Question 1

In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 2

Internal controls are important because they:

Accepted Answer

A)   deter fraud and prevent misleading financial statements.
B)   eliminate fraud.
C)   ensure that the company maintains a compensating balance.
D)   guarantee accurate financial statements.E) A) and D)
F) B) and C)

Question 3

Denominator in the ratio of cash to monthly cash expense is calculated as _____.

Accepted Answer

A)   total revenues divided by 12
B)   net cash flows from investing activities divided by 12
C)   earnings before taxes divided by 12
D)   net cash flows from operations divided by 12E) A) and B)
F) B) and D)

Question 4

Zorro Inc.has the following cash register data for December 31: Cash register total for cash sales
$23,500
Cash receipts from cash sales
$23,480
How should the difference be recorded?

Accepted Answer

A)   $20 cash overage as miscellaneous operating expense
B)   $20 cash overage as revenue
C)   $20 cash shortage as normal operating expense
D)   $20 cash shortage as other revenueE) None of the above
F) A) and B) C

Question 5

List and define each of the five elements of internal control set forth by the Integrated Framework.

Accepted Answer

(1)Control Environment: The control envi...

Question 6

A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

Accepted Answer

A) True 
 B)False

Question 7

The bank informs the depositor of bank service charges by including a credit memorandum with a monthly bank statement.

Accepted Answer

A) True 
 B)False

Question 8

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Accepted Answer

A) True 
 B)False

Question 9

A business that requires all cash payments be made by check cannot use a petty cash system.

Accepted Answer

A) True 
 B)False

Question 10

In preparing a bank reconciliation, the amount of outstanding checks is deducted from the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 11

A bank issues credit memos for:

Accepted Answer

A)   payments made by electronic funds transfer.
B)   interest earned on the company's account.
C)   service charges.
D)   customer checks returned for not sufficient funds.E) None of the above
F) A) and B)

Question 12

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would require an adjusting entry including a:

Accepted Answer

A)   debit to Accounts Receivable.
B)   debit to Cash.
C)   debit to Accounts Payable.
D)   credit to Accounts Payable.E) B) and D)
F) A) and B)

Question 13

Employee fraud is the intentional act of deceiving an employer for personal gain.

Accepted Answer

A) True 
 B)False

Question 14

The depositor reconciles the bank's statement to the depositor's records.

Accepted Answer

A) True 
 B)False

Question 15

Using the following information, prepare a bank reconciliation for Murack Co.for May 31, 2016:
(a)The bank statement balance is $4,063.
(b)The cash account balance is $3,735.
(c)Outstanding checks amounted to $640.
(d)Deposits in transit are $245.
(e)The bank service charge is $40.
(f)A check for $74 for supplies was recorded on the depositor's books as $47.

Accepted Answer

$\begin{array}{c}
\text {Murack Co.}\
\text { Bank Reconciliation}\
\text { May 31.2016}\\begin{array}{lr}
\hline\text { Cash balance according to bank statement } & &\$ 4,063 \
\text { Add: Deposits in transit not recorded by bank }&&\underline{245}\
&&\$4,308\
\text { Deduct: Outstanding checks } & \underline{\$ 640}& \underline{640} \
\text { Adjusted balance } && \underline{\$ 3,668}\
\
\text { Cash balance according to Murack Co. } && \$ 3,735 \
\text { Deduct: Bank service charge } & \$ 40 & \
\quad \text { Error in recording } & \underline{27} & \underline{67} \
\text { Adjusted balance } & & \underline{\$ 3,668}
\end{array}\end{array}$

Question 16

Which of the following would be deducted from the cash balance per books on a bank reconciliation?

Accepted Answer

A)   Service charges
B)   Outstanding checks
C)   Deposits in transit
D)   Notes collected by the bankE) C) and D)
F) None of the above

Question 17

The bank reconciles its statement to the depositor's records.

Accepted Answer

A) True 
 B)False

Question 18

When a company reports negative net cash flows from operations _____.

Accepted Answer

A)   ratio of equity to annual cash expenses helps in assessing the survival of the company
B)   ratio of equity to monthly cash expenses helps in assessing the survival of the company
C)   ratio of cash to monthly cash expenses helps in assessing the survival of the company
D)   ratio of accounts payable to annual financing expenses helps in assessing the survival of the companyE) B) and C)
F) A) and B)

Question 19

Which element of internal control observes employees' behavior and the accounting system for indicators of control problems?

Accepted Answer

A)   Control environment
B)   Risk assessment
C)   Control procedures
D)   MonitoringE) C) and D)
F) A) and B)

Question 20

List the objectives of internal control and give an example of how each is implemented.

Accepted Answer

The objectives of internal control are to provide reasonable assurance that:
(1)Assets are safeguarded and used for business purposes.
(2)Business information is accurate.
(3)Employees comply with laws and regulations.
Examples are:
(1)Duties are separated.
(2)Duties are rotated.
(3)Reports are submitted to management.
There are many other examples that would be correct.

Exam 5: Internal Control and Cash

In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

Correct Answer
verified

Internal controls are important because they:

Correct Answer
verified

Denominator in the ratio of cash to monthly cash expense is calculated as _____.

Correct Answer
verified

Zorro Inc.has the following cash register data for December 31: Cash register total for cash sales $23,500 Cash receipts from cash sales $23,480 How should the difference be recorded?

Correct Answer
verified
C

List and define each of the five elements of internal control set forth by the Integrated Framework.

Correct Answer
verified
(1)Control Environment: The control envi...
View Answer

A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

Correct Answer
verified

The bank informs the depositor of bank service charges by including a credit memorandum with a monthly bank statement.

Correct Answer
verified

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Correct Answer
verified

A business that requires all cash payments be made by check cannot use a petty cash system.

Correct Answer
verified

In preparing a bank reconciliation, the amount of outstanding checks is deducted from the cash balance per books.

Correct Answer
verified

A bank issues credit memos for:

Correct Answer
verified

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would require an adjusting entry including a:

Correct Answer
verified

Employee fraud is the intentional act of deceiving an employer for personal gain.

Correct Answer
verified

The depositor reconciles the bank's statement to the depositor's records.

Correct Answer
verified

Which of the following would be deducted from the cash balance per books on a bank reconciliation?

Correct Answer
verified

The bank reconciles its statement to the depositor's records.

Correct Answer
verified

When a company reports negative net cash flows from operations _____.

Correct Answer
verified

Which element of internal control observes employees' behavior and the accounting system for indicators of control problems?

Correct Answer
verified

List the objectives of internal control and give an example of how each is implemented.

Exam 5: Internal Control and Cash

In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

Correct AnswerverifiedShow Answer

Internal controls are important because they:

Correct AnswerverifiedShow Answer

Denominator in the ratio of cash to monthly cash expense is calculated as _____.

Correct AnswerverifiedShow Answer

Zorro Inc.has the following cash register data for December 31: Cash register total for cash sales $23,500 Cash receipts from cash sales $23,480 How should the difference be recorded?

Correct AnswerverifiedC

List and define each of the five elements of internal control set forth by the Integrated Framework.

Correct Answerverified(1)Control Environment: The control envi...View AnswerShow Answer

A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

Correct AnswerverifiedShow Answer

The bank informs the depositor of bank service charges by including a credit memorandum with a monthly bank statement.

Correct AnswerverifiedShow Answer

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Correct AnswerverifiedShow Answer

A business that requires all cash payments be made by check cannot use a petty cash system.

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation, the amount of outstanding checks is deducted from the cash balance per books.

Correct AnswerverifiedShow Answer

A bank issues credit memos for:

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would require an adjusting entry including a:

Correct AnswerverifiedShow Answer

Employee fraud is the intentional act of deceiving an employer for personal gain.

Correct AnswerverifiedShow Answer

The depositor reconciles the bank's statement to the depositor's records.

Correct AnswerverifiedShow Answer

Which of the following would be deducted from the cash balance per books on a bank reconciliation?

Correct AnswerverifiedShow Answer

The bank reconciles its statement to the depositor's records.

Correct AnswerverifiedShow Answer

When a company reports negative net cash flows from operations _____.

Correct AnswerverifiedShow Answer

Which element of internal control observes employees' behavior and the accounting system for indicators of control problems?

Correct AnswerverifiedShow Answer

List the objectives of internal control and give an example of how each is implemented.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified
(1)Control Environment: The control envi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified