Question 1

Cash

Accepted Answer

Resources that consist of coins, currency, checks, money orders, and money on hand or on deposit in a bank or similar depository.

Question 2

Cash-equivalents

Accepted Answer

Short-term, highly liquid investments that can be readily converted to a specific amount of cash and which are relatively insensitive to interest rate changes.

Question 3

Deposits in transit

Accepted Answer

Deposits recorded by the depositor that have not been recorded by the bank.

Question 4

Fraud

Accepted Answer

A dishonest act by an employee that results in personal benefit to the employee at a cost to the employer.

Question 5

Fraud triangle

Accepted Answer

The three factors that contribute to fraudulent activity by employees: opportunity, financial pressure, and rationalization.

Question 6

NSF check

Accepted Answer

A check that is not paid by a bank because of insufficient funds in a bank account.

Question 7

Outstanding checks

Accepted Answer

Checks issued and recorded by a company that have not been paid by the bank.

Question 8

Petty cash fund

Accepted Answer

A cash fund used to pay relatively small amounts.

Question 9

Internal control is used in a business to enhance the accuracy and reliability of its accounting records and to:

Accepted Answer

safeguard its assets.

Question 10

Physical controls do not include:

Accepted Answer

independent bank reconciliations.

Question 11

Permitting only designated personnel such as cashiers to handle cash receipts is an application of the principle of:

Accepted Answer

establishment of responsibility.

Question 12

The use of pre-numbered checks in disbursing cash is an application of the principle of:

Accepted Answer

documentation procedures.

Question 13

In a bank reconciliation, deposits in transit are:

Accepted Answer

added to the bank balance.

Question 14

The reconciling item in a bank reconciliation that will result in an adjusting entry by the depositor is:

Accepted Answer

bank service charges.

Question 15

Which of the following items in a cash drawer at November 30 is not cash?

Accepted Answer

An NSF check.

Question 16

Which statement correctly describes the reporting of cash?

Accepted Answer

Cash is listed first in the current assets section.

Question 17

Which of the following would not be an example of good cash management?

Accepted Answer

Invest temporary excess cash in stock of a small company.

Question 18

Which of the following is not one of the sections of a cash budget?

Accepted Answer

Cash from operations section.

Question 19

A check is written to replenish a $100 petty cash fund when the fund contains receipts of $94 and $4 in cash. In recording the check:

Accepted Answer

debit Cash Over and Short for $2.

Question 20

Before a check authorization is issued, the following documents must be in agreement, except for the

Accepted Answer

remittance advice

Question 21

Which one of the following would not cause a bank to debit a depositor's account?

Accepted Answer

Collection of a note receivable.

Question 22

For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?

Accepted Answer

Check written for $57, but recorded by the company as $75

Question 23

James Company had checks outstanding totaling $32400 on its June bank reconciliation. In July, James Company issued checks totaling $233400. The July bank statement shows that $157800 in checks cleared the bank in July. A check from one of James Company's customers in the amount of $1800 was also returned marked NSF. The amount of outstanding checks on James Company's July bank reconciliation should be

Accepted Answer

$32400 + $233400 - $157800 = $108000(June out. Checks + book disb - bank disb.)

Question 24

Nilson Company gathered the following reconciling information in preparing its August bank reconciliation:Cash balance per books, 8/31 $28000Deposits in transit 1200Notes receivable and interest collected 6800 6 Bank charge for check printing 160Outstanding checks 16000NSF check 1360The adjusted cash balance per books on August 31 is

Accepted Answer

$28000 + $6800 - $160 - $1360 = $33280(Cash bal. + Note coll. - Print. Char. - NSF check)

Question 25

Internal Control

Accepted Answer

-Establishment of responsibility&bull;Segregation of duties&bull;Documentation procedures&bull;Physical controls&bull;Independent internal verification&bull;Human resource controls

Question 26

Basic Principles of Cash Management

Accepted Answer

1.Increase the speed of receivables collection2.Keep inventory levels low.3.Monitor payment of liabilities. 4.Plan the timing of major expenditures. 5.Invest idle cash.

Accounting CH 7

Unlock all answers in this set

Haven't found what you need?