Accounting #6 ch 6 study

Recall the preparation of a bank reconciliation by selecting the correct items below. (Check all that apply.) Multiple select question. A. Compute the adjusted bank balance. B. Subtract any outstanding checks from the balance per bank. C. Add deposits in transit to the balance per bank. D. Add the deposits in transit to the balance per books. E. Compute the adjusted book balance. F. Add any unrecorded bank fees to the balance per bank

A, B,C,E

Determine the statements below that are true regarding why a bank reconciliation is used. (Check all that apply.) Multiple select question. A. We must reconcile the balance of the bank's records and the Cash account in the general ledger and explain or account for any differences in the two. B. The Cash account balance in the general ledger is accurate, but the bank statement balance is not. C. The bank reconciliation is useful in proving the accuracy of the Cash account in the general ledger. D. Timing differences between the bank statement and the depositor's records are reflected in the bank reconciliation.

A, C, D

Identify the principles of internal control by selecting the correct answers below. (Check all that apply.) Multiple select question. A.Perform regular and independent reviews. B.Separate recordkeeping from custody of assets. C.Insure assets. D.Match revenues with expenses in the same accounting period. E.Establish responsibilities. F.Apply technological controls. G.Record assets at cost. H.Maintain adequate records.

A,B, C,E,F,H

Choose the items below that would be subtracted from the book balance on a bank reconciliation. (Check all that apply.) Multiple select question. A. NSF customer check B. Monthly check charges assessed by the bank C. Monthly bank service charge D. Cleared checks E. Note collected by the bank for the depositor F. Interest earned on the depositor's account G. Outstanding checks

A,B,C

A blockchain ledger is more secure because: (Check all that apply). Multiple select question. A. it is continuously verified. B. it is continuously updated. C. auditors can focus on verifying accuracy of the output of the ledger. D. it is difficult to modify the ledger without a detailed record of changes.

A,B,D

Determine which of the statements below accurately describe services provided by a bank. (Check all that apply.) Multiple select question. A. A bank account is a record set up by a bank for a customer. B. To withdraw money from an account, the depositor can use a check. C. Each bank deposit is supported by a check. D. Each bank deposit is supported by a deposit ticket. E. To limit access to a bank account, all persons authorized to write checks on the account must sign a deposit slip.

A,B,D

Each of the following are types of technological impacts related to internal control: Multiple select question. A. more extensive testing of records B. new evidence of processing C. maintaining adequate records D. separation of duties E. reduced processing errors F. establish responsibilities

A,B,D,E

Which of the following are principles of internal control? (Check all that apply.) Multiple select question. A.Maintain adequate records. B.Perform regular and independent reviews. C.Increase revenues. D.Divide responsibility for related transactions. E.Establish responsibilities. F.Reduce vendor payables.

A,B,D,E

Determine which of the items below would show up on a monthly bank statement. (Check all that apply.) Multiple select question. A. End-of-period balance in the account B. Deposits and other credits increasing the account during the period C. Checks and other credits decreasing the account during the period D. Checks that the company has written, but have not cleared the bank yet E. Checks and other debits decreasing the account during the period F. Beginning-of-period balance in the account

A,B,E,F

Describe the internal control principle of dividing responsibility for related transactions by selecting the correct statements below. (Check all that apply.) Multiple select question. A. Examples of transactions with divided responsibility are placing inventory orders and paying vendors. B. This principle calls for a duplication of work so that comparisons can be made. C. This principle helps to make sure that the work of one individual acts as a check on another individual's work on a related transaction. D. This principle is often called separation of duties.

A,C,D

Which of the following are correct regarding why management uses internal controls? (Check all that apply.) Multiple select question. A.Promote efficient operations. B.Reduce vendor payables. C.Uphold company policies. D.Protect assets. E.Increase revenues. F.Ensure reliable accounting.

A,C,D,F

A person who has access to an asset must _____ access to that asset's accounting records. Multiple choice question. A.not have B.have

A.

Choose the statement below which is correct regarding which bank reconciliation items require adjusting journal entries. Multiple choice question. A Only the items reconciling the book balance require adjustment. B. Only the items reconciling the bank balance require adjustment. D.All items reconciling both the bank balance and the book balance require adjustment.

A.

Demonstrate the required adjusting entry needed to record a $1,000 note receivable collected by the bank by choosing the correct entry below. Multiple choice question. A. Debit Cash $1,000 and credit Notes Receivable $1,000. B. Debit Notes Receivable $1,000 and credit Cash $1,000. C. Debit Cash $1,000 and credit Notes Payable $1,000. D. Debit Cash $1,000 and credit Accounts Receivable $1,000.

A.

Good recordkeeping helps protect assets and helps managers: Multiple choice question. A.monitor company activities B.apply technological controls C.divide responsibility D.establish responsibilities

A.

