Question 1

A sequentially numbered document authorizing a cash payment is known as a:

Accepted Answer

A)  cash register.
B)  voucher.
C)  voucher register.
D)  ledger folio.E) C) and D)
F) All of the above

Question 2

The bank made an EFT payment of a telephone bill of $5,000. How would this information be included on the bank reconciliation?

Accepted Answer

A)  an addition on the bank side
B)  a deduction on the book side
C)  an addition on the book side
D)  a deduction on the bank sideE) None of the above
F) A) and D)

Question 3

In the following situation, which internal control procedure needs strengthening? Syria Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment.

Accepted Answer

A)  assignment of responsibilities
B)  competent, reliable, and ethical personnel
C)  separation of duties
D)  documentsE) A) and C)
F) B) and C)

Question 4

In a bank reconciliation, an NSF check will be shown on the book side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 5

The following information is needed to reconcile the cash balance for Fire Steel Inc.
• A deposit of $5,800 is in transit.
• Outstanding checks total $1,500.
• The book balance is $6,800 at February 28, 2013.
• The bookkeeper recorded a $1,740 check as $17,400 in payment of the current month's rent.
• The bank balance at February 28, 2013 was $18,000.
• A deposit of $400 was credited by the bank for $4,000.
• A customer's check for $3,700 was returned for nonsufficient funds.
• The bank service charge is $60.
Based on this information, prepare a bank reconciliation for Fire Steel Inc. as of February 28, 2013.

Accepted Answer

The answer of The following information is needed to reconcile...

Question 6

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

Accepted Answer

A)  errors made by the bank revealed by the bank reconciliation
B)  all items on the bank's side
C)  errors made on the books revealed by the bank reconciliation
D)  outstanding checksE) All of the above
F) C) and D)

Question 7

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Accepted Answer

A)  a credit to Petty cash
B)  a debit to Accounts Receivable
C)  a credit to Cash
D)  a credit to various expenses and assetsE) A) and B)
F) A) and C)

Question 8

A strong computer firewall is an essential element of good internal controls for e-commerce.

Accepted Answer

A) True 
 B)False

Question 9

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

Accepted Answer

A) True 
 B)False

Question 10

Journal entries are required if the bank reconciliation includes a book error.

Accepted Answer

A) True 
 B)False

Question 11

A check of $300,000, deposited by a company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?

Accepted Answer

A)  a deduction on the bank side
B)  an addition on the bank side
C)  an addition on the book side
D)  a deduction on the book sideE) None of the above
F) C) and D)

Question 12

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

Accepted Answer

A) True 
 B)False

Question 13

Having a cash ratio below 1 is a good thing.

Accepted Answer

A) True 
 B)False

Question 14

A ________ is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

Accepted Answer

A)  bank statement
B)  deposit receipt
C)  bank reconciliation
D)  remittance adviceE) B) and D)
F) All of the above

Question 15

Petty cash is accounted for by maintaining a constant balance in the petty cash account, supported by the fund, cash plus payment tickets, totaling the same amount. Such a system is known as the:

Accepted Answer

A)  control system.
B)  voucher system.
C)  balanced system.
D)  imprest system.E) A) and C)
F) All of the above

Question 16

The bank charged a service fee of $55. How would this information be included on the bank reconciliation?

Accepted Answer

A)  a deduction on the bank side
B)  an addition on the book side
C)  a deduction on the book side
D)  an addition on the bank sideE) A) and B)
F) All of the above

Question 17

Which of the following describes the internal control component "monitoring of controls?"

Accepted Answer

A)  Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate.
B)  Monitoring of controls is the "tone at the top" of the business.
C)  Monitoring of controls is designed to ensure that the business's goals are achieved.
D)  A company must identify its risks.E) C) and D)
F) A) and D)

Question 18

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following describes the internal control component "information system?"

Accepted Answer

A)  Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.
B)  Control procedures are designed to ensure that the business's goals are achieved.
C)  Only authorized users have access to various parts of the information system.
D)  The information system is the "tone at the top" of the business.E) All of the above
F) B) and C)

Question 20

Which of the following describes the internal control procedure "assignment of responsibilities?"

Accepted Answer

A)  To validate their accounting records, a company should have an audit by an external accountant.
B)  A company should separate the custody of assets from accounting.
C)  The external auditors will monitor internal controls.
D)  A company should have clearly assigned responsibilities for each position.E) All of the above
F) B) and D)

Exam 8: Internal Control and Cash

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

Correct Answer
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Correct Answer
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A ________ is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

Correct Answer
verified

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

Correct Answer
verified

The bank made an EFT payment of a telephone bill of $5,000. How would this information be included on the bank reconciliation?

Correct Answer
verified

Having a cash ratio below 1 is a good thing.

Correct Answer
verified

Journal entries are required if the bank reconciliation includes a book error.

Correct Answer
verified

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

Correct Answer
verified

Which of the following describes the internal control procedure "assignment of responsibilities?"

Correct Answer
verified

In the following situation, which internal control procedure needs strengthening? Syria Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment.

Correct Answer
verified

A sequentially numbered document authorizing a cash payment is known as a:

Correct Answer
verified

Which of the following describes the internal control component "information system?"

Correct Answer
verified

Petty cash is accounted for by maintaining a constant balance in the petty cash account, supported by the fund, cash plus payment tickets, totaling the same amount. Such a system is known as the:

Correct Answer
verified

Which of the following describes the internal control component "monitoring of controls?"

Correct Answer
verified

In a bank reconciliation, an NSF check will be shown on the book side of the reconciliation.

Correct Answer
verified

A check of $300,000, deposited by a company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?

Correct Answer
verified

The bank charged a service fee of $55. How would this information be included on the bank reconciliation?

Correct Answer
verified

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Correct Answer
verified

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

Correct Answer
verified

A strong computer firewall is an essential element of good internal controls for e-commerce.

Correct Answer
verified

Exam 8: Internal Control and Cash

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A ________ is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

Correct AnswerverifiedShow Answer

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

Correct AnswerverifiedShow Answer

The bank made an EFT payment of a telephone bill of $5,000. How would this information be included on the bank reconciliation?

Correct AnswerverifiedShow Answer

Having a cash ratio below 1 is a good thing.

Correct AnswerverifiedShow Answer

Journal entries are required if the bank reconciliation includes a book error.

Correct AnswerverifiedShow Answer

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

Correct AnswerverifiedShow Answer

Which of the following describes the internal control procedure "assignment of responsibilities?"

Correct AnswerverifiedShow Answer

In the following situation, which internal control procedure needs strengthening? Syria Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment.

Correct AnswerverifiedShow Answer

A sequentially numbered document authorizing a cash payment is known as a:

Correct AnswerverifiedShow Answer

Which of the following describes the internal control component "information system?"

Correct AnswerverifiedShow Answer

Petty cash is accounted for by maintaining a constant balance in the petty cash account, supported by the fund, cash plus payment tickets, totaling the same amount. Such a system is known as the:

Correct AnswerverifiedShow Answer

Which of the following describes the internal control component "monitoring of controls?"

Correct AnswerverifiedShow Answer

In a bank reconciliation, an NSF check will be shown on the book side of the reconciliation.

Correct AnswerverifiedShow Answer

A check of $300,000, deposited by a company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?

Correct AnswerverifiedShow Answer

The bank charged a service fee of $55. How would this information be included on the bank reconciliation?

Correct AnswerverifiedShow Answer

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Correct AnswerverifiedShow Answer

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

Correct AnswerverifiedShow Answer

A strong computer firewall is an essential element of good internal controls for e-commerce.

Correct AnswerverifiedShow Answer

Correct Answer
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