Accounting Chapter 8

Jackson Brothers decided to create a petty cash fund. They estimated that $200 would be needed in the fund. Demonstrate the correct journal entry to create the account by choosing the correct action from those below. Multiple choice question. Cash is debited for $200; Petty Cash is credited for $200. Petty Cash is credited for $200; Miscellaneous Expense is debited for $200. Miscellaneous Expense is debited for $200; Cash is credited for $200. Petty Cash is debited for $200; Cash is credited for $200.

Petty Cash is debited for $200; Cash is credited for $200.

Determine which of the statements below describes a petty cash receipt. (Check all that apply.) Multiple select question. A petty cash receipt is rarely prenumbered. All petty cash receipts are turned in to the company cashier at the end of each day. Any person wishing to withdraw funds from a petty cash fund must complete a petty cash receipt. A petty cash receipt is sometimes called a petty cash ticket. A petty cash receipt will have a signature line for the person receiving a payment from the fund. The petty cashier must present all paid receipts to the company cashier in order to replenish the fund.

Any person wishing to withdraw funds from a petty cash fund must complete a petty cash receipt. A petty cash receipt is sometimes called a petty cash ticket. A petty cash receipt will have a signature line for the person receiving a payment from the fund. The petty cashier must present all paid receipts to the company cashier in order to replenish the fund.

Determine which of the items below would show up on a monthly bank statement. (Check all that apply.) Multiple select question. Beginning period balance in the depositor's account Ending period balance in the account Deposits and other increases to the depositor's account during the period Withdrawals and other increases to the account during the period Withdrawals and other decreases to the account during the period Checks that the company has written, but have not cleared the bank yet

Beginning period balance in the depositor's account Ending period balance in the account Deposits and other increases to the depositor's account during the period Withdrawals and other decreases to the account during the period

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.

Blank 1: task Blank 2: established

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below. (Check all that apply.) Multiple select question. Cash payments are made by check. Bills should be paid immediately. Handling cash is separate from recordkeeping of cash. Cash receipts are promptly deposited in a bank. Excess cash should be left in the bank to maintain liquidity.

Cash payments are made by check. Handling cash is separate from recordkeeping of cash. Cash receipts are promptly deposited in a bank.

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

Note collected by the bank for the depositor Interest earned on the depositor's account

Review the following statements regarding a petty cash fund used in a business and select the one that is correct. Multiple choice question. A check written against the fund is cashed when the fund is replenished. The cashier of a fund will write checks for small payments like postage, supplies and deliveries. A petty cash fund is controlled by top management. Only the petty cashier is responsible for paying cash from the fund.

Only the petty cashier is responsible for paying cash from the fund.

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

Perform regular and independent reviews. Maintain adequate records. Insure assets. Establish responsibilities. Separate recordkeeping from custody of assets. Apply technological controls.

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

Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft. Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry. Technology has reduced the number of processing errors.

Determine which of the statements below is true regarding the adjusted bank balance and the adjusted book balance on a bank reconciliation. Multiple choice question. The cash balance on the bank statement must equal the cash balance in the general ledger before the bank reconciliation. The adjusted bank balance must equal the adjusted cash balance per books. The adjusted book balance will rarely equal the adjusted bank balance. The adjusted balance per books must equal the cash balance printed on the bank statement.

The adjusted bank balance must equal the adjusted cash balance per books.

A cash register tape reflected total sales equaling $100, but the cash in the cash register drawer equaled $105. Review the statements below and determine which is correct regarding this discrepancy. Multiple select question. The extra $5 collected will be treated as a miscellaneous revenue. The Sales account will be credited for $100. The Sales account will be credited for $105. The Cash Over and Short account will be debited for $5. The Cash account will be debited for $105. The Cash Over and Short account will be credited for $5.

The extra $5 collected will be treated as a miscellaneous revenue. The Sales account will be credited for $100. The Cash account will be debited for $105. The Cash Over and Short account will be credited for $5.

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

monitor company activities

ach of the following are types of technological impacts related to internal control: (Check all that apply.) Multiple select question. more extensive testing of records establish responsibilities reduced processing errors separation of duties maintaining adequate records new evidence of processing

more extensive testing of records reduced processing errors separation of duties new evidence of processing

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

A bank account is a record set up by a bank for a customer. To withdraw money from an account, the depositor can use a check. Each bank deposit is supported by a deposit ticket.

Which of the answers below correctly describe the Cash Over and Short account? (Check all that apply.) Multiple select question. A debit balance reflects an expense. It is an income statement account. A debit balance reflects a revenue. It records the effects of cash overages and cash shortages. It is an asset account.

A debit balance reflects an expense. It is an income statement account. It records the effects of cash overages and cash shortages.

Human (error/fraud) is related to misjudgment or confusion. Human (error/fraud) involves intent to defeat internal controls for personal gain.

Blank 1: error Blank 2: fraud

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

Cash deposits made by the account owner

At the end of the month, Brown Co.'s petty cash fund contains $4 in cash and receipts for postage of $50 and delivery expenses of $46. It started out with $100 in the fund at the beginning of the month. Brown Co.'s journal entry to replenish the fund would include which of the following? Multiple choice question. Petty Cash is credited for $96. Cash is credited for $96. Cash is debited for $96. Petty Cash is debited for $96.

Cash is credited for $96.

Define what liquidity means by completing the following sentence. Liquidity refers to a company's ability to pay for its liabilities.

Current

The cash in a cash register equaled $100, but the record of cash receipts/sales equaled $102. Determine which of the following entries is correct to record cash sales and the shortage. Multiple choice question. Debit Cash $102; credit Cash Over and Short $2; and credit Sales $100. Debit Cash $102 and credit Sales $102. Debit Cash $100; credit Cash Over and Short $2; and credit Sales $102. Debit Cash $100; debit Cash Over and Short $2; and credit Sales $102.

Debit Cash $100; debit Cash Over and Short $2; and credit Sales $102.

Jackson Co. needs to replenish its petty cash fund. Currently, it contains $11 in cash and receipts for supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate the journal entry to replenish the account by choosing the correct actions from those below. (Check all that apply.) Multiple select question. Delivery Expense is debited for $49. Cash is credited for $89. Supplies Expense is debited for $40. Petty Cash is debited for $89. Petty Cash is credited for $89.

Delivery Expense is debited for $49. Cash is credited for $89. Supplies Expense is debited for $40.

Determine which of the statement(s) are correct if a Petty Cash account is not replenished at the end of the accounting period. (Check all that apply.) Multiple select question. Expenses would not be recorded in the period in which they were incurred. The income statement would reflect a net income amount that was too high. The balance sheet would show an overstated cash asset. The balance sheet would show an understated cash asset.

Expenses would not be recorded in the period in which they were incurred. The income statement would reflect a net income amount that was too high. The balance sheet would show an overstated cash asset.

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

Interest earned

Review the following statements and select the ones which accurately describe a Petty Cash fund. Select all answers which apply. Multiple select question. It is an asset reported on the balance sheet. It is an expense reported on the income statement. It is established to pay for small payments like low-cost supplies and shipping fees, etc. It is an account used to record small sales amounts. Need help? Review these concept resources.

It is an asset reported on the balance sheet. It is established to pay for small payments like low-cost supplies and shipping fees, etc.

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

Monthly bank service charge NSF customer check Monthly check charges assessed by the bank

Identify which of the items below are goals of good cash management. (Check all that apply.) Multiple select question. Plan cash receipts to meet cash payments when due. Pay all bills immediately when received. Keep a maximum level of cash available to pay for emergencies that develop Keep a minimum level of cash necessary to operate.

Plan cash receipts to meet cash payments when due. Keep a minimum level of cash necessary to operate.

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

Reliable records are a source of information that managers use to monitor activities. Keeping detailed records makes it unlikely that assets are lost or stolen without detection.

Determine the statements below that are true regarding why a bank reconciliation is used. Multiple select question. Timing differences between the bank statement and the depositor's records are reflected in the bank reconciliation. The Cash account balance in the general ledger is accurate, but the bank statement balance is not. The bank reconciliation is useful in proving the accuracy of the Cash account in the general ledger. 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.

Timing differences between the bank statement and the depositor's records are reflected in the bank reconciliation. The bank reconciliation is useful in proving the accuracy of the Cash account in the general ledger. 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.

The adjusted book balance and the adjusted bank balance must equal each other on a bank reconciliation; otherwise, the cash account is not reconciled. True false question.TrueFalse

True

All of the following describe blockchain: (Check all that apply.) Multiple select question. blockchain is continuously and simultaneously updated and verified blockchain cannot verify and facilitate Bitcoin transactions blockchain is a less secure type of accounting ledger blockchain makes it more difficult for the ledger to be modified without a detailed record of changes

blockchain is continuously and simultaneously updated and verified blockchain makes it more difficult for the ledger to be modified without a detailed record of changes

A good internal control to protect cash is to make cash payments using Multiple choice question. checks cash petty cash checks or cash

checks

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

effectiveness/aMaintain adequate records. Divide responsibility for related transactions. Establish responsibilities. Perform regular and independent reviews.ccuracy

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

one person

Which of the following are correct regarding why management uses internal controls? Multiple select question. increase revenues. reduce vendor payables. protect assets. ensure reliable accounting. uphold company policies. promote efficient operations.

protect assets. ensure reliable accounting. uphold company policies. promote efficient operations.

The triple threat of fraud involves: (Check all that apply.) Multiple select question. rationalization mistakes pressure error opportunity

rationalization pressure opportunity

What is the purpose of internal controls? Multiple choice question. to guarantee that loss is eliminated to reduce outstanding customer balances as a basis of employee performance reviews to protect assets and ensure reliable accounting

to protect assets and ensure reliable accounting

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.

Blank 1: report Blank 2: checking Blank 3: bank

Recall the preparation of a bank reconciliation by selecting the correct items below. (Check all that apply.)

Compute the adjusted (depositor's) book balance. Compute the adjusted bank balance. Subtract any outstanding checks from the bank balance. Add deposits in transit to the bank balance.

Recall the preparation of a bank reconciliation by selecting the correct items below. (Check all that apply.) Multiple select question. Compute the adjusted bank balance. Add deposits in transit to the bank balance. Subtract any outstanding checks from the bank balance. Compute the adjusted (depositor's) book balance. Add the deposits in transit to the book balance. Add any unrecorded bank fees to the bank balance.

Compute the adjusted bank balance. Add deposits in transit to the bank balance. Subtract any outstanding checks from the bank balance. Compute the adjusted (depositor's) book balance.

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

Deposits made during the month Interest paid by the bank on the bank account balance A note collected by the bank on behalf of the account owner

Which of the statements below describe the goals and principles of cash management? (Check all that apply.) Multiple select question. Keep a minimum level of cash necessary to operate. Encourage quick payment of liabilities. Reason: Delay payment of liabilities until the last possible moment. Plan cash receipts to meet cash payments when due. Money should be spent only when it is available. Excess cash should be kept on hand to pay bills. Reason: Excess cash should be invested. Encourage quick collection of receivables.

Keep a minimum level of cash necessary to operate. Plan cash receipts to meet cash payments when due. Money should be spent only when it is available. Encourage quick collection of receivables.

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

Keeping detailed records makes it unlikely that assets are lost or stolen without detection. Reliable records are a source of information that managers use to monitor activities.

Which statement below explains why liquid assets are needed in a business? Multiple choice question. Liquid assets are easier to protect and control. The maturity value of liquid assets is sensitive to interest rate changes. Liquid assets must be available to pay current liabilities. Liquid assets are purchased because they take longer to mature.

Liquid assets must be available to pay current liabilities.

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

NSF check

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

NSF check, Deposit in transit, interest paid by bank

XYZ Co. decided to create a petty cash fund. They estimated that $100 would be needed in the fund. Demonstrate the correct journal entry to create the account by choosing the correct action from those below. Multiple choice question. Petty Cash is debited for $100. Cash is debited for $100. Petty Cash is credited for $100. Miscellaneous Expense is debited for $100.

Petty Cash is debited for $100.

Determine which of the statements below is correct regarding information reflected on a monthly bank statement. Multiple choice question. Withdrawals by the company will be listed as increases to the bank account on the bank statement. Deposits that the company makes will be listed as debits to the bank account on the bank statement. The information on the bank statement reflects the customer's records. The information on the bank statement reflects the bank's records of the depositor's account.

The information on the bank statement reflects the bank's records of the depositor's account.