130 outstanding checks refer to checks that have been a written recorded sent to pay 3455376

130. Outstanding checks refer to checks that have
been:
A. Written, recorded, sent to payees, and received and
paid by the bank.
B. Written and not yet recorded in the company books.
C. Held as blank checks.
D. Written, recorded on the
company books, sent to the customer, but have not yet been paid by the bank.
E. Issued by the bank.

131. On a bank reconciliation, the amount of an
unrecorded bank service charge should be:
A. Added to the book balance of cash.
B. Deducted from the book
balance of cash.
C. Added to the bank balance of cash.
D. Deducted from the bank balance of cash.
E. Noted in memorandum form only.

132. A check that was outstanding on last period’s
bank reconciliation was not among the cancelled checks returned by the bank
this period. As a result, in preparing this period’s reconciliation, the amount
of this check should be:
A. Added to the book balance of cash.
B. Deducted from the book balance of cash.
C. Added to the bank balance of cash.
D. Deducted from the bank
balance of cash.
E. Ignored in preparing the period’s bank
reconciliation.

133. A company made a bank deposit on September 30
that did not appear on the bank statement dated as of September 30. In
preparing the September 30 bank reconciliation, the company should:
A. Deduct the deposit from the bank statement balance.
B. Send the bank a debit memorandum.
C. Deduct the deposit from the September 30 book balance
and add it to the October 1 book balance.
D. Add the deposit to the book balance of cash.
E. Add the deposit to the
bank statement balance.

134. If a check correctly written and paid by the bank
for $794 is incorrectly recorded in the company’s books for $749, how should
this error be treated on the bank reconciliation?
A. Subtract $45 from the bank’s balance.
B. Add $45 to the bank’s balance.
C. Subtract $45 from the
book balance.
D. Add $45 to the book balance.
E. Subtract $45 from the bank’s balance and add $45 to
the book’s balance.

135. During the month of September, Norris Industries
issued a check in the amount of $845 to a supplier on account. The check
cleared the bank during September. The disbursement was recorded incorrectly as
$854. The journal entry to correct this mistake when discovered will
include:
A. A debit to Accounts Payable for $854.
B. A credit to Cash for $854.
C. A credit to Cash for $9.
D. A credit to Accounts
Payable for $9.
E. A debit to Cash for $49.

136. In the process of reconciling Marks Enterprises’
bank statement for September, Mr. Marks compiles the following information:

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The adjusted cash balance per the books on September 30 is:
A. $ 6,900
B. $ 8,160
C. $ 4,600
D. $ 6,520
E. $ 5,840

137. Which of the following events would cause a bank
to debit a depositor’s account?
A. The depositor authorizes
the bank to charge the depositor’s account $50 for new checks.
B. The bank collects a note receivable and related
interest on the depositor’s behalf.
C. The depositor determines there are outstanding checks
drawn on the account at month-end.
D. The depositor determines there are deposits in
transit on the account at month-end.
E. The bank determines it incorrectly charged the
depositor’s account twice for the monthly service charge in a previous month.

138. A seller of goods or services, usually a
manufacturer or wholesaler, is known as a:
A. Vendor.
B. Payee.
C. Vendee.
D. Creditor.
E. Debtor.

139. The internal document prepared by a department manager
that informs the purchasing department of its needs that lists the merchandise
needed and requests that it be purchased is the
A. Purchase requisition.
B. Purchase order.
C. Invoice.
D. Receiving report.
E. Invoice approval.

120 the entry necessary to establish a petty cash fund should include a a debit to c 3455374

120. The entry necessary to establish a petty cash
fund should include:
A. A debit to Cash and a credit to Petty Cash.
B. A debit to Cash and a credit to Cash Over and Short.
C. A debit to Petty Cash
and a credit to Cash.
D. A debit to Petty Cash and a credit to Accounts
Receivable.
E. A debit to Cash and a credit to Petty Cash Over and
Short.

