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) A) and C)
G) B) and E)

Question 2

Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments.

Accepted Answer

A) True 
 B)False

Question 3

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794, how should this error be treated on the bank reconciliation?

Accepted Answer

A)  Subtract $45 from the bank's balance.
B)  Add $45 to the bank's balance.
C)  Subtract $45 from the book balance.
D)  Add $45 to the book balance.
E)  Subtract $45 from the bank's balance and add $45 to the book's balancE.$749 - $794 = $45 too much deducted from the company's cash account balance that must be added back to cash.F) All of the above
G) A) and B)

Question 4

The Cash Over and Short account:

Accepted Answer

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

Question 5

When evaluating the days' sales uncollected ratio, generally the higher the receivables balance, the better the ratio.

Accepted Answer

A) True 
 B)False

Question 6

Internal control of cash ensures that cash received is properly recorded and deposited.

Accepted Answer

A) True 
 B)False

Question 7

The document prepared by the vendor that is an itemized statement of goods listing the customer's name, items sold, sales prices, and terms of the sale is the _________________.

Accepted Answer

The answer of The document prepared by the vendor that...

Question 8

The three parties involved with a check are:

Accepted Answer

A)  The writer, the cashier, and the bank.
B)  The maker, the payee, and the bank.
C)  The maker, the manager, and the payee.
D)  The bookkeeper, the maker, and the bank.
E)  The signer, the cashier, and the company.F) A) and B)
G) B) and D)

Question 9

One of the specific requirements of the Sarbanes-Oxley Act (SOX)  is that:

Accepted Answer

A)  Auditors should not evaluate internal controls since they are management's responsibility.
B)  Auditors of a client are restricted as to what consulting services may be provided.
C)  The person leading the audit should remain the same indefinitely to maintain consistency.
D)  A modest penalty is imposed for any violation of the SOX guidelines.
E)  Auditor's work on a client engagement is overseen directly by the FASB.F) D) and E)
G) None of the above

Question 10

A set of procedures and approvals for verifying, approving and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n) :

Accepted Answer

A)  Internal cash system.
B)  Petty cash system.
C)  Cash disbursement system.
D)  Voucher system.
E)  Cash control system.F) A) and B)
G) A) and C)

Question 11

A voucher is an internal document or file:

Accepted Answer

A)  Prepared after an invoice is received.
B)  Used as a substitute for an invoice if the supplier fails to send one.
C)  Used to accumulate information needed to control cash disbursements and to ensure that transactions are properly recorded.
D)  Takes the place of a bank check.
E)  Prepared before the company orders goods to make sure that all goods are being ordered from an approved vendor list.F) All of the above
G) B) and D)

Question 12

Cash registers, check protectors, time clocks and personal identification scanners are examples of devices that can improve internal control.

Accepted Answer

A) True 
 B)False

Question 13

Ferguson Co. has a $200 petty cash fund. At the end of the first month the accumulated receipts represent $43 for delivery expenses, $127 for merchandise inventory, and $12 for miscellaneous expenses. The fund has a balance of $18. The journal entry to record the reimbursement of the account includes a:

Accepted Answer

A)  Debit to Petty Cash for $200.
B)  Debit to Cash Over and Short for $18.
C)  Credit to Cash for $182.
D)  Credit to Inventory for $127.
E)  Credit to Cash Over and Short for $18.F) A) and D)
G) A) and C)

Question 14

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of general and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 15

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 16

When reimbursing the petty cash fund:

Accepted Answer

A)  Cash is debited.
B)  Petty Cash is credited.
C)  Petty Cash is debited.
D)  Appropriate expense accounts are debited.
E)  No expenses are recorded.F) A) and B)
G) A) and C)

Question 17

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

Accepted Answer

Basic bank services can be organized int...

