Question 1

On a bank reconciliation,a bank fee for check printing not yet recorded by the company is:

Accepted Answer

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

Question 2

Spencer Co.decides to establish a petty cash fund with a beginning balance of $200.The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system.The journal entry to record establishing the account is:

Accepted Answer

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

Question 3

After the petty cash fund is established,the Petty Cash account is not debited or credited again unless the amount of the fund is changed.

Accepted Answer

A) True 
 B)False

Question 4

Meng Co.maintains a $300 petty cash fund.On January 31,the fund is replenished.The accumulated receipts on that date represent $80 for office supplies,$160 for merchandise inventory,and $20 for miscellaneous expenses.There is a cash shortage of $8.
-Based on this information,the amount of cash in the fund before the replenishment is:

Accepted Answer

A)  $300.
B)  $260.
C)  $40.
D)  $48.
E)  $32.F) C) and D)
G) B) and D)

Question 5

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 payments 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) B) and C)
G) A) and B)

Question 6

Describe a petty cash account and its purpose.

Accepted Answer

The petty cash account is established to...

Question 7

Franklin Company's bank reconciliation as of August 31 is shown below. The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

Accepted Answer

A)  Debit Cash $4,500; credit Sales $4,500.
B)  Debit Cash $1,725; credit Notes Receivable $1,725.
C)  Debit Cash $50; credit Bank Service Fee Expense $50.
D)  Debit Misc.Expense $3,900; credit Cash $3,900.
E)  Debit Notes Receivable $1,725; credit Cash $1,725.F) A) and C)
G) D) and E)

Question 8

Two clerks sharing the same cash register is a violation of which internal control principle?

Accepted Answer

A)  Establish responsibilities.
B)  Maintain adequate records.
C)  Insure assets.
D)  Bond key employees.
E)  Apply technological controls.F) None of the above
G) A) and B)

Question 9

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

Question 10

On a bank statement,deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.

Accepted Answer

A) True 
 B)False

Question 11

The number of days' sales uncollected:

Accepted Answer

A)  Is used to evaluate the liquidity of receivables.
B)  Is calculated by multiplying 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 D)
G) All of the above

Question 12

An invoice is an itemized statement of goods prepared by the customer,listing the customer's name,items sold,sales prices,and terms of sale.

Accepted Answer

A) True 
 B)False

Question 13

Cash equivalents:

Accepted Answer

A)  Are short-term,highly liquid investment assets.
B)  Include 6-month certificates of deposit.
C)  Include checking accounts.
D)  Are recorded in petty cash.
E)  Include money orders.F) A) and E)
G) None of the above

Question 14

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ________.

Accepted Answer

The answer of The internal document that is used to...

Question 15

In order to streamline the purchasing process,department managers should place orders directly with suppliers.

Accepted Answer

A) True 
 B)False

Question 16

Days' sales uncollected

Accepted Answer

A)  Fundamental guidelines applicable to all companies established to minimize the risk of fraud and theft and to increase the reliability and accuracy of the accounting records.
B)  Short-term, highly liquid investment assets that are readily convertible to cash and close enough to their due date so that their market value will not greatly change.
C)  An internal document used to collect information to control cash payments and to ensure that a transaction is properly recorded.
D)  An income statement account used to record the income effects of cash overages and cash shortages arising from missing petty cash receipts or errors in making change.
E)  A measure of how quickly a company can convert its accounts receivable into cash.F) Principle that says the costs of internal controls must not exceed their benefitsG) A set of procedures and approvals designed to control cash payments and the acceptance of liabilities.H) Used by the bank to verify signatures of persons authorized to write checks.I) A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.J) The ability of a company to pay for its near-term obligations.K) D) and J)
L) E) and I)

Question 17

Bank fees for check printing are recorded by the bank as:

Accepted Answer

A)  An increase in the bank's asset account.
B)  A decrease in the bank's asset account.
C)  A decrease in the depositor's bank account.
D)  An increase in the depositor's bank account.
E)  An increase in the bank's expense account.F) A) and E)
G) A) and D)

Question 18

The use of internal controls provides a guarantee against losses due to operating activities.