121. The entry to record reimbursement of the petty
cash fund for postage expense should include:
A. A debit to Postage
Expense.
B. A debit to Petty Cash.
C. A debit to Cash.
D. A debit to Cash Short and Over.
E. A debit to Supplies.

122. When a petty cash fund is in use:
A. Expenses paid with petty
cash are recorded when the fund is replenished.
B. Petty Cash is debited when funds are replenished.
C. Petty Cash is credited when funds are replenished.
D. Expenses are not recorded.
E. Cash is debited when funds are replenished.

123. In reimbursing the petty cash fund:
A. Cash is debited.
B. Petty Cash is credited.
C. Petty Cash is debited.
D. Appropriate expense
accounts are debited.
E. No expenses are recorded.

124. Assume that the custodian of a $450 petty cash
fund has $62.50 in coins and currency plus $382.50 in receipts at the end of
the month. The entry to replenish the petty cash fund will include:
A. A debit to Cash for $377.50.
B. A credit to Cash Over and Short for $5.00.
C. A debit to Petty Cash for $382.50.
D. A credit to Cash for
$387.50.
E. A debit to Cash for $387.50.

125. A company plans to decrease a $200 petty cash
fund to $75. The current balance in the account includes $45 petty cash payment
in receipts and $165 in currency. The entry to reduce the fund will include
a:
A. Debit to Cash Short and Over for $10.
B. Debit to Cash for $90.
C. Debit to Miscellaneous Expenses for $35.
D. Credit to Petty Cash for $165.
E. Credit to Cash for $90.
$200.00 – 165.00 – 45.00 = $-10.00 cash overage
$125.00 – 45.00 + 10.00 = $90.00 debit to cash

126. A company had $43 missing from petty cash that
was not accounted for by petty cash receipts. The correct procedure is
to:
A. Debit Cash Over and
Short for $43.
B. Credit Cash Over and Short for $43.
C. Debit Petty Cash for $43.
D. Credit Petty Cash for $43.
E. Credit Cash for $43.

127. Martha Company has an established petty cash fund
in the amount of $500. The fund was last reimbursed on November 30. At the end
of December, the fund contained the following petty cash receipts:

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If, in addition to these receipts, the petty cash fund contains $301 of cash,
the journal entry to reimburse the fund on December 31 will include:
A. A debit to Transportation-In of $73.
B. A debit to Transportation-Out of $73.
C. A credit to Office Supplies of $66.
D. A credit to Cash Over and Short of $10.
E. A debit to Cash Over and
Short of $10.

128. An analysis that explains any differences between
the checking account balance according to the depositor’s records and the
balance reported on the bank statement is a(n):
A. Internal audit.
B. Bank reconciliation.
C. Bank audit.
D. Trial reconciliation.
E. Analysis of debits and credits.

129. On a bank reconciliation, an unrecorded debit
memorandum for printing checks is:
A. Noted as a memorandum only.
B. Added to the book balance of cash.
C. Deducted from the book
balance of cash.
D. Added to the bank balance of cash.
E. Deducted from the bank balance of cash.

110 an income statement account that is used to record cash overages and cash shorta 3455373

110. An income statement account that is used to
record cash overages and cash shortages arising from petty cash transactions or
from errors in making change is titled:
A. Cash Lost.
B. Bank Reconciliation.
C. Petty Cash.
D. Cash Over and Short.
E. Cash Receivable.

111. A set of procedures and approvals designed to
control cash disbursements and the acceptance of obligations is referred to as
a(n):
A. Internal cash system.
B. Petty cash system.
C. Cash disbursement system.
D. Voucher system.
E. Cash control system.

112. Internal control procedures for cash receipts
require that:
A. Custody over cash is kept separate from its recordkeeping.
B. Cash sales should be recorded on a cash register at
the time of each sale.
C. Clerks having access to cash in a cash register
should not have access to the register tape or file.
D. An employee (with no access to cash receipts) should
compare the total cash recorded by the register with the record of cash
receipts reported by the cashier.
E. All of these.

