Reference no: EM13842131
1.
Effective internal controls for cash include:
o making cash payments by prenumbered check.
o depositing cash in the bank on a timely basis.
o giving written cash receipts to customers as evidence of payment.
o all of these.
2.
Which of the following is not a procedure for the control of cash receipts?
o Immediate preparation of records of all cash receipts.
o Giving customers written receipts for all monies paid.
o Using prenumbered checks.
o Depositing cash in the bank frequently.
3.
Which of the following is not a procedure for control of cash payments?
o Checks should be properly authorized with approval signatures.
o The business should provide written receipts to all cash customers.
o All checks should be prenumbered.
o Spoiled checks should be voided and retained.
4.
Which of the following is not a feature of an internal control system?
o Separation of duties so that fraud or theft requires collusion
o Establishing clear lines of authority and responsibility
o Using unnumbered receipts and purchase orders
o Implementing physical controls such as locking cash in a safe
5.
In a company's bank reconciliation, an outstanding check is a check that:
o is guaranteed for payment by the bank.
o has been issued by the company but has not been presented to the bank for payment.
o has been presented to the bank for payment but has not been reported on the bank statement.
o has been written for an amount that is greater than the balance in the account holder's bank account.
6.
The most favorable opinion that an auditor can express is the
o Unqualified opinion.
o Qualified opinion.
o Adverse opinion.
o Disclaimer.
7.
The most negative opinion that an auditor can express is the 09_19_2014_QC_54289
o Unqualified opinion.
o Qualified opinion.
o Adverse opinion.
o Disclaimer.
8.
A financial statement audit is
o a detailed examination of a company's financial statements.
o tests the reliability of the accounting system used to produce the financial statements.
o conducted by an independent auditor.
o all of these.
9.
How is a business's certified check treated in doing the business's bank reconciliation?
o It is added to the bank balance.
o It is subtracted from the book balance.
o It is subtracted from the bank balance.
o It is not included in doing the bank reconciliation.
10.
When a customer's NSF check is returned to a business with its bank statement, the business should make a journal entry increasing
o Cash.
o Accounts Receivable.
o A net loss.
o Expense for Bad Debts.
11.
What documentation issued by a bank decreases the balance in a company's checking account balance at the bank?
o a credit memos
o credit entries
o a debit memo
o NSF checks
12.
What documentation issued by a bank increases a company's checking account balance at the bank?
o an account invoice
o a debit memo
o a credit memo
o a certified check
13.
In preparing bank reconciliations, typical adjustments to the bank balance include
o NSF checks.
o interest earned on the account.
o accounts or notes receivable collected by the bank.
o deposits in transit.
14.
In preparing bank reconciliations, typical adjustments to the book balance include
o outstanding checks.
o correction of an error made by the bank.
o interest earned on the checking account.
o deposits in transit.
15.
Osborn Company's unadjusted book balance at June 30, 2014 is $12,200. The company's bank statement reveals bank service charges of $61. Two credit memos are included in the bank statement: one for $1,464 which represents a collection of an account receivable that the bank made for Osborn and one for $20 which represents the amount of interest that Osborn had earned on its interest-bearing checking account in June. Based on this information, Osborn's true cash balance is:
o $13,684.
o $13,745.
o $12,200.
o $13,623.
16.
Davis Company's unadjusted bank balance at March 31, 2014 is $4,620. The bank reconciliation revealed outstanding checks amounting to $680 and deposits in transit of $490. Based on this information, Davis's true cash balance is:
o $5,110.
o $4,620.
o $4,430.
o $4,130.
17.
Rich Company's unadjusted book balance at October 31, 2014 is $5,950. The following information is available for the bank reconciliation.
Outstanding checks, $1,450
Deposits in transit, $1,250
Bank service charges, $110
Bank collected an accounts receivable for Rich Company, $2,700
NSF check written by one of Rich's customers, $1,450
Based on this information Rich's true cash balance is:
o $7,710.
o $7,090.
o $2,700.
o $5,640.
18.
The bank statement for Trainum Company contained the following items: a bank service charge of $30; a credit memo for interest earned, $35; and a $90 NSF check from one of Trainum customers. Outstanding checks amounted to $200 ; a deposit in transit was $500.
Assuming that the unadjusted bank balance was $1,000, determine the unadjusted book balance.
o $1,385.
o $1,500.
o $915.
o $1,300.
19.
At the end of the month, Grant Entertainment Company showed a $10,500 book balance in its cash account. The following information was gathered by studying the bank statement and the company's cash records:
(1) deposits in transit amounted to $3,450
(2) outstanding checks were $6,800
(3) a $610 check had been incorrectly drawn on Grant's account by the bank
(4) NSF checks returned by the bank were $810
(5) bank service charge was $30
(6) credit memo for $75 for the collection of one of the company's account receivable
Based on the above information the true cash balance would be:
o $10,345.
o $7,050.
o $6,945.
o $9,735.
20.
At March 31, Casey Co. had a book balance in its cash account of $10,500. At the end of March the company determined that it had outstanding checks of $1,130, deposits in transit of $700, a bank service charge of $40, and an NSF check from a customer for $225. The true cash balance at March 31 is:
o $10,235.
o $10,500.
o $9,780.
o $10,070.
21.
The April 30, 2014 bank statement for Turner Corporation shows an ending balance of $36,308. The unadjusted cash account balance was $30,150. The accountant for Turner gathered the following information:
1. April's deposit in transit was $4,612
2. The bank statement reports a service charge of $84
3. A credit memo included in the bank statement shows interest earned of $335
4. Outstanding checks totaled $11,889
5. The bank statement included a customer's $1,370 NSF check deposited in April
What is the true cash balance as of April 30, 2014?
o $33,643
o $33,308
o $29,031
o $27,661