Identify the statement below that describes what the Days' sales uncollected ratio assesses. Multiple choice question. A.. It measures how quickly a company can convert its accounts receivables into cash. B.It assesses the company's ability to pay its debts. C.It measures how profitable a company is when it sells it products. D.It is a useful in evaluating the liquidity of inventory.

A.

Regular and independent reviews should be done by _____. Multiple choice question. A. auditors not directly involved in the activities B. auditors directly involved in the activities C. employees directly involved in the activities D. employees not directly involved in the activities

A.

Review the statements below to determine the correct definition of a credit memorandum. Multiple choice question. A. The bank notifies the depositor of each increase to the account with a credit memorandum. B. Whenever the balance in the account becomes overdrawn, the bank issues a credit memorandum. C. Whenever a check is drawn against the account, the bank issues a credit memorandum. D. The bank notifies the depositor of each deduction to the account with a credit memorandum.

A.

Determine which of the items below would appear in the Deposits and Credits column of a bank statement and would cause an increase in the account's balance. (Check all that apply.) Multiple select question. A. A returned NSF customer check B. Interest paid by the bank on the bank account balance C. Deposits made during the month D. Checks written by the account owner E. A note collected by the bank on behalf of the account owner

B, C, E

Determine the statements below that are true regarding why a bank reconciliation is used. (Check all that apply.) Multiple select question. A. The Cash account balance in the general ledger is accurate, but the bank statement balance is not. B. The bank reconciliation is useful in proving the accuracy of the Cash account in the general ledger. C. Timing differences between the bank statement and the depositor's records are reflected in the bank reconciliation. D. We must reconcile the balance of the bank's records and the Cash account in the general ledger and explain or account for any differences in the two.

B,C,D

Determine which of the items below would appear in the Checks and Debits column of a bank statement and would cause a decline in the account's balance. (Check all that apply.) Multiple select question. A. Interest paid by the bank on the bank account balance B. A customer's NSF check C. Monthly service fees charged by the bank D. Checks written by the account owner E. ATM withdrawals F. Deposits made during the month

B,C,D,E

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.) Multiple select question. A. Technology increases job creation and fewer job consolidations. B. Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry. C. Technology can be designed to require the use of password before access to the system is granted. D. Technology has reduced the number of processing errors. E. Technology has encouraged the growth of e-commerce, so there is a higher risk of credit card number theft.

B,C,D,E

Identify the bank reconciliation items that would require adjustments to the book balance. (Check all that apply.) Multiple select question. A. Deposits in transit B. Interest earned C. NSF check D. Collection of note by bank E. Outstanding checks F. Bank charges

B,C,D,F

How has the Sarbanes-Oxley Act (SOX) impacted the internal control of companies? (Check all that apply.) Multiple select question. A.SOX requires that management hire outside consultants to create internal controls to be used to safeguard assets. B.SOX requires that auditors verify internal controls. C.SOX requires that management apply technological controls whenever cash is involved. D.SOX requires that the company have effective internal controls.

B,D

Determine which of the statements below is correct regarding information reflected on a monthly bank statement. Multiple choice question. A. Deposits that the company makes will be listed as debits to the bank account on the bank statement. B, The information on the bank statement reflects the bank's records of the depositor's account. C, The information on the bank statement reflects the customer's records. D. Checks that the company writes will be listed as credits to the bank account on the bank statement.

B.

Identify the item below that would be added to the book balance. Multiple choice question. A. Bank service charge B. Interest earned C. Outstanding checks D. NSF check

B.

Review the items below and determine which would cause a decrease in the monthly bank statement balance. Multiple choice question. A. Note collected by the bank on behalf of the account owner B. Checks written by the account owner C. Deposits made during the month D. Interest paid by the bank on the bank account balance

B.

Select the items below that would cause the bank statement balance to differ from the depositor's book balance. Multiple choice question. A. Cleared checks, Bank service charge, NSF check B, NSF check, Deposit in transit, interest paid by bank C, NSF check, Outstanding checks, Supplies expenses E. Bank Service charges, Deposit in transit, Cleared checks

B.

What is the purpose of internal controls? Multiple choice question. A.Companies use strong internal controls to guarantee that loss is eliminated. B.Companies create internal controls to protect assets and ensure reliable accounting. C.Internal controls are used by managers as a way to reduce outstanding customer balances. D.Managers utilize internal controls as a basis of employee performance reviews.

B.

Which statement below describes the internal control procedure of insuring assets and bonding key employees? Multiple choice question. A.Insuring assets and bonding employees makes it unlikely that a theft is uncovered. B.Insuring assets against casualty and bonding employees who handle cash, reduces risk of loss. C.Bonding employees and insuring assets increases the risk of loss. D.Insuring assets has a cost that outweighs the risk of loss.

