Question 1

If the month-end bank statement shows a balance of $72,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $3,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Accepted Answer

A)   $33,000.
B)   $36,000.
C)   $72,000.
D)   $114,000.E) A) and B)
F) B) and C)

Question 2

Which one of the following items would not be considered cash?

Accepted Answer

A)   Coins
B)   Money orders
C)   Currency
D)   Postdated checksE) All of the above
F) A) and B)

Question 3

Controls that enhance the accuracy and reliability of the accounting records are

Accepted Answer

A)   automated controls.
B)   external controls.
C)   mechanical and electronic controls.
D)   physical controls.E) A) and D)
F) A) and B)

Question 4

A check returned by the bank marked "NSF" means

Accepted Answer

A)   no service fee.
B)   no signature found.
C)   not satisfactorily filled-out.
D)   not sufficient funds.E) B) and C)
F) A) and B)

Question 5

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

Accepted Answer

A) True 
 B)False

Question 6

Checks received through the mail should

Accepted Answer

A)   immediately be endorsed "For Deposit Only."
B)   be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account.
C)   be cashed at the bank as soon as possible.
D)   be "rung up" on a cash register immediately.E) A) and C)
F) C) and D)

Question 7

Tangible frauds include

Accepted Answer

A)   asset misappropriation.
B)   false pretenses.
C)   counterfeiting.
D)   all of the above.IFRSE) A) and B)
F) None of the above

Question 8

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Accepted Answer

A)   debit to Cash for $86.
B)   credit to Petty Cash for $86.
C)   credit to Cash Over and Short for $3.
D)   credit to Cash for $86.E) B) and C)
F) All of the above

Question 9

A petty cash fund should not be used for

Accepted Answer

A)   postage due.
B)   loans to the petty cash custodian.
C)   taxi fares.
D)   customer lunches.E) B) and D)
F) A) and D)

Question 10

Which of the following would not be reported on the balance sheet as a cash equivalent?

Accepted Answer

A)   Money market fund
B)   Sixty-day certificate of deposit
C)   Six-month Treasury bill
D)   Money market savings certificateE) All of the above
F) B) and C)

Question 11

Bank errors

Accepted Answer

A)   occur because of time lags.
B)   must be corrected by debits.
C)   are infrequent in occurrence.
D)   are corrected by making an adjusting entry on the depositor's books.E) All of the above
F) B) and D)

Question 12

A voucher system is used by many large companies as a means of controlling cash receipts.

Accepted Answer

A) True 
 B)False

Question 13

A debit memorandum could show the collection of a note receivable by the bank.

Accepted Answer

A) True 
 B)False

Question 14

Macrinez Company assembled the following information in completing its July bank reconciliation: balance per bank $22,920; outstanding checks $4,650; deposits in transit $7,500; NSF check $480; bank service charge $150; cash balance per books $26,400. As a result of this reconciliation, Macrinez will

Accepted Answer

A)   reduce its cash account by $150.
B)   reduce its cash account by $630.
C)   reduce its cash account by $2,850.
D)   increase its cash account by $330.E) B) and D)
F) B) and C)

Question 15

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A)   Petty Cash, $94.
B)   Petty Cash, $97.
C)   Cash, $94; Cash Over and Short, $3.
D)   Cash, $97.E) C) and D)
F) All of the above

Question 16

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Accepted Answer

A)   Petty Cash, $84.
B)   Petty Cash, $81.
C)   Cash, $81; Cash Over and Short, $3.
D)   Cash, $84.E) B) and C)
F) A) and B)

Question 17

The principle of establishing responsibility does not include

Accepted Answer

A)   one person being responsible for one task.
B)   authorization of transactions.
C)   independent internal verification.
D)   approval of transactions.E) A) and C)
F) None of the above

Question 18

Allowing only designated personnel to handle cash receipts is an example of

Accepted Answer

A)   establishment of responsibility.
B)   segregation of duties.
C)   documentation procedures.
D)   independent internal verification.E) A) and B)
F) All of the above

Question 19

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Accepted Answer

A)   prepaid insurance.
B)   cash.
C)   buildings.
D)   land.E) A) and D)
F) All of the above

Question 20

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Accepted Answer

A)   a contra-asset account.
B)   a liability account.
C)   also an asset account.
D)   a stockholders' equity account.E) All of the above
F) C) and D)

Exam 7: Fraud, Internal Control, and Cash

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Correct Answer
verified

Which one of the following items would not be considered cash?

Correct Answer
verified

A petty cash fund should not be used for

Correct Answer
verified

A debit memorandum could show the collection of a note receivable by the bank.

Correct Answer
verified

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Correct Answer
verified

Controls that enhance the accuracy and reliability of the accounting records are

Correct Answer
verified

Tangible frauds include

Correct Answer
verified

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

Correct Answer
verified

A voucher system is used by many large companies as a means of controlling cash receipts.

Correct Answer
verified

Checks received through the mail should

Correct Answer
verified

Allowing only designated personnel to handle cash receipts is an example of

Correct Answer
verified

If the month-end bank statement shows a balance of $72,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $3,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Correct Answer
verified

Bank errors

Correct Answer
verified

A check returned by the bank marked "NSF" means

Correct Answer
verified

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Correct Answer
verified

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Correct Answer
verified

Which of the following would not be reported on the balance sheet as a cash equivalent?

Correct Answer
verified

The principle of establishing responsibility does not include

Correct Answer
verified

Correct Answer
verified

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Correct Answer
verified

Exam 7: Fraud, Internal Control, and Cash

From an internal control standpoint, the asset most susceptible to improper diversion and use is

Correct AnswerverifiedShow Answer

Which one of the following items would not be considered cash?

Correct AnswerverifiedShow Answer

A petty cash fund should not be used for

Correct AnswerverifiedShow Answer

A debit memorandum could show the collection of a note receivable by the bank.

Correct AnswerverifiedShow Answer

If a petty cash fund is established in the amount of $200, and contains $119 in cash and $84 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Correct AnswerverifiedShow Answer

Controls that enhance the accuracy and reliability of the accounting records are

Correct AnswerverifiedShow Answer

Tangible frauds include

Correct AnswerverifiedShow Answer

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

Correct AnswerverifiedShow Answer

A voucher system is used by many large companies as a means of controlling cash receipts.

Correct AnswerverifiedShow Answer

Checks received through the mail should

Correct AnswerverifiedShow Answer

Allowing only designated personnel to handle cash receipts is an example of

Correct AnswerverifiedShow Answer

If the month-end bank statement shows a balance of $72,000, outstanding checks are $54,000, a deposit of $15,000 was in transit at month end, and a check for $3,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Correct AnswerverifiedShow Answer

Bank errors

Correct AnswerverifiedShow Answer

A check returned by the bank marked "NSF" means

Correct AnswerverifiedShow Answer

A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to replenish the account would include a

Correct AnswerverifiedShow Answer

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Correct AnswerverifiedShow Answer

Which of the following would not be reported on the balance sheet as a cash equivalent?

Correct AnswerverifiedShow Answer

The principle of establishing responsibility does not include

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Correct AnswerverifiedShow Answer

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