Question 1

To maintain public confidence and trust in the financial reporting of companies is the purpose of

Accepted Answer

Sarbanes-Oxley

Question 2

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Accepted Answer

monitoring

Question 3

The objectives of internal control are to

Accepted Answer

provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with

Question 4

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

Accepted Answer

FASB controls

Question 5

Credit memos from the bank

Accepted Answer

show the bank has collected a note receivable for the customer

Question 6

A bank statement

Accepted Answer

shows the activity that increased or decreased the company's account balance.

Question 7

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)

Accepted Answer

addition to the balance per the company's records

Question 8

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts?

Accepted Answer

debit Cash; credit Accounts Payable

Question 9

A bank reconciliation should be prepared periodically because

Accepted Answer

any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected

Question 10

The bank reconciliation

Accepted Answer

is part of the internal control system

Question 11

Journal entries based on the bank reconciliation are required in the company's accounts for

Accepted Answer

book errors

Question 12

Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is

Accepted Answer

a deduction from the balance per company's records

Question 13

Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?

Accepted Answer

debit Miscellaneous Administrative Expense; credit Cash

Question 14

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the company's accounts?

Accepted Answer

debit Accounts Payable; credit Cash

Question 15

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

Accepted Answer

addition to the balance per company's records

Question 16

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)

Accepted Answer

addition to the balance per company's records

Question 17

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

Accepted Answer

debit Cash; credit Notes Receivable and Interest Revenue

Question 18

The amount of deposits in transit is included on the bank reconciliation as a(n)

Accepted Answer

addition to the balance per bank statement

Question 19

The amount of the outstanding checks is included on the bank reconciliation as a(n

Accepted Answer

deduction from the balance per bank statement

Question 20

Which of the following items that appeared on the bank reconciliation did not require a journal entry?

Accepted Answer

deposits in transit

Question 21

What entry is required in the company's accounts to record outstanding checks?

Accepted Answer

no entry is required

Question 22

Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n)

Accepted Answer

deduction from the balance per company's records

Question 23

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?

Accepted Answer

debit Accounts Receivable; credit Cash

Question 24

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

Accepted Answer

service charges

Question 25

Which of the following would be added to the balance per books on a bank reconciliation?

Accepted Answer

notes collected by the bank

Question 26

Which of the following would be subtracted from the balance per bank on a bank reconciliation?

Accepted Answer

outstanding checks

Question 27

A bank reconciliation should be prepared

Accepted Answer

to explain any difference between the company's balance per books with the balance per bank

Question 28

During a bank reconciliation process,

Accepted Answer

outstanding checks are subtracted and deposits in transit are added to the bank statement balance

Question 29

A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account would include a

Accepted Answer

debit to Cash Over and Short for $13

Question 30

$135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the account would include a

Accepted Answer

credit to Cash Over and Short for $3

Question 31

Cash equivalents include

Accepted Answer

money market accounts and commercial paper

Question 32

During the year, Tempo Inc. has monthly cash expenses of $115,000. On December 31, its cash balance is $1,437,500. The ratio of cash to monthly cash expenses is

Accepted Answer

12.5

Accounting Chapter 8

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