Question 1

On a bank reconciliation, bank charges for the month are added to the cash balance per the books.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true regarding a credit memorandum?

Accepted Answer

A)   A credit memorandum is subtracted from the balance per the company's books.
B)   A credit memorandum could be issued for bank service charges.
C)   A credit memorandum is issued when a customer gives the company an NSF check.
D)   A credit memorandum is added to the balance per the company's books.

Question 3

_________________________ describes a form used by the accountant to reconcile the balance shown on the bank statement for a particular account with the balance shown in the accounting records.

Accepted Answer

The answer of _________________________ describes a form used by the...

Question 4

Which internal control procedure is followed when a physical count of inventory is performed in a perpetual inventory system?

Accepted Answer

A)   Segregation of duties
B)   Safeguarding assets and records
C)   Independent verifications
D)   Proper authorizations

Question 5

A six-month certificate of deposit would be considered to be a cash equivalent.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following is a sound internal control procedure for cash disbursements?

Accepted Answer

A)   Making copies of purchase orders for the receiving department so they know how many items to be expected upon delivery
B)   Using presigned checks to facilitate payment within the cash discount period
C)   Comparing purchase requisitions, purchase orders, receiving reports, and invoices
D)   Requiring the signature of the purchasing department supervisor on checks

Question 7

For the following items Questions 220-227, indicate whether each should be (a)  included or (b)  excluded from the line item titled Cash and cash equivalents on the balance sheet.
-Savings account

Accepted Answer

A)  Included
B)  Excluded

Question 8

Which of the following is an example of a debit memorandum?

Accepted Answer

A)   Service charge notice
B)   Interest earned on the account balance
C)   Outstanding check
D)   Company error in recording a $500 deposit as $600

Question 9

How would deposits in transit be dealt with in a bank reconciliation?

Accepted Answer

A)   added to bank statement balance
B)   deducted from company's book balance
C)   they would be ignored
D)   None of these choices

Question 10

A purchase order is not the basis for recording a purchase and a liability.

Accepted Answer

A) True 
 B)False

Question 11

Match the term with the statement that best defines it.
-Provides direct contact between the shareholders and the independent auditing firm.

Accepted Answer

A)  Accounting controls
B)  Accounting system
C)  Administrative controls
D)  Audit committee
E)  Board of directors

Question 12

Most merchandisers receive checks and currency from customers in two ways: (1) cash received over the counter from cash sales and (2) cash received in the mail from credit sales.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following items would not be a reconciling item?

Accepted Answer

A)   Canceled checks
B)   NSF checks
C)   Outstanding checks
D)   Deposits in transit

Question 14

Some cash equivalents appear in the long term investment section of a balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

The establishment of a petty cash fund has no effect on the company's total cash balance.

Accepted Answer

A) True 
 B)False

Question 16

The ___________________ is a subset of the board of directors that acts as a direct contact between the stockholders and the independent accounting firm.

Accepted Answer

The answer of The ___________________ is a subset of the...

Question 17

For the following items Questions 220-227, indicate whether each should be (a)  included or (b)  excluded from the line item titled Cash and cash equivalents on the balance sheet.
-Corporate bonds maturing in 30 days

Accepted Answer

A)  Included
B)  Excluded

Question 18

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Customer's NSF check is returned with the bank statement

Accepted Answer

A)  Addition to bank balance
B)  Subtraction from bank balance
C)  Addition to book balance
D)  Subtraction from book balance
E)  Would not appear on the May reconciliation

Question 19

On a bank reconciliation, interest earned for the month is added to the cash balance per the books.

Accepted Answer

A) True 
 B)False

Question 20

How would customer's NSF checks be dealt with in a bank reconciliation?

Accepted Answer

A)   added to company's book balance
B)   deducted from company's book balance
C)   added to bank statement balance
D)   deducted from bank statement balance

Exam 6: Cash and Internal Control

For the following items Questions 220-227, indicate whether each should be (a) included or (b) excluded from the line item titled Cash and cash equivalents on the balance sheet. -Corporate bonds maturing in 30 days

Correct AnswerverifiedShow Answer

On a bank reconciliation, interest earned for the month is added to the cash balance per the books.

Correct AnswerverifiedShow Answer

Match the term with the statement that best defines it. -Provides direct contact between the shareholders and the independent auditing firm.

Correct AnswerverifiedShow Answer

For the following items Questions 220-227, indicate whether each should be (a) included or (b) excluded from the line item titled Cash and cash equivalents on the balance sheet. -Savings account

Correct AnswerverifiedShow Answer

Which internal control procedure is followed when a physical count of inventory is performed in a perpetual inventory system?

Correct AnswerverifiedShow Answer

A purchase order is not the basis for recording a purchase and a liability.

Correct AnswerverifiedShow Answer

How would customer's NSF checks be dealt with in a bank reconciliation?

Correct AnswerverifiedShow Answer

The ___________________ is a subset of the board of directors that acts as a direct contact between the stockholders and the independent accounting firm.

Correct AnswerverifiedShow Answer

The establishment of a petty cash fund has no effect on the company's total cash balance.

Correct AnswerverifiedShow Answer

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Customer's NSF check is returned with the bank statement

Correct AnswerverifiedShow Answer

Which one of the following is a sound internal control procedure for cash disbursements?

Correct AnswerverifiedShow Answer

A six-month certificate of deposit would be considered to be a cash equivalent.

Correct AnswerverifiedShow Answer

_________________________ describes a form used by the accountant to reconcile the balance shown on the bank statement for a particular account with the balance shown in the accounting records.

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding a credit memorandum?

Correct AnswerverifiedShow Answer

Some cash equivalents appear in the long term investment section of a balance sheet.

Correct AnswerverifiedShow Answer

How would deposits in transit be dealt with in a bank reconciliation?

Correct AnswerverifiedShow Answer

Which of the following items would not be a reconciling item?

Correct AnswerverifiedShow Answer

Most merchandisers receive checks and currency from customers in two ways: (1) cash received over the counter from cash sales and (2) cash received in the mail from credit sales.

Correct AnswerverifiedShow Answer

On a bank reconciliation, bank charges for the month are added to the cash balance per the books.

Correct AnswerverifiedShow Answer

Which of the following is an example of a debit memorandum?

Correct AnswerverifiedShow Answer

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