Chapter 3 - Accounting

Preparation of a bank ____ helps maintain control of cash accounts

reconciliation

Preparation of a bank __________ helps maintain control of cash accounts

reconciliation

When adjusting the company's cash account balance in a bank reconciliation , which items reduce the company's cash account balance ? ( Select all that apply ) Deposits outstanding Service charges Charges for NSF checks Outstanding checks

-Deposits outstanding -Service charges -Charges for NSF checks -Outstanding checks

Which of the following items will require a journal entry following a bank reconciliation? -deposits outstanding -notes collected by the bank -NSF checks -outstanding checks

-Notes collected by the bank -NSF checks

The asset that is most easily stolen and susceptible to fraud is (Enter one word per blank )

cash

The asset that is most susceptible to employee fraud is -cash -accounts receivable -investments -equipment

cash

Cash disbursement that have been recorded in the company's accounting records but are not yet recorded by the banks -NSF checks -electronic funds transfer -deposits outstanding -checks outstanding

checks outstanding

A banks reconciliation compares the company's cash records with the bank statement and dicovers difference in those amounts due to -timing differences and errors -cash flows from operating activities -accrual revenues being different from cash revenues -uncollected customers accounts

timing differences and errors

The Sarbanes - Oxley Act applies to a -companies that operate internationally -any company organized in the United States companies that are required to file with the SEC -companies that are formed as partnerships .

companies that are required to file with the SEC

The two types of control procedures are preventive and

detective

Which of the following steps are necessary to reconcile he bank balance and he cash balance -adjust bank's cash balance for items not in bank statement -record items that reconcile the banks cash balance -record items that reconcile the company's cash balance -adjust the company's cash balance for items not in company records

-adjust bank's cash balance for items not in bank statement -record items that reconcile the company's cash balance -adjust the company's cash balance for items not in company records.

Which of the following items are included in cash? -balance in checking accounts -notes receivable from customers -accounts receivable from customers -checks from customers -currency and coins

-balance in checking accounts -checks from customers -currency and coins

The acronym NSF stands for

nonsufficient funds

A small amount of cash kept on hand for minor purchases is commonly referred to as a(n) ________________ _________________ fund.

petty cash

Two types of control activities are -investor and creditor controls -operating and investing controls -asset and liability controls -preventive and detective controls

preventive and detective controls .

One of the most important internal controls for cash is the bank

reconciiation

One of the most important internal controls for cash is the bank

reconciliation

A ________ difference in cash occurs when a company records a transaction either before or after the bank records the same transaction

timing

A bank statement may not agree with the amount of cash recorded by the company in the cash account because of differences and errors

timing

If a company records a transaction before the bank records the same transaction , this is called a / an ___________ difference -timing -internal -reconciliation -control

timing

The framework for designing an internal control system is provided by the -Committee of Sponsoring Organizations (COSO) of the Treadway Commission -Financial Accounting Standards Boards -Securities and Exchange Commission Act of 1934 -Public Companies Accounting Oversight Board (PCAOB)

Committee of Sponsoring Organization (COSO) of the Treadway Commission

Effective internal control over cash requires segregation of duties . Which of the following duties should be segregated? -Opening the mail and deposit of checks in the bank -Opening the mail and making a list of checks received -Depositing checks into the bank and recording receipts in the accounting records -Accepting credit cards and accepting cash

Opening the mail and deposit of checks in the bank Depositing checks into the bank and recording receipts in the accounting records

What is the primary purpose of a bank reconciliation? -To ensure that the cash receipts of the period were received -to ensure the bank balance per reconciliation is equal to the company balance per reconciliation -to ensure that the cash disbursements of the periods were properly authorized

To ensure the bank balance per reconciliation is equal to the company balance per reconiliation

When adjusting the company's cash account balance in a bank reconciliation, which item must be added to the cash account balance? -outstanding checks -deposits outstanding -charges for NSF checks -collections of funds by the banks

collections of funds by the bank

When a company finds out that an NSF check was written to the company, the company must ______ the balance in the cash account -increase -decrease

decrease

cash receipts have been recorded in the company's accounting records but are not yet recorded by the bank are -NSF checks -checks outstanding -electronic funds transfers -deposits outstanding

deposits outstanding

The process of allocating the cost of an asset to expense over the useful life of the asset is called -asset valuation -contra accounting -book value -depreciation .

depreciation .

The Committee of Sponsoring Organizations ( COSO ) of the Treadway Commission provided a framework for -preparing useful financial statements -auditing internal control systems -designing an internal control system -designing fraud -proof accounting system .

designing an internal control system

A company's plans to safeguard company assets and enhance the reliability and accuracy of accounting information are referred to as -corporate regulations -general controls -protective controls -security controls -internal controls

internal controls

A petty cash fund is used for -routine purchases of inventory and requited necessities -small amounts of cash needed for low-cost items -larger items purchases that were not in the budget

small amounts of cash needed for low-cost items

Internal control consists of plans to (Select all that apply ) -provide accurate and reliable accounting information -report misuse of company assets to investors report management -errors to the police -safeguard company assets

-provide accurate and reliable accounting information -safeguard company assets

Which of the following steps are necessary to reconcile the bank balance and the cash account balance -record items that reconcile the company's cash balance -adjust the company's cash balance for items not in company records -record items that reconcile the banks cash balance -adjust banks cash balance for items not in bank statement

-record items that reconcile the company's cash balance -adjust the company's cash balance for items not in company records -adjust banks cash balance for items not in bank statement

A non-sufficient funds check requiring an adjustment to the cash balance was written -to the company preparing the bank reconciliation -by the company preparing the bank reconciliation -by the bank preparing the bank statement used in the reconciliation

to the company preparing the bank reconciliation

Which of the following items are not included in cash? -Currency and coins -Accounts receivable from customers -Cash in savings account -Balance in checking accounts

Accounts receivable from customers

(Enter one word) When a person intentionally deceives another person or company for personal gain, this is referred to as

fraud or fraudulence

List the steps for a bank reconciliation in the correct order. -Adjust the company's cash balance for items not in company records -adjust bank's cash balance for items not on bank statement -updates the company's Cash account by recording items identifies in the previous step

-adjust bank's cash balance for items not on bank statement -Adjust the company's cash balance for items not in company records -updates the company's Cash account by recording items identifies in the previous step

Which of the following are common controls over cash receipts? - opening mail daily and making a detailed list of checks received -placing one trusted employee in charge of all cash-related activities -reducing the amount of total sales to customers -having two different employees take custody of the checks and made the deposit

-opening mail daily and making a detailed list of checks received -having two different employees take custody of the checks and made the deposit

What would cause a bank statement not to agree with the cash balance in the accounting records? -the company wrote checks that have cleared the bank -the company made an error in recording a deposit -the bank paid interest that the company has not recorded -the bank made an error in recording a deposit made by the company -deposits outstanding that have been recorded on the company's records, but not on the banks

-the company made an error in recording a deposit -the bank paid interest that the company has not recorded -the bank made an error in recording a deposit made by the company -deposits outstanding that have been recorded on the company's records, but not on the banks.

In a bank reconciliation, which of the following will require a journal entry by the company -both the adjustment to the bank balance and adjustment to the cash balance in the accounting records -adjustments to the balance per books for items not discovered on the bank reconciliation that were not recorded on the books -adjustments to the banks balance for items recorded on the books but not yet on the bank statement

adjustments to the balance per books for items discovered on the bank reconciliation that were not yet recorded on the books