accounting ch 7

Which one of the following would NOT cause a bank to debit a depositor’s account?

Collection of a note receivable.

All of the following are true regarding bank statements except

the bank statement balance will always agree with the company recorded balance.

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company’s checkbook for subsequent misappropriation of funds?

The use of prenumbered checks.

A NSF check should appear in which section of the bank reconciliation?

Deduction from the balance per books.

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

Service charges

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

Notes collected by the bank

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

Outstanding checks

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

Deposits in transit

A check returned by the bank marked "NSF" means

not sufficient funds

A debit memorandum would not be issued by the bank for

the collection of a notes receivable

A bank reconciliation should be prepared

to explain any difference between the depositor’s balance per books with the balance per bank.

In preparing a bank reconciliation, outstanding checks are

deducted from the balance per bank.

A check written by the company for $167 is incorrectly recorded by a company as $176. On the bank reconciliation, the $9 error should be

added to the balance per books.

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

Deposit of $600 recorded by bank as $60.

For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation?

A returned $300 check recorded by bank as $30.

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

Check written for $57 recorded as $75.

Which of the following bank reconciliation items would not result in an adjusting entry?

Deposits in transit.

All of the following bank reconciliation items would result in an adjusting entry on the company’s books except

deposits in transit.

An adjusting entry is not required for

outstanding checks.

What causes the balance on the bank statement to differ from the cash balance in the general ledger?

errors by the bank, time lags, errors by the company

Which of the following is an example of a bank reconciliation item that requires an adjusting entry?

NSF check

Which item is a current asset?

Cash equivalents

Which of the following would not be reported on the balance sheet as a cash equivalent?

Restricted cash

Restricted cash should be reported

separately on the balance sheet

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management?

Keeping inventory levels low

Which of the following is not a basic principle of cash management?

keep inventory levels high.

Which of the following does not appear as a separate section on the cash budget?

Cash sales.

Which one of the following sections would not appear on a cash budget?

Investing

Which of the following is not included in the cash disbursements section of a cash budget?

Repayments of borrowed funds.

If the cash budget showed a projected cash shortage, the company would most likely

arrange to borrow the necessary cash for that period.

Which one of the following items would never appear on a cash budget?

Depreciation expense.

A petty cash fund should be replenished

at the end of every accounting period.

Entries are made to the Petty Cash account when

establishing the fund.

Which of the following is not one of the main factors that contribute to fraudulent activity?

Incompatible duties.

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act of 2002 except:

independent outside auditors must eliminate redundant internal control.

Which one of the following is not an objective of a system of internal controls?

Fairness of the financial statements.

Each of the following is a feature of internal control except

an extensive marketing plan

Each of the following is a feature of internal control except

generic design of documents

Which of the following is not a limitation of internal control?

collusion

Internal control is defined, in part, as a plan that safeguards

assets

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

increases the potential for errors and fraud.

The custodian of a company asset should

not have access to the accounting records for that asset

When two or more people get together for the purpose of circumventing prescribed controls, it is called

collusion.

A traditional definition of internal control specifically includes all of the following features except

insistence that employees not take earned vacations.

A consequence of separation of duties is that

theft is still possible when several employees are involved.

The principle of establishing responsibility does not include

independent internal verification.

The control principle related to not having the same person authorize and pay for goods is known as

separation of duties

Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

segregation of duties is violated

If employees are bonded

they have been insured against misappropriation of assets.

Mrs. Smith has worked for Bosco Inc. for 20 years without taking a vacation. An internal control feature that would address this situation would be

human resource controls