113. The Cash Over and Short account:
A. Is used to record a credit balance in the cash
account.
B. Is an income statement
account used for recording the income effects of cash overages and cash
shortages from errors in making change and/or from errors in processing petty
cash transactions.
C. Is not necessary in a computerized accounting system.
D. Can never have a debit balance.
E. Can never have a credit balance.

114. The voucher system of control:
A. Is a set of procedures and approvals designed to
control cash receipts and the acceptance of obligations.
B. Establishes procedures
for verifying, approving, and recording obligations for eventual cash
disbursement.
C. Establishes procedures for receiving checks for the
sale of verified, approved, and recorded activities.
D. Applies only when multiple purchases are made from
the same supplier.
E. All of these.

115. A voucher is an internal file:
A. Prepared after an invoice is received.
B. Used as a substitute for an invoice.
C. Used to accumulate
information needed to control cash disbursements and to ensure that
transactions are properly recorded.
D. Takes the place of a bank check.
E. Prepared before the company orders goods.

116. Which of the following procedures would weaken
control over cash receipts that arrive through the mail?
A. After the mail is opened, a list (in triplicate) of
the money received is prepared with a record of the sender’s name, the amount,
and an explanation of why the money is sent.
B. The bank reconciliation is prepared by a person who
does not handle cash or record cash receipts.
C. For safety, only one
person should open the mail, and that person should immediately deposit the
cash received in the bank.
D. The cashier should not also be the record keeper who
records the amounts received in the accounting records.
E. All of these are good internal control procedures
over cash receipts that arrive through the mail.

117. At the end of the day, the cash register’s record
shows $1,250, but the count of cash in the cash register is $1,245. The correct
entry to record the cash sales is
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B..png”>
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118. At the end of the day, the cash register tape
shows $1,000 in cash sales but the count of cash in the register is $1,035. The
proper entry to account for this excess includes a:
A. Credit to Cash for $35.
B. Debit to Cash for $35.
C. Credit to Cash Over and
Short for $35.
D. Debit to Cash Over and Short for $35.
E. Debit to Petty Cash for $35.

119. A key factor in a voucher system is:
A. Only approved departments and individuals are
authorized to incur an obligation that will result in the payment of cash.
B. Procedures for purchasing, receiving and paying for
merchandise are divided among several departments.
C. The system limits the individuals that can incur cash
payment obligations for a company.
D. It should be extended to all expenses.
E. All of these.

100 a bank statement includes a a list of outstanding checks b a list of petty cash 3455372

100. A bank statement includes:
A. A list of outstanding checks.
B. A list of petty cash amounts.
C. The beginning and the
ending balance of the depositor’s account.
D. A listing of deposits in transit.
E. All of these.

101. For which item does a bank NOT issue a debit
memorandum?
A. To notify a depositor of all withdrawals through an
ATM.
B. To notify a depositor of a fee assessed to the
depositor’s account.
C. To notify a depositor of a uncollectible check.
D. To notify a depositor of periodic payments arranged
in advance, by a depositor.
E. To notify a depositor of
a deposit to their account.

102. Preparing a bank reconciliation on a monthly basis
is an example of:
A. Establishing responsibility.
B. Separation of duties.
C. Protecting assets by
proving accuracy of cash records.
D. A technological control.
E. Poor internal control.

103. The number of days’ sales uncollected:
A. Is used to evaluate the
liquidity of receivables.
B. Is calculated by dividing accounts receivable by
sales.
C. Measures a company’s ability to pay its bills on
time.
D. Measures a company’s debt to income.
E. Is calculated by dividing sales by accounts
receivable.

104. The days’ sales uncollected ratio is used
to:
A. Measure how many days of sales remain until the end
of the year.
B. Determine the number of days that have passed without
collecting on accounts receivable.
C. Identify the likelihood of collecting sales on
account.
D. Estimate how much time
is likely to pass before the amount of accounts receivable is received in cash.
E. Measure the amount of layaway sales for a period.

