Acct Chapter 4

11. __________ consists of procedures designed to protect assets and ensure the accuracy of accounting records. a. Analysis and adjustment b. Closing the books c. Retrieval from accounting database d. Internal control

D

19 Which of the following is NOT a problem that must be addressed in the internal controls for e-commerce? A) Trojans B) Stolen credit card numbers C) Phishing expeditions D) Separation of duties

D

4. The bank recorded a $2,000 deposit as $200. How would this information be included on the bank reconciliation? A) A deduction on the bank side B) A deduction on the book side C) An addition on the book side D) An addition on the bank side

D

6. A check of $75 deposited by a company was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation? A) A deduction on the bank side B) An addition on the bank side C) An addition on the book side D) A deduction on the book side

D

24 A company received a bank statement with a balance of $5,350. Reconciling items included a bookkeeper error of $200 (a $300 check recorded as $500), two outstanding checks totaling $720, a service charge of $15, a deposit in transit of $180, and interest revenue of $21. What is the adjusted bank balance? A) $4,636 B) $4,610 C) $5,016 D) $4,810

D $5,350 - $720 + $180 = 4,810

13. Which of the following demonstrates a poor internal control procedure? The bookkeeper makes cash deposits and records journal entries related to cash, while the treasurer prepares the bank reconciliation. The president, who does no bookkeeping, prepares the bank reconciliation each month. The treasurer signs all checks after the bookkeeper prepares the supporting documents. One bookkeeper prepares cash deposits and the other bookkeeper enters the collections in the journal and ledger.

A

14. Which is NOT a provision of Sarbanes-Oxley? A) Accounting firms are allowed to provide both audit services and a full range of consulting services to their public company clients. B) Those who commit securities fraud may be sentenced to 25 years in prison. C) Public companies must issue an internal control report evaluated by an outside auditor. D) Auditors of public companies are under the scrutiny of the Public Company Accounting Oversight Board.

A

23. Which of the following is TRUE about a bank reconciliation? A) A bank reconciliation should not be prepared by an employee who handles cash transactions. B) A bank reconciliation cannot be prepared with online banking. C) A bank reconciliation is a financial statement. D) A bank reconciliation guarantees that no errors have been made.

A

27. In reconciling a bank statement, the bank balance is $1,800 and the checkbook balance is $1,205. Which of the following is the MOST probable reason why the bank balance is larger than the book balance? A) There are outstanding checks. B) The bank has deducted certain amounts for bank service charges. C) A deposit in transit was made at the end of the month. D) The company erroneously recorded a check for an amount less than actual.

A

10. A company has a petty cash fund amount of $200. When replenished, it has petty cash receipts of $15 for gas expense, $23 for postage expense, $18 for supplies expense and $12 for miscellaneous expenses. In the journal entry, Cash would be credited for: A) $68. B) $132. C) $200. D) $42.

A 15+23+18+12

1. Which of the following is an appropriate reconciling item to the balance per bank in a bank reconciliation? a. Bank service charge. b. Deposit in transit. c. Bank interest. d. Chargeback for NSF check.

B

20. Which of the following describes collusion? A) When bogus websites acquire passwords and account numbers fraudulently B) When two or more people cooperate together to defraud a company C) When one employee steals from a company D) When a company defrauds its suppliers by making false claims

B

26 Which of the following would be included in a journal to record an NSF check? A) A debit to Accounts payable and a credit to Cash B) A debit to Accounts receivable and a credit to Cash C) A debit to Cash and a credit to Accounts receivable D) A debit to Miscellaneous expense and a credit to Cash

B

3. A check was written by a business for $205, but recorded in the cash payments journal as $502. How would this error be included on the bank reconciliation? A) A deduction on the bank side B) An addition on the book side C) An addition on the bank side D) A deduction on the book side

B

9. A company's cash ledger shows an ending balance of $5,000. Reconciling items included a bookkeeper error of $200 (a $300 check recorded as $500), two outstanding checks totaling $720, a service charge of $15, a deposit in transit of $180, and interest revenue of $21. What is the adjusted book balance? A) $5,194 B) $4,486 C) $5,206 D) $4,806

