Question 1

Indicate which of the features of an effective internal control system are involved in the practices set out in the following question.
-Segregation of duties involves:

Accepted Answer

A)   clearly establishing responsibility lines
B)   maintaining effective records
C)   separating record-keeping from handling of assets
D)   physically protecting sensitive assets.E) All of the above
F) None of the above

Question 2

Which of the following is NOT a benefit to be derived from an efficient system of internal control?

Accepted Answer

A)   Assets are protected against damage or loss.
B)   Defalcations are completely eliminated.
C)   The conduct of the business is more orderly.
D)   Errors are identified and corrected on a timely basis.E) A) and D)
F) None of the above

Question 3

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a customer's note receivable for $1500 plus $50 interest collected by bank and appearing on the bank statement is to:

Accepted Answer

A)   add it to the balance as per bank statement
B)   deduct it from the balance as per bank statement
C)   add it to the balance per company records
D)   deduct it from the balance per company records.E) A) and B)
F) A) and D)

Question 4

Use the information below to answer the following questions:
Tell Ltd’s bank statement showed a credit balance of $7000 at 30 November 2012. It also showed bank service charges of $1100 and the collection of a note for the company amounting to $300. Unpresented cheques were $700 and there was an outstanding deposit for $2300.
-What was the final bank balance in Tell Ltd's ledger at 30 November 2012?

Accepted Answer

A)   $5400 DR
B)   $5400 CR
C)   $8600 DR
D)   $8600 CR.E) C) and D)
F) All of the above

Question 5

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque for $952 in payment of a supplier's account that was erroneously entered as $592 in the company's books is to:

Accepted Answer

A)   add it to the balance as per bank statement
B)   deduct it from the balance as per bank statement
C)   add it to the balance per company records
D)   deduct it from the balance per company records.E) B) and D)
F) B) and C)

Question 6

In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:

Accepted Answer

A)   DR Accounts receivable \quad $750 \quad\quad CR Cash \quad\quad $750
B)   DR Accounts receivable \quad  $750  \quad  CR Inventory \quad $750
C)   DR Accounts payable \quad\quad $750 \quad\quad CR Cash \quad\quad $750
D)   CR Accounts receivable \quad $750 \quad\quad  DR Cash \quad\quad $750 E) B) and C)
F) None of the above

Question 7

Use the information below to answer the following questions:
Tell Ltd’s bank statement showed a credit balance of $7000 at 30 November 2012. It also showed bank service charges of $1100 and the collection of a note for the company amounting to $300. Unpresented cheques were $700 and there was an outstanding deposit for $2300.
-What was the bank balance in Tell Ltd's books at 30 November 2012 before the adjustments?

Accepted Answer

A)   $7800 DR
B)   $7900 CR
C)   $8600 CR
D)   $9400 DR.E) C) and D)
F) B) and C)

Question 8

Which of the following items would require a journal entry following preparation of the bank reconciliation statement?

Accepted Answer

A)   error by the bank
B)   error by the company
C)   unpresented cheques at end of the month
D)   receipts not yet banked.E) B) and C)
F) A) and C)

Question 9

Accompanying the bank statement was a debit memorandum for an NSF (not sufficient funds) cheque received from a customer.What entry is required in the company's accounts?

Accepted Answer

A)   DR Other revenue \quad\quad\quad\quad\quad  CR Cash
B)   DR Cash \quad\quad\quad\quad\quad\quad\quad\quad  CR Other revenue
C)   DR Cash \quad\quad\quad\quad\quad\quad\quad\quad  CR Accounts receivable
D)   DR Accounts receivable \quad\quad\quad  CR Cash E) None of the above
F) A) and D)

Question 10

Indicate which of the features of an effective internal control system are involved in the practices set out in the following question.
-The practice of issuing identification cards to employees ensures:

Accepted Answer

A)   clear establishment of responsibility lines
B)   maintenance of effective records
C)   separation of record-keeping from handling assets
D)   physical protection of sensitive assets.E) A) and C)
F) C) and D)

Question 11

The debit recorded in the journal to reimburse the petty cash fund is to:

Accepted Answer

A)   petty cash
B)   accounts receivable
C)   cash
D)   various accounts for which the petty cash was disbursed.E) B) and C)
F) All of the above

Question 12

Which of the following is NOT true of a sound system of internal control?

Accepted Answer

A)   Implementation of controls involves costs.
B)   A sound system of internal control is the responsibility of management.
C)   All errors and irregularities should be eliminated.
D)   A sound system of internal control is fundamental to the production of reliable financial reports.E) None of the above
F) A) and B) C

Question 13

Which of the following statements about the bank statement is NOT true?

Accepted Answer

A)   The bank statement shows the amount payable by the customer.
B)   The bank statement summarises the activity in a cheque account.
C)   If the customer of the bank has a substantial bank overdraft,the closing balance will normally be a debit.
D)   It is the source document for bank charges.E) A) and B)
F) A) and C)

Question 14

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a deposit for $2300 not appearing on the bank statement is to:

Accepted Answer

A)   add it to the balance as per bank statement
B)   deduct it from the balance as per bank statement
C)   add it to the balance per company records
D)   deduct it from the balance per company records.E) None of the above
F) All of the above

Question 15

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for monthly service charge appearing on the bank statement,$45,is to:

Accepted Answer

A)   add it to the balance as per bank statement
B)   deduct it from the balance as per bank statement
C)   add it to the balance per company records
D)   deduct it from the balance per company records.E) A) and C)
F) C) and D)

Question 16

In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a note collected by the bank for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:

Accepted Answer

A)   the outstanding cheques of $9400 and the deposit in transit of $2900
B)   the note collected for $500 and the interest charge of $760
C)   only the interest on overdraft charge of $760
D)   the note collected for $500,the interest charge of $760 and outstanding cheques of $9400.E) None of the above
F) A) and B) B

Question 17

Which of the following is NOT a way that management can establish proper control over the enterprise's affairs?

Accepted Answer

A)   There is a rotation of employees over a range of jobs.
B)   Record-keeping is combined with handling of assets.
C)   Insurance is carried on assets.
D)   Staff are required to take annual leave.E) None of the above
F) A) and D) B

Question 18

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for $650 that a customer paid directly into the company's bank account is to:

Accepted Answer

A)   add it to the balance as per bank statement
B)   deduct it from the balance as per bank statement
C)   add it to the balance per company records
D)   deduct it from the balance per company records.E) B) and C)
F) A) and D)

Question 19

For which of the following adjustments would NO journal entry be required following completion of the bank reconciliation?

Accepted Answer

A)   error by the bank
B)   error by the company
C)   note collected by the bank
D)   NSF cheque.E) A) and D)
F) A) and B)

Question 20

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque outstanding at end of month,$450,is to:

Accepted Answer

A)   add it to the balance as per bank statement
B)   deduct it from the balance as per bank statement
C)   add it to the balance per company records
D)   deduct it from the balance per company records.E) None of the above
F) B) and C)

Exam 8: Internal Control and Cash

Indicate which of the features of an effective internal control system are involved in the practices set out in the following question. -Segregation of duties involves:

Correct Answer
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Which of the following is NOT a benefit to be derived from an efficient system of internal control?

Correct Answer
verified

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a customer's note receivable for $1500 plus $50 interest collected by bank and appearing on the bank statement is to:

Correct Answer
verified

Correct Answer
verified

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque for $952 in payment of a supplier's account that was erroneously entered as $592 in the company's books is to:

Correct Answer
verified

In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:

Correct Answer
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Correct Answer
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Which of the following items would require a journal entry following preparation of the bank reconciliation statement?

Correct Answer
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Accompanying the bank statement was a debit memorandum for an NSF (not sufficient funds) cheque received from a customer.What entry is required in the company's accounts?

Correct Answer
verified

Indicate which of the features of an effective internal control system are involved in the practices set out in the following question. -The practice of issuing identification cards to employees ensures:

Correct Answer
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The debit recorded in the journal to reimburse the petty cash fund is to:

Correct Answer
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Which of the following is NOT true of a sound system of internal control?

Correct Answer
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C

Which of the following statements about the bank statement is NOT true?

Correct Answer
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In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a deposit for $2300 not appearing on the bank statement is to:

Correct Answer
verified

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for monthly service charge appearing on the bank statement,$45,is to:

Correct Answer
verified

In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a note collected by the bank for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:

Correct Answer
verified
B

Which of the following is NOT a way that management can establish proper control over the enterprise's affairs?

Correct Answer
verified
B

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for $650 that a customer paid directly into the company's bank account is to:

Correct Answer
verified

For which of the following adjustments would NO journal entry be required following completion of the bank reconciliation?

Correct Answer
verified

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque outstanding at end of month,$450,is to:

Correct Answer
verified

Exam 8: Internal Control and Cash

Indicate which of the features of an effective internal control system are involved in the practices set out in the following question. -Segregation of duties involves:

Correct AnswerverifiedShow Answer

Which of the following is NOT a benefit to be derived from an efficient system of internal control?

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a customer's note receivable for $1500 plus $50 interest collected by bank and appearing on the bank statement is to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque for $952 in payment of a supplier's account that was erroneously entered as $592 in the company's books is to:

Correct AnswerverifiedShow Answer

In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following items would require a journal entry following preparation of the bank reconciliation statement?

Correct AnswerverifiedShow Answer

Accompanying the bank statement was a debit memorandum for an NSF (not sufficient funds) cheque received from a customer.What entry is required in the company's accounts?

Correct AnswerverifiedShow Answer

Indicate which of the features of an effective internal control system are involved in the practices set out in the following question. -The practice of issuing identification cards to employees ensures:

Correct AnswerverifiedShow Answer

The debit recorded in the journal to reimburse the petty cash fund is to:

Correct AnswerverifiedShow Answer

Which of the following is NOT true of a sound system of internal control?

Correct AnswerverifiedC

Which of the following statements about the bank statement is NOT true?

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a deposit for $2300 not appearing on the bank statement is to:

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for monthly service charge appearing on the bank statement,$45,is to:

Correct AnswerverifiedShow Answer

In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a note collected by the bank for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:

Correct AnswerverifiedB

Which of the following is NOT a way that management can establish proper control over the enterprise's affairs?

Correct AnswerverifiedB

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for $650 that a customer paid directly into the company's bank account is to:

Correct AnswerverifiedShow Answer

For which of the following adjustments would NO journal entry be required following completion of the bank reconciliation?

Correct AnswerverifiedShow Answer

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque outstanding at end of month,$450,is to:

Correct AnswerverifiedShow Answer

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C

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B

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B

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