105. The number of days’ sales uncollected is
calculated by:
A. Dividing accounts receivable by net sales.
B. Dividing accounts
receivable by net sales and multiplying by 365.
C. Dividing net sales by accounts receivable.
D. Dividing net sales by accounts receivable and
multiplying by 365.
E. Multiplying net sales by accounts receivable and
dividing by 365.

106. The number of days’ sales uncollected:
A. Measures how much time is likely to pass before the
current amount of accounts receivable is received in cash.
B. Can be used for comparisons to other companies in the
same industry.
C. Can be used for comparisons between current and prior
periods.
D. Reflects the liquidity of receivables.
E. All of these.

107. A company had net sales of $31,500 and ending
accounts receivable of $2,700 for the current period. Its days’ sales
uncollected equals:
A. 11.7 days.
B. 23.3 days.
C. 31.3 days.
D. 42.5 days.
E. 46.6 days.

108. Mattel had net sales of $4,235 million and ending
accounts receivable of $775 million. Its days’ sales uncollected equals:
A. 298 days.
B. 66.8 days.
C. 19.4 days.
D. 81.8 days.
E. 65.2 days.

109. The following information is taken from Hogan
Company’s December 31 balance sheet:

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If net credit sales and cost of goods sold for the current year were $612,000
and $367,200, respectively, the firm’s days’ sales uncollected for the year
is:
A. 60 days
B. 85 days
C. 42 days
D. 154 days
E. 70 days

90 internal control systems are a developed by the securities and exchange commissio 3455371

90. Internal control systems are:
A. Developed by the Securities and Exchange Commission
for public companies.
B. Developed by the Small Business Administration for
non-public companies.
C. Developed by the Internal Revenue Service for all
U.S. companies.
D. Required by
Sarbanes-Oxley (SOX) to be documented and certified if the company’s stock is
traded on an exchange.
E. Required only if a company plans to engage in
interstate commerce.

91. Cash, not including cash equivalents,
includes:
A. Postage stamps.
B. Coins, currency, and
checking accounts.
C. IOUs.
D. Two-year certificates of deposit.
E. Money market funds.

92. Cash equivalents:
A. Are short-term, highly
liquid investment assets.
B. Include 6-month CDs.
C. Include checking accounts.
D. Are recorded in petty cash.
E. Include money orders.

93. Cash equivalents:
A. Include savings accounts.
B. Include checking accounts.
C. Are short-term
investments sufficiently close to their maturity date that their value is not
sensitive to interest rate changes.
D. Include time deposits.
E. Have no immediate value.

94. Cash equivalents:
A. Are readily convertible to a known cash amount.
B. Include short-term investments purchased within 3
months of their maturity dates.
C. Have a market value that is not sensitive to interest
rate changes.
D. Include short-term U.S. treasury bills.
E. All of these.

95. The following information is available for Holland
Company at December 31:

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Based on this information, Holland Company should report Cash and Cash
Equivalents on December 31 of:
A. $35,421
B. $50,421
C. $37,546
D. $36,246
E. $40,439

96. The following information is available for Johnson
Manufacturing Company at June 30:

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Based on this information, Johnson Manufacturing Company should report Cash and
Cash Equivalents on June 30 of:
A. $15,062
B. $20,146
C. $20,072
D. $19,205
E. $19,462

97. Banking activities include:
A. Bank accounts.
B. Bank deposits.
C. Checking.
D. Electronic funds transfer.
E. All of these.

98. A check involves three parties:
A. The writer, the cashier, and the bank.
B. The maker, the payee,
and the bank.
C. The maker, the manager, and the payee.
D. The bookkeeper, the payee, and the bank.
E. The signer, the cashier, and the company.

99. A remittance advice is:
A. An explanation for a
payment by check.
B. A bank statement.
C. A voucher.
D. An EFT.
E. A cancelled check.