B.

Summarize the internal control procedure of maintaining adequate records by selecting the correct answers below. (Check all that apply.) Multiple select question. A.Bonding employees reduces the risk of loss. B.Dividing responsibility for related transactions reduces the occurrence of recordkeeping errors. C.Keeping detailed records makes it unlikely that assets are lost or stolen without detection. D.Reliable records are a source of information that managers use to monitor activities.

C,D

Choose the items below that would be added to the book balance on a bank reconciliation. (Check all that apply.) Multiple select question. A. Monthly bank service charge B. Monthly check charges assessed by the bank C. Interest earned on the depositor's account D. NSF customer check E. Note collected by the bank for the depositor F. Deposit in transit

C,E

Bonding employees who handle cash is important because it: Multiple choice question. A.helps establish responsibility B.encourages employee theft C.discourages employee theft D.ensures employees will not steal company property

C.

Identify the item below that would be subtracted from the book balance on a bank reconciliation. Multiple choice question. A. Interest earned B. Outstanding checks C. NSF check D. Deposit in transit

C.

Review the items below and determine which would cause an increase in the monthly bank statement balance. Multiple choice question. A. Checks written during the month B. Service fees charged by the bank C. Cash deposits made by the account owner D. A customer's NSF check

C.

Sarbanes-Oxley allows for the following penalties for violators: Multiple choice question. A.Up to 15 years in prison without fines B.Up to 25 years in prison without fines C.Up to 25 years in prison with fines D.Up to 15 years in prison with fines

C.

What is the purpose of internal controls? Multiple choice question. A.Internal controls are used by managers as a way to reduce outstanding customer balances. B.Managers utilize internal controls as a basis of employee performance reviews. C.To help managers know if the business is receiving the assets and services it has paid for. D.Companies use strong internal controls to guarantee that loss is eliminated.

C.

Which of the statements below describes the internal control principle of applying technological controls? Multiple choice question. A. The person in charge of creating technology controls should not be the person who installs the technology control. B. Technological controls for assets should be separated from custody over those assets. C. Technological controls, such as time clocks and cash registers, improve the effectiveness of controls. D. A responsibility for a transaction should be divided between two or more individuals or departments

C.

Responsibility for a task should be clearly established and assigned to: Multiple choice question. A.two people B.one person and their manager C.multiple people D.one person

D.

The formula to compute days' sales uncollected is: Multiple choice question. A. net sales divided by accounts receivable divided by 365 B. accounts receivable times net sales divided by 365 C. net sales divided by accounts receivable times 365 D. accounts receivable divided by net sales times 365

D.

Which of the statements below explains the internal control principle of performing regular and independent reviews? Multiple choice question. A.Responsibility for a task is clearly established and assigned to one person who does a regular review of these tasks to verify accuracy. B. Using preprinted forms and internal documents are designed to be an independent review of transactions. C. Using personal identification scanners are an appropriate regular and independent review. D. Regular reviews of internal control systems are needed to ensure that procedures are followed.

D.

The internal control of ____________ of duties means that the responsibility for a transaction should be divided between two or more individuals.

Seperation

An ID scanner is a type of ________ control.

Tecchnological

True or false: Bank errors must be accounted for in the bank reconciliation. True false question.TrueFalse

True

Explain how depositors can check for errors by completing the following sentence. Error testing includes (a) comparing deposits on the bank statement with deposits in the (accounting/sales/customer) records and (b) comparing (outstanding/canceled) checks on the bank statement with (checks/deposits) recorded in the accounting records.

accounting, canceled, checks

A more secure type of accounting ledger is called _____________ ledger.

blockchain

Describe the internal control principle of separating recordkeeping from custody of assets by completing the following sentence. A person who (identifies/controls/recommends) or has access to an asset must (always/not/) keep that asset's accounting records.

controls, not

The electronic transfer of cash from one party to another is called electronic _________ transfer.

funds

Contrast how a depositor's account is classified by a bank compared to how it is classified by the account owner by completing the following sentence. A depositor's account is a(n) (liability/asset/expense) on the bank's records, but it is a(n) (liability/asset/expense) on the books of the account owner. Because of this, every time the account owner makes a deposit, the bank (debits/credits) the account owner's account.

liability, asset, credit

Show your understanding of what a bank reconciliation is by completing the following sentence. A bank reconciliation is a(n) (entry/charge/report) explaining any differences between the (checking/subsidiary/sales) account balance according to the depositor's records and the balance reported on the (income/financial/bank) statement.

report, checking, bank

Summarize the internal control principle of establishing responsibility by completing the following sentence. Proper internal control means that responsibility for a (task/shortage/sale) is clearly (posted/established/compensated) and assigned to one person.

task, established

True or false: An owner of a small business usually knows if the business is receiving the assets and services the company paid for.

true