C ** 5000+200-15+21

28. The following information is available for Andersen Company for the month ending June 30, 2008. • Balance per the bank statement is $10,241.43. • Balance per books is $9,745.06. • Check #506 for $1,948.52 and check #510 for $1,800.25 were not shown on the June 30 bank statement. • A deposit in transit of $5,113.40 had not been received by the bank when the bank statement was generated. • A bank debit memo indicated an NSF check in the amount of $79 written by Bruce Garrett to Andersen Company on June 13. • A bank credit memo indicated a note collected by the bank of $1,900 and interest revenue of $75 on June 20. • The bank statement indicated service charges of $35. What is the adjusted bank balance? A) $8,876.80 B) $11,606.06 C) $19,103.60 D) $8,152.43

B $10,241.43 + $5,113.40 - $1,948.52 - $1,800.25 = $11,606

29. Please refer to the following information needed to reconcile the cash balance for Woods Paper Products. • A deposit of $5,794.62 is in transit. • Outstanding checks total $1,533.25. • The book balance is $5,695.62. • The bookkeeper recorded a $1,524.00 check as $15,240 in payment of the current month's rent. • The bank balance at February 28, 2008 was $16,500.25. • A deposit of $300 was credited by the bank for $3,000. • A customer's check for $1,280 was returned for nonsufficient funds. • The bank service charge is $70. What was the adjusted bank balance? A) $6,472.38 B) $18,061.62 C) $9,355.63 D) $14,938.88

B 16,500.25 + $5,794.62 - $1,533.25 - $2,700.00 = $18,061.62

15. Which of the following statements about internal control is FALSE? A) Internal auditors insure that employees follow company policies. B) The treasurer is the officer ultimately responsible for writing of checks. C) External auditors are employees of the company. D) The control environment is known as the "tone at the top."

C

16. Which of the following items will NOT appear on the book side of the reconciliation? A) The bank collected a note receivable of $1,000. B) A nonsufficient funds check of $75 was returned to the bank. C) A deposit was in transit. D) The bank charged a service fee of $20.

C

17. Which of the following is FALSE? a. Under the Sarbanes-Oxley Act, violators may be sentenced to prison for securities fraud. b. Under the Sarbanes-Oxley Act, accounting firms are prohibited from both auditing a client and also providing certain consulting services for the same client. c. Under the Sarbanes-Oxley Act, the outside auditor must issue an internal control report. d. Separation of duties limits fraud and promotes the accuracy of the account records.

C

18,. Which of the following is a requirement of the Sarbanes-Oxley Act? A) The outside auditor must issue an internal control report for each public company. B) The Public Company Oversight Board must conduct audits of public companies. C) Accounting firms may not both audit a public client and also provide certain consulting services for the same client. D) The Public Company Oversight Board must create new accounting standards.

C

2. Which of the following items will NOT appear on the book side of the reconciliation? A) The bank collected a note receivable of $1,000. B) A nonsufficient funds check of $75 was returned to the bank. C) A deposit was in transit. D) The bank charged a service fee of $20.

C

21 Which of the following items will NOT appear on the book side of the reconciliation? A) The bank collected a note receivable of $1,000. B) A nonsufficient funds check of $75 was returned to the bank. C) A deposit outstanding. D) The bank charged a service fee of $20.

C

22) Check Number 6135 for $576 was incorrectly entered as $657. Which adjustment needs to be made? A) Decrease the book balance. B) Decrease the bank statement balance. C) Increase the book balance. D) Increase the bank statement balance.

C

5. The bank collected a note receivable of $1,000. How would this information be included on the bank reconciliation? A) An addition on the bank side B) A deduction on the book side C) An addition on the book side D) A deduction on the bank side

C

7. The bank charged a service fee of $20. How would this information be included on the bank reconciliation? A) A deduction on the bank side B) An addition on the book side C) A deduction on the book side D) An addition on the bank side

C

Which asset is most susceptible to theft? Inventory Micro-computers Cash Equipment

C

25.A company's cash ledger shows an ending balance of $5,000. Reconciling items included a bookkeeper error of $200 (a $300 check recorded as $500), two outstanding checks totaling $720, a service charge of $15, a deposit in transit of $180, and interest revenue of $21. What is the adjusted book balance? A) $5,194 B) $4,486 C) $5,206 D) $4,806

C $5,000 + $200 - $15 + $21 = $5,206

8. A company received a bank statement showing a balance of $62,300. Reconciling items were outstanding checks of $1,450 and a deposit in transit of $8,500. What is the company's adjusted bank balance? A) $72,250 B) $60,850 C) $69,350 D) $70,850

C * 62300-1450+8500