acct final 2110 CH4

Upon completion of the bank reconciliation, the accounting records may require some adjustment. Which of the following would NOT require an adjusting entry? a.Deposits in transit b.Error in recording a canceled check in the company's records c.Interest earned and deposited by the bank to the company's account d.A check returned to the company marked NSF

a.Deposits in transit

Urban Enterprises established a petty cash fund for $100. At the end of the month, the following receipts were presented by the petty cash custodian for reimbursement: U.S. Post Office (postage): $12 FedEx (package delivery): $36 Aqua H2O (water delivery): $48 The cash on hand in the petty cash fund is $5. The journal entry to record replenishment of the petty cash fund will include a.a credit to Cash Over and Short for $1. b.debits to appropriate expense accounts totaling $95. c.a credit to Cash for $96. d.a debit to Cash Over and Short for $1.

a.a credit to Cash Over and Short for $1.

Control activities are the policies and procedures top management establishes to help ensure that its objectives are met. Which of the following is NOT one of the control activities? a.Clearly defined authority and responsibility (authority) b.Adequate information communicated (information) c.Safeguards over assets and records (safeguarding) d.Segregation of duties (separation)

b.Adequate information communicated (information)

Except in very small businesses, top management delegates responsibility for engaging in business activities and recording their effects in the accounting system to other managers and employees. Which of the following is NOT management's desire? a.Ensure that employees operate within the scope of the assigned responsibility b.Ensure the internal control system is put in place by external auditors c.Ensure that employees act for the good of the business d.None of these choices are correct.

b.Ensure the internal control system is put in place by external auditors

Which of the following is true of a credit memo issued by a bank? a.It might result if the bank makes a prearranged deduction from the business' account to pay a utility bill. b.If it has not yet been recorded by the business, the bank balance will be larger than the cash account balance. c.It is an asset to the bank. d.It is recorded on a company's books by crediting the cash account.

b.If it has not yet been recorded by the business, the bank balance will be larger than the cash account balance.

Operations objectives ensure the effectiveness and efficiency of the entity's operations. This includes which of the following? a.Financial performance goals b.Safeguarding assets against loss and financial performance goals c.Safeguarding assets against loss d.None of these choices are correct.

b.Safeguarding assets against loss and financial performance goals

Urban Enterprises established a petty cash fund for $100. At the end of the month, the following receipts were presented by the petty cash custodian for reimbursement: U.S. Post Office (postage): $12 FedEx (package delivery): $36 Aqua H2O (water delivery): $48 The journal entry to record replenishment of the petty cash fund will include a a.credit to Petty Cash for $96. b.credit to Cash for $96. c.debit to Cash for $96. d.debit to Petty Cash for $96.

b.credit to Cash for $96.

All of the following are strategic risks EXCEPT a.customers. b.employees. c.competitors. d.the economic environment.

b.employees.

Cash is reported on both the balance sheet and the a.income statement. b.statement of cash flows. c.statement of stockholders' equity. d.statement of retained earnings.

b.statement of cash flows.

There are five elements of internal control. Which of the following is NOT one of these elements? a.Monitoring b.Control activities c.Quantifying and reporting d.Risk assessment

c.Quantifying and reporting

Bank reconciliations often identify differences between the cash account and the bank statement. Which of the following is NOT a reason for the difference? a.Transactions were recorded by the business but not recorded by the bank in time to appear on the current bank statement. b.Transactions were recorded by the bank but not yet recorded by the business. c.Transactions were recorded by both the bank and the business. d.Errors were made in recording transactions on either set of records.

c.Transactions were recorded by both the bank and the business.

When the petty cash custodian submits receipts for replenishment of the petty cash fund, the resulting journal entry includes a a.debit to Petty Cash. b.credit to Petty Cash. c.credit to Cash. d.debit to Cash.

c.credit to Cash.

The stage of the operating cycle and cash management that focuses on speeding up collection of receivables is a.buying inventory. b.paying for inventory. c.selling inventory. d.None of these choices are correct.

c.selling inventory.

The Sarbanes-Oxley Act of 2002 requires top management of publicly traded corporations to ensure the reliability of financial statements. The Act requires all of the following EXCEPT a.that management produce an internal control report. b.that management assess the effectiveness of internal controls. c.that the internal control report acknowledge that management is allowed to deny knowledge or understanding of any deceptive financial reporting. d.that the internal control report acknowledge that management is responsible for establishing and maintaining an adequate internal control system.

c.that the internal control report acknowledge that management is allowed to deny knowledge or understanding of any deceptive financial reporting.

The following items were identified during the June 30 bank reconciliation: Company's balance according to the general ledger: $18,750 Outstanding checks:$3,400 Deposit in transit: $1,200 Bank service charge: $25 Credit memo for receivable collected by the bank: $500 A customer's NSF check returned by the bank: $100 What is the increase (decrease) to cash resulting from adjusting entries after the bank reconciliation? a.$(125) b.$(2,200) c.$500 d.$375

d.$375

Internal control systems are designed to provide reasonable assurance that the company's objectives are being met in a.reporting objectives. b.compliance objectives. c.operations objectives. d.All of these choices are correct.

d.All of these choices are correct.

Management's reporting objectives apply to a.internal financial reporting. b.external financial reporting. c.nonfinancial reporting. d.All of these choices are correct.

d.All of these choices are correct.

Which of the following activities is part of the operating cycle of a business? a.Receiving cash from the owners of the business b.Purchasing building and equipment for the business c.Repaying creditors the principal loaned to the business d.Collecting cash from customers

d.Collecting cash from customers

Bank reconciliations often identify differences between the cash account and the bank statement. Which of the following is NOT a reason for the difference? a.Transactions were recorded by the business but not recorded by the bank in time to appear on the current bank statement. b.Errors were made in recording transactions on either set of records. c.Transactions were recorded by the bank but not yet recorded by the business. d.Transactions were recorded by both the bank and the business.

d.Transactions were recorded by both the bank and the business.

Cash Over and Short with a debit balance is generally reported on the a.income statement as part of other revenues. b.balance sheet as part of petty cash. c.balance sheet as part of liabilities. d.income statement as part of other expenses.

d.income statement as part of other expenses.

The balance sheet typically reports the amount of cash and equivalents available a.at the beginning of the period. b.on average for the period. c.in the next year or operating cycle, whichever is longer. d.on the balance sheet date.

d.on the balance sheet date.