order

Correct Answer
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human error/human fr...
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Which internal control principle prescribes the use of pre-numbered printed checks?

Correct Answer
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Cash equivalents meet all of the following criteria except:

Correct Answer
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Principles of internal control include all of the following except:

Correct Answer
verified

________________ are checks written by the depositor,deducted on the depositor's records,and sent to the payee,but not yet recorded by the bank at the bank statement date.

Correct Answer
verified

The following information is available for Birch Company at December 31: Based on this information,Birch Company should report Cash and Cash Equivalents on December 31 of:

Correct Answer
verified

On a bank reconciliation,the amount of an unrecorded bank service charge should be:

Correct Answer
verified

The gross method of recording purchases refers to recording:

Correct Answer
verified

Internal control systems are:

Correct Answer
verified

Correct Answer
verified

All of the following are considered effective cash management principles except:

Correct Answer
verified

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ___________________.

Correct Answer
verified
perform re...
View Answer

A ________________ fund is used to make cash disbursements of small amounts to avoid the time and cost of writing checks.

Correct Answer
verified

Exam 8: Cash and Internal Controls

Correct AnswerverifiedShow Answer

Deposits made and recorded by the depositor but not yet recorded on the bank statement are called _______________________.

Correct AnswerverifiedShow Answer

The number of days' sales uncollected:

Correct AnswerverifiedShow Answer

A sales system with pre-numbered,controlled sales slips is an example of the internal control principle of _______________________.

Correct Answerverifiedmaintain a...View AnswerShow Answer

A company wants to decrease its $200 petty cash fund to $175.The entry to reduce the fund is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The use of electronic communication to transfer cash from one party to another is called __________________________________.

Correct Answerverifiedelectronic...View AnswerShow Answer

Two limitations of internal control systems are ______________ and ________________. answers can appear in any order

Correct Answerverifiedhuman error/human fr...View AnswerShow Answer

Which internal control principle prescribes the use of pre-numbered printed checks?

Correct AnswerverifiedShow Answer

Cash equivalents meet all of the following criteria except:

Correct AnswerverifiedShow Answer

Principles of internal control include all of the following except:

Correct AnswerverifiedShow Answer

________________ are checks written by the depositor,deducted on the depositor's records,and sent to the payee,but not yet recorded by the bank at the bank statement date.

Correct AnswerverifiedShow Answer

The following information is available for Birch Company at December 31: Based on this information,Birch Company should report Cash and Cash Equivalents on December 31 of:

Correct AnswerverifiedShow Answer

On a bank reconciliation,the amount of an unrecorded bank service charge should be:

Correct AnswerverifiedShow Answer

The gross method of recording purchases refers to recording:

Correct AnswerverifiedShow Answer

Internal control systems are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All of the following are considered effective cash management principles except:

Correct AnswerverifiedShow Answer

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ___________________.

Correct Answerverifiedperform re...View AnswerShow Answer

A ________________ fund is used to make cash disbursements of small amounts to avoid the time and cost of writing checks.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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maintain a...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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electronic...
View Answer

Two limitations of internal control systems are and __. answers can appear in any order

Correct Answer
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human error/human fr...
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Correct Answer
verified

Correct Answer
verified

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
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Correct Answer
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Correct Answer
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Correct Answer
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perform re...
View Answer

Correct Answer
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