Accepted Answer

A) True 
 B)False

Question 19

When using a voucher system,what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

Accepted Answer

There are four steps that must be comple...

Question 20

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

Accepted Answer

A) True 
 B)False

Exam 6: Cash,fraud,and Internal Controls

Two clerks sharing the same cash register is a violation of which internal control principle?

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

Franklin Company's bank reconciliation as of August 31 is shown below. The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

Correct Answer
verified

After the petty cash fund is established,the Petty Cash account is not debited or credited again unless the amount of the fund is changed.

Correct Answer
verified

Cash equivalents:

Correct Answer
verified

Days' sales uncollected

Correct Answer
verified

Describe a petty cash account and its purpose.

Correct Answer
verified
The petty cash account is established to...
View Answer

Correct Answer
verified

An invoice is an itemized statement of goods prepared by the customer,listing the customer's name,items sold,sales prices,and terms of sale.

Correct Answer
verified

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

Correct Answer
verified

The use of internal controls provides a guarantee against losses due to operating activities.

Correct Answer
verified

On a bank statement,deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.

Correct Answer
verified

In order to streamline the purchasing process,department managers should place orders directly with suppliers.

Correct Answer
verified

Spencer Co.decides to establish a petty cash fund with a beginning balance of $200.The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system.The journal entry to record establishing the account is:

Correct Answer
verified

The number of days' sales uncollected:

Correct Answer
verified

On a bank reconciliation,a bank fee for check printing not yet recorded by the company is:

Correct Answer
verified

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ________.

Correct Answer
verified

Bank fees for check printing are recorded by the bank as:

Correct Answer
verified

A voucher is an internal document or file:

Correct Answer
verified

When using a voucher system,what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

Correct Answer
verified
There are four steps that must be comple...
View Answer

Exam 6: Cash,fraud,and Internal Controls

Two clerks sharing the same cash register is a violation of which internal control principle?

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

Franklin Company's bank reconciliation as of August 31 is shown below. The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

Correct AnswerverifiedShow Answer

After the petty cash fund is established,the Petty Cash account is not debited or credited again unless the amount of the fund is changed.

Correct AnswerverifiedShow Answer

Cash equivalents:

Correct AnswerverifiedShow Answer

Days' sales uncollected

Correct AnswerverifiedShow Answer

Describe a petty cash account and its purpose.

Correct AnswerverifiedThe petty cash account is established to...View AnswerShow Answer

Correct AnswerverifiedShow Answer

An invoice is an itemized statement of goods prepared by the customer,listing the customer's name,items sold,sales prices,and terms of sale.

Correct AnswerverifiedShow Answer

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

Correct AnswerverifiedShow Answer

The use of internal controls provides a guarantee against losses due to operating activities.

Correct AnswerverifiedShow Answer

On a bank statement,deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.

Correct AnswerverifiedShow Answer

In order to streamline the purchasing process,department managers should place orders directly with suppliers.

Correct AnswerverifiedShow Answer

Spencer Co.decides to establish a petty cash fund with a beginning balance of $200.The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system.The journal entry to record establishing the account is:

Correct AnswerverifiedShow Answer

The number of days' sales uncollected:

Correct AnswerverifiedShow Answer

On a bank reconciliation,a bank fee for check printing not yet recorded by the company is:

Correct AnswerverifiedShow Answer

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ________.

Correct AnswerverifiedShow Answer

Bank fees for check printing are recorded by the bank as:

Correct AnswerverifiedShow Answer

A voucher is an internal document or file:

Correct AnswerverifiedShow Answer

When using a voucher system,what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

Correct AnswerverifiedThere are four steps that must be comple...View AnswerShow Answer

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
verified
The petty cash account is established to...
View Answer

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
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
verified
There are four steps that must be comple...
View Answer