Question 18

Identify each of the following items 1 through 10 as either (A) cash or (B) cash equivalent.
_____ 1. Coins
_____ 2. Petty cash
_____ 3. Three-month certificate of deposit
_____ 4. Commercial paper
_____ 5. Currency
_____ 6. Certified check
_____ 7. Cashier's check
_____ 8. Money market accounts
_____ 9. Money orders
_____ 10. U.S. treasury bills

Accepted Answer

1. A; 2. A; 3. B; 4....

Question 19

Vouchers should be used for purchases of inventory and all other expenditures made within a company.

Accepted Answer

A) True 
 B)False

Question 20

What is the purpose of the days' sales uncollected ratio?

Accepted Answer

The days' sales uncollected ratio is a l...

Exam 6: Reporting and Analyzing Cash and Internal Controls

Correct Answer
verified

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794, how should this error be treated on the bank reconciliation?

Correct Answer
verified

What is the purpose of the days' sales uncollected ratio?

Correct Answer
verified
The days' sales uncollected ratio is a l...
View Answer

When reimbursing the petty cash fund:

Correct Answer
verified

A voucher is an internal document or file:

Correct Answer
verified

Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments.

Correct Answer
verified

Correct Answer
verified
1. A; 2. A; 3. B; 4....
View Answer

Vouchers should be used for purchases of inventory and all other expenditures made within a company.

Correct Answer
verified

When evaluating the days' sales uncollected ratio, generally the higher the receivables balance, the better the ratio.

Correct Answer
verified

A set of procedures and approvals for verifying, approving and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n) :

Correct Answer
verified

One of the specific requirements of the Sarbanes-Oxley Act (SOX) is that:

Correct Answer
verified

The Cash Over and Short account:

Correct Answer
verified

Internal control of cash ensures that cash received is properly recorded and deposited.

Correct Answer
verified

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

Correct Answer
verified

The document prepared by the vendor that is an itemized statement of goods listing the customer's name, items sold, sales prices, and terms of the sale is the _________________.

Correct Answer
verified

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

Correct Answer
verified
Basic bank services can be organized int...
View 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 Answer
verified

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of general and administrative expenses.

Correct Answer
verified

The three parties involved with a check are:

Correct Answer
verified

Cash registers, check protectors, time clocks and personal identification scanners are examples of devices that can improve internal control.

Correct Answer
verified

Exam 6: Reporting and Analyzing Cash and Internal Controls

Correct AnswerverifiedShow Answer

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794, how should this error be treated on the bank reconciliation?

Correct AnswerverifiedShow Answer

What is the purpose of the days' sales uncollected ratio?

Correct AnswerverifiedThe days' sales uncollected ratio is a l...View AnswerShow Answer

When reimbursing the petty cash fund:

Correct AnswerverifiedShow Answer

A voucher is an internal document or file:

Correct AnswerverifiedShow Answer

Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments.

Correct AnswerverifiedShow Answer

Correct Answerverified1. A; 2. A; 3. B; 4....View AnswerShow Answer

Vouchers should be used for purchases of inventory and all other expenditures made within a company.

Correct AnswerverifiedShow Answer

When evaluating the days' sales uncollected ratio, generally the higher the receivables balance, the better the ratio.

Correct AnswerverifiedShow Answer

A set of procedures and approvals for verifying, approving and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n) :

Correct AnswerverifiedShow Answer

One of the specific requirements of the Sarbanes-Oxley Act (SOX) is that:

Correct AnswerverifiedShow Answer

The Cash Over and Short account:

Correct AnswerverifiedShow Answer

Internal control of cash ensures that cash received is properly recorded and deposited.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The document prepared by the vendor that is an itemized statement of goods listing the customer's name, items sold, sales prices, and terms of the sale is the _________________.

Correct AnswerverifiedShow Answer

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

Correct AnswerverifiedBasic bank services can be organized int...View AnswerShow 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

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of general and administrative expenses.

Correct AnswerverifiedShow Answer

The three parties involved with a check are:

Correct AnswerverifiedShow Answer

Cash registers, check protectors, time clocks and personal identification scanners are examples of devices that can improve internal control.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The days' sales uncollected ratio is a l...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1. A; 2. A; 3. B; 4....
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Basic bank services can be organized int...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified