Question 1

Which of the following statements concerning a petty cash fund is not correct?

Accepted Answer

A)  A petty cash fund acts as a control by establishing a limited amount of cash to use for specific types of expenses.
B)  A petty cash fund is similar to an imprest payroll account in acting as a control of a limited amount of cash.
C)  The company's petty cash custodian is responsible for operating the petty cash fund.
D)  To avoid the administrative costs of the use of purchasing cards,or Pcards,many organizations have started using petty cash funds.E) None of the above
F) C) and D)

Question 2

A remittance advice:

Accepted Answer

A)  explains the purpose of a customer's payment.
B)  ensures cash sales are properly recorded in the accounting records.
C)  enhances the safe deposit of cash in the bank.
D)  reduces the risk of cash-handling errors.E) None of the above
F) A) and D) A

Question 3

Egrane,Inc.'s monthly bank statement showed the ending balance of cash of $14,800.The bank reconciliation for the period showed an adjustment for a deposit in transit of $1,200,outstanding checks of $1,600,a NSF check of $560,bank service charges of $24 and the EFT from a customer in payment of the customer's account of $1,200. What journal entry should be recorded by Egrane for the NSF check returned?

Accepted Answer

A)  Debit Accounts Receivable and credit Cash for $560.
B)  Debit Cash and credit Accounts Receivable for $560.
C)  Debit Cash and credit Accounts Payable for $560.
D)  No journal entry is necessary for this item.E) A) and B)
F) A) and C)

Question 4

The volume of transactions is enormous and the risk of handling errors is significant for:

Accepted Answer

A)  cash.
B)  inventory.
C)  accounts receivable.
D)  computer software.E) All of the above
F) A) and D)

Question 5

Before reconciling its bank statement,Rollin Corporation's general ledger had a month-end balance in the cash account of $9,450.The bank reconciliation for the month contained the following items:  Given the above information,what up-to-date ending cash balance should Rollin report at month-end?

Accepted Answer

A)  $8,100
B)  $8,676
C)  $9,288
D)  $10,062E) B) and D)
F) C) and D)

Question 6

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Accepted Answer

A)  Debit Accounts Receivable and credit Cash in the amount of $776.
B)  Debit Cash and credit Accounts Receivable in the amount of $776.
C)  Debit NSF Check Expense and credit Accounts Receivable in the amount of $776.
D)  No journal entry is necessary.E) A) and D)
F) B) and D)

Question 7

Which of the following is deducted from the bank balance on a bank reconciliation?

Accepted Answer

A)  Deposits in transit
B)  Outstanding checks
C)  EFT received from customers
D)  Bank service chargeE) A) and B)
F) B) and C)

Question 8

Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations,reporting,and compliance.

Accepted Answer

A) True 
 B)False

Question 9

An attempt to deceive others for personal gain is known as:

Accepted Answer

A)  fraud.
B)  larceny.
C)  opportunity.
D)  incentive.E) A) and B)
F) All of the above

Question 10

Match the term to the appropriate definition.There are more definitions than terms.
-Bank Reconciliation

Accepted Answer

A)  Money or any instrument that banks will accept for deposit and immediately credit to a company's account.
B)  A process for approving and documenting all purchases and payments on account.
C)  Short-term,highly liquid investments purchased within three months of maturity.
D)  Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations.
E)  Not available for general use but rather restricted for a specific purpose.F) An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.G) Another name for bounced checks.They arise when the check writer (your customer) does not have sufficient funds to cover the amount of the check.H) An attempt to deceive others for personal gain.I) A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence.J) An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.K) A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.L) Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment.M) D) and I)
N) C) and E)

Question 11

A cash register does not:

Accepted Answer

A)  restrict access to cash.
B)  document the amount of cash received for items sold.
C)  summarize the cash register's total cash sales.
D)  reconcile accrual accounting with cash accounting.E) A) and B)
F) A) and C)

Question 12

When duties are properly segregated,the accounting department should compare the cash in the register with the cash count sheet.

Accepted Answer

A) True 
 B)False  True

Question 13

Common control principles include all of the following,except:

Accepted Answer

A)  outsource work to third parties.
B)  segregate of duties.
C)  independently verify.
D)  restrict access to assets and information.E) A) and D)
F) B) and C) A

Question 14

Which of the following is not a reason that a business needs an effective internal control system?

Accepted Answer

A)  Ensure that work is completed efficiently and effectively.
B)  Produce reliable and timely accounting information for use by people external to the organization.
C)  Protect assets by reducing the risk of fraud.
D)  Identify ways to circumvent applicable laws and regulations.E) A) and D)
F) None of the above

Question 15

Petty cash payments are recorded in the accounting system when:

Accepted Answer

A)  the petty cash fund needs to be replenished.
B)  a payment is made out of petty cash.
C)  a bank reconciliation is prepared for the petty cash fund.
D)  cash is received from returns of merchandise.E) B) and C)
F) None of the above

Question 16

Outstanding checks have:

Accepted Answer

A)  been recorded by the company but not yet by the bank.
B)  been recorded by the bank but not yet by the company.
C)  not been recorded by the bank or the company.
D)  been recorded by both the bank and the company.E) C) and D)
F) B) and C)

Question 17

Cottage Co.deposits all cash receipts on the day when they are received and it makes all cash payments by check.At the close of business on December 31,its Cash account shows a debit balance of $36,606.The company's bank statement as of December 31 shows an ending cash balance of $31,842.The following information was also available.
Outstanding checks as of December 31 total $4,522.
Included with the bank statement was a debit memo in the amount of $70 for bank service charges.
Check No.2519,listed with the canceled checks,was correctly drawn for $805 in payment of a utility bill on December 16.The company mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $895.
The December 31 cash receipts of $6,850 were placed in the bank's night depository after banking hours and were not recorded on the December 31 bank statement.
The bank deducted $2,456 for an NSF check from a customer deposited on December 10.
Required:
Prepare the journal entries for the items that would appear on the company's bank reconciliation as of December 31.(If no entry is required for a transaction/event,select "No Journal Entry Required" in the first account field. )

Accepted Answer

The answer of Cottage Co.deposits all cash receipts on the...

Question 18

The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the:

Accepted Answer

A)  president of the company.
B)  chief financial officer of the company.
C)  independent directors.
D)  company's external auditors.E) A) and B)
F) C) and D)

Question 19

A bank service charge should be a(n) ________ on a bank reconciliation.

Accepted Answer

A)  addition to the bank balance
B)  deduction from the bank balance
C)  addition to the book balance
D)  deduction from the book balanceE) A) and B)
F) A) and C)

Question 20

The petty cash fund was used to reimburse employees for office expenses during the month.The cash and receipts in the locked box equaled the Petty Cash account balance.When the petty cash fund is replenished,the related journal entry will include a debit to:

Accepted Answer

A)  Office Expenses.
B)  Petty Cash.
C)  Cash.
D)  Cash Shortage.E) None of the above
F) B) and D)

Exam 5: Fraud,Internal Control,and Cash

Which of the following statements concerning a petty cash fund is not correct?

Correct Answer
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A remittance advice:

Correct Answer
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A

Correct Answer
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The volume of transactions is enormous and the risk of handling errors is significant for:

Correct Answer
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Before reconciling its bank statement,Rollin Corporation's general ledger had a month-end balance in the cash account of $9,450.The bank reconciliation for the month contained the following items: Given the above information,what up-to-date ending cash balance should Rollin report at month-end?

Correct Answer
verified

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Correct Answer
verified

Which of the following is deducted from the bank balance on a bank reconciliation?

Correct Answer
verified

Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations,reporting,and compliance.

Correct Answer
verified

An attempt to deceive others for personal gain is known as:

Correct Answer
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Match the term to the appropriate definition.There are more definitions than terms. -Bank Reconciliation

Correct Answer
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A cash register does not:

Correct Answer
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When duties are properly segregated,the accounting department should compare the cash in the register with the cash count sheet.

Correct Answer
verified
True

Common control principles include all of the following,except:

Correct Answer
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A

Which of the following is not a reason that a business needs an effective internal control system?

Correct Answer
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Petty cash payments are recorded in the accounting system when:

Correct Answer
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Outstanding checks have:

Correct Answer
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Correct Answer
verified

The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the:

Correct Answer
verified

A bank service charge should be a(n) ________ on a bank reconciliation.

Correct Answer
verified

The petty cash fund was used to reimburse employees for office expenses during the month.The cash and receipts in the locked box equaled the Petty Cash account balance.When the petty cash fund is replenished,the related journal entry will include a debit to:

Correct Answer
verified

Exam 5: Fraud,Internal Control,and Cash

Which of the following statements concerning a petty cash fund is not correct?

Correct AnswerverifiedShow Answer

A remittance advice:

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

The volume of transactions is enormous and the risk of handling errors is significant for:

Correct AnswerverifiedShow Answer

Before reconciling its bank statement,Rollin Corporation's general ledger had a month-end balance in the cash account of $9,450.The bank reconciliation for the month contained the following items: Given the above information,what up-to-date ending cash balance should Rollin report at month-end?

Correct AnswerverifiedShow Answer

What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Correct AnswerverifiedShow Answer

Which of the following is deducted from the bank balance on a bank reconciliation?

Correct AnswerverifiedShow Answer

Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations,reporting,and compliance.

Correct AnswerverifiedShow Answer

An attempt to deceive others for personal gain is known as:

Correct AnswerverifiedShow Answer

Match the term to the appropriate definition.There are more definitions than terms. -Bank Reconciliation

Correct AnswerverifiedShow Answer

A cash register does not:

Correct AnswerverifiedShow Answer

When duties are properly segregated,the accounting department should compare the cash in the register with the cash count sheet.

Correct AnswerverifiedTrue

Common control principles include all of the following,except:

Correct AnswerverifiedA

Which of the following is not a reason that a business needs an effective internal control system?

Correct AnswerverifiedShow Answer

Petty cash payments are recorded in the accounting system when:

Correct AnswerverifiedShow Answer

Outstanding checks have:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the:

Correct AnswerverifiedShow Answer

A bank service charge should be a(n) ________ on a bank reconciliation.

Correct AnswerverifiedShow Answer

The petty cash fund was used to reimburse employees for office expenses during the month.The cash and receipts in the locked box equaled the Petty Cash account balance.When the petty cash fund is replenished,the related journal entry will include a debit to:

Correct AnswerverifiedShow Answer

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A

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True

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A

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