Chapter 7 Quiz- Principals Of Financial Accounting

Which of the following should not be considered cash by an accountant? a. Coins b. Traveler's checks c. Certificates of deposit d. Money orders

Which one of the following is not an element of internal control? a. Monitoring b. Management's philosophy and operating style c. Control procedures d. Risk assessment

Hector Company gathered the following reconciling information in preparing its March bank reconciliation: Cash balance per books, 3/31 $12,000 Notes receivable collected by bank 6,000 Outstanding checks 9,000 Deposits in transit 4,500 Bank service charge 75 NSF check 1,200 Using the above information, determine the adjusted cash balance for March. a. $16,725 b. $12,225 c. $15,500 d. $7,500

Cash equivalents include a. commercial paper. b. money market funds. c. U.S. Treasury bills. d. All of these choices are correct.

Which of the following is not a reason that Congress passed the Sarbanes-Oxley Act? a. To require companies to maintain strong and effective internal controls over the recording of financial transactions b. To apply the same controls to private companies as to public companies c. To require companies to maintain strong and effective internal controls over the preparation of financial statements d. To answer the public outcry related to the financial scandals of the early 2000s

Which of the following would appear as a credit memorandum on the bank statement? a. EFT deposit b. Bank correction of an error from recording a $300 check paid as $30 c. Service charge d. NSF check

Internal control does not consist of policies and procedures that a. aid management in directing operations toward achieving business goals. b. ensure that business information is accurate. c. guarantee the company will make a profit. d. protect assets from misuse.

All of the following are objectives of internal control except to a. make sure that all errors are eliminated. b. ensure compliance with laws and regulations by employees and managers. c. provide reasonable assurance that business information is accurate. d. provide reasonable assurance that assets are safeguarded and used for business purposes.

The company section of the bank reconciliation a. ends with the adjusted balance. b. deducts debit memos that have not been recorded. c. begins with the cash balance according to the company's records. d. All of these choices are correct.

Journal entries based on the bank reconciliation are required in the depositor's accounts for a. deposits in transit. b. NSF items. c. bank errors. d. outstanding checks.

The debit balance in Cash Short and Over at the end of an accounting period is reported as a. income on the income statement. b. a liability on the balance sheet. c. an asset on the balance sheet. d. an expense on the income statement.

Which of these is a minimum cash account balance that is required by a bank? a. Compensating balance b. Bank loan c. Cash equivalent d. Line of credit

Which of the following is not a result or characteristic of the Sarbanes-Oxley Act? a. Effective internal controls over the preparation of financial statements b. Restoration of public confidence and trust in the financial statements of companies c. Complete elimination of fraud and theft d. Strong internal controls over the recording of transactions

The bank section of the bank reconciliation a. ends with the adjusted balance. b. ends with the unadjusted bank balance. c. begins with the cash balance according to the company's records. d. None of these choices are correct.

Which of the following is not an internal control activity for cash? a. An employee compares cash received in the mail with the accompanying remittance advice. b. At the end of a shift, the clerk and the supervisor count the cash in the clerk's cash drawer and compare it to beginning cash plus cash sales. c. The employee opening the mail stamps checks and money orders "For Deposit Only" in the bank account of the business. d. All cash payments should be made with cash.

Compensating balances are a. balances banks may require depositors to maintain as a minimum in their cash accounts. b. requested lines of credit. c. amounts of required payments on liabilities. d. desired loan amounts.

Sarbanes-Oxley does not require a. all publicly held companies to comply with the act. b. companies to turn over responsibility for establishing and maintaining internal controls for financial reporting to auditors. c. companies to file their internal control reports with the 10-K report with the Securities and Exchange Commission. d. companies and their independent accountants to report on the effectiveness of the companies' internal controls.

A bank correction of an error from recording a $50 check paid as $500 appears on the bank statement as a a. credit memorandum that decreases the account balance. b. debit memorandum that decreases the account balance. c. debit memorandum that increases the account balance. d. credit memorandum that increases the account balance.

An NSF check appears on the bank statement as a a. credit memorandum that decreases the account balance. b. debit memorandum that decreases the account balance. c. debit memorandum that increases the account balance. d. credit memorandum that increases the account balance.