FA - Chapter 8 (Flash Cards)

32. Which of the following documents would not originate with the purchasing company? a. Purchase order b. Receiving report c. Check d. Invoice

d. Invoice

18. For each of the items below, use the following letters to identify the correct treatment in a bank reconciliation. A = Add to bal per bank C = Add to bal per books B = Deduct from bal per bankD = Deduct from bal per books ____ 1. Interest income ____ 2. Outstanding checks ____ 3. Check written for $89, but $98 recorded in books ____ 4. Customer's NSF check ____ 5. Note receivable collected by bank ____ 6. Deposit made for $70, but $700 recorded in books ____ 7. Bank check-printing charge ____ 8. Check written for $52, but $25 recorded in books

(C) 1. Interest income (B) 2. Outstanding checks (C) 3. Check written for $89, but $98 recorded in books (D) 4. Customer's NSF check (C) 5. Note receivable collected by bank (D) 6. Deposit made for $70, but $700 recorded in books (D) 7. Bank check-printing charge (D) 8. Check written for $52, but $25 recorded in books (A) 9. Deposits in transit (D) 10. Bank fee for collection on note receivable

1. Under a perpetual inventory system, is it necessary to take a physical inventory at the end of the period? Why or why not?

A physical inventory must be taken to determine whether or not the actual quantity of goods matches the quantity contained in the perpetual inventory record. Discrepancies could arise as a result of error or theft.

8. A company establishes a $100 petty cash fund. The fund is replenished in the amount of $90, after petty cash vouchers of $40 for postage, $34 for donations, and $27 for meals had accumulated. Was there a cash shortage, overage, or neither? (State amount if overage or shortage.)

ANS: $11 overage

9. A company establishes a $150 petty cash fund. The fund is replenished in the amount of $136, after petty cash vouchers of $66 for transportation, $44 for supplies, and $22 for postage had accumulated. Was there a cash shortage, overage, or neither? (State amount if overage or shortage.)

ANS: $4 shortage

11. The Report of Management in Townsgate Company's annual report states, "Management has established a system of internal controls to provide reasonable assurance that assets are maintained and accounted for in accordance with its policies and that transactions are recorded accurately on the company's books and records." Name five control activities Townsgate could and probably does implement.

ANS: Any of the following control activities would be used by Townsgate's management: a. Authorization of transactions and activities b. Recording of all transactions c. Design and use of adequate documents d. Permit access to assets only with management's authorization e. Record must be checked against the assets by some other responsible person f. Separation of functional duties g. Sound personnel procedures must be followed

12. Otto Sounds, Inc., a specialty retailer of customized audio systems for automobiles, installed a perpetual inventory system in the second quarter of 20x3. The new system allowed the firm to adjust its merchandise inventories to sales patterns more effectively and to prepare monthly financial statements. Although the system led to an improvement in sales and income, the gross margin on the monthly income statements was falling below both management's expectations and the industry average. At the end of 20x8, a physical inventory revealed that actual merchandise inventory was considerably lower than the perpetual inventory records indicated. The merchandise inventories of some stores were off more than others, but all had deficiencies. What probably caused these losses and what steps could be taken to prevent them in the future?

ANS: The merchandise inventory losses probably were due to shoplifting and embezzlement. Management must carefully review its controls at the individual stores and install a system that will protect its merchandise inventory from these forms of theft. This goal can be accomplished through an internal control structure that creates an environment that encourages compliance with a company's policies, a good accounting system, and specific activities designed to safeguard the merchandise inventory.

25. The following information pertains to the bank transactions of Crawford Company: a. Cash on the books as of September 30 was $499. Cash as shown on the bank statement for the same date was $1,330. b. A deposit of $160, representing cash receipts of September 30, did not appear on the bank statement. c. Outstanding checks totaled $240. d. Bank service charges for September amounted to $9. e. The bank collected for Crawford Company $840 (which includes $40 interest) on a note left for collection. f. An NSF check for $80 from a customer, Jack Betz, was returned with the statement. 1. Prepare a bank reconciliation for Crawford Company as of September 30. 2. State the amount of cash that would appear on the balance sheet as of September 30.

Balance per bank, September 30 $1,330 Add deposit in transit 160 $1,490 Less outstanding checks 240 Adjusted bank balance, September 30 $1,250 Balance per books, September 30 $ 499 Add: Note collected by bank $800 Interest on note collected by bank 40 840 $1,339 Less: Bank service charges $ 9 NSF check of Jack Betz 80 89 Adjusted book balance, September 30 $1,250

16. Why do businesses need to keep some currency on hand?

Businesses need to keep some currency on hand to provide money for cash registers in order to make change; to pay small, spur-of-the-moment expenses such as coffee cups for the break room; or to provide money in advance to salespersons for their travel expenses.

14. The Sharon Advocate has established a petty cash fund for small expenditures. In the journal provided, prepare the entries for the following transactions. (Omit explanations.) Apr. 5: Established a $250 petty cash fund with cash withdrawn from company checking account. Apr 30: The petty cash fund has $12 remaining and is replenished. Expenditures for April were $75 for supplies, $60 for meals, $80 for postage, and $25 for freight-in. May 31: The petty cash fund has $24 remaining and is replenished. Expenditures for May were $70 for postage, $45 for meals, $80 for supplies, and $30 for freight-in.

Date Description Debit Credit April 5 Petty Cash 250 Cash 250 30 Supplies 75 Meals Expense 60 Postage Expense 80 Freight-In 25 Cash 238 Cash Short or Over 2 May 31 Postage Expense 70 Meals Expense 45 Supplies 80 Freight-In 30 Cash Short or Over 1 Cash 226

13. Magnolia Company has established a petty cash fund for small expenditures. In the journal provided, prepare the entries for the following transactions. (Omit explanations.) June 5: Established a $200 petty cash fund with cash withdrawn from company checking account. June 30: The petty cash fund has $10 remaining and is replenished. June 30: Expenditures for June were $60 for supplies, $50 for meals, $65 for postage, and $20 for freight-in. July 31: The petty cash fund has $20 remaining and is replenished. Expenditures for July were $55 for postage, $40 for meals, $56 for supplies, and $25 for freight-in.

Date Description Debit Credit June 5 Petty Cash 200 Cash 200 30 Supplies 60 Meals Expense 50 Postage Expense 65 Freight-In 20 Cash 190 Cash Short or Over 5 July 31 Postage Expense 55 Meals Expense 40 Supplies 56 Freight-In 25 Cash Short or Over 4 Cash 180

7. The petty cash fund of Landis Company appeared as follows on May 31: Cash on hand $24 Petty cash vouchers Postage $30 Office supplies $6 $36 $60 Prepare the entries in journal form for the following (a) on May 1 to establish the fund and (b) on May 31 to replenish the fund. Note: Omit explanations

General Journal Page 1 Date Descr PRef. Debit Credit a. May 1 Petty Cash 60 Cash 60 b. 31 Postage Expense 30 Office Supplies 6 Cash 36

10. An accountant is responsible for the following activities: (1) receiving all cash; (2) maintaining the general ledger; (3) maintaining the accounts receivable subsidiary ledger that includes the individual records of each customer; (4) maintaining the journals for recording sales, purchases, and cash receipts; and (5) preparing monthly statements to be sent to customers. As a service to customers and employees, the company allows the accountant to cash checks of up to $75 with money from the cash receipts. When deposits are made, the checks are included in place of the cash receipts. What weaknesses in internal control exist in this system?

In this case, the principle of separation of duties is violated. Because the accountant collects the cash and keeps the records for accounts receivable, he or she could divert incoming checks from customers and cash the checks out of cash collections. At the end of the month, when statements are mailed to customers, the accountant could destroy the statements to the customers whose checks he or she had embezzled. The customers then would believe that the company had received the payments because they would not receive a subsequent statement. In addition, there is no sign of any outside verification. Furthermore, allowing checks to replace cash receipts does not provide for consistent documentation of the firm's transactions.

15. On a balance sheet, what items normally are included in Cash?

The items normally included in Cash are coins and currency on hand, checks and money orders from customers, and deposits in bank accounts.

2. Why is the separation of duties an important control activity in a good system of internal control?

When only one employee is responsible for processing a transaction from beginning to end, it is likely that an error or theft by that employee would go unnoticed. However, when two or more employees are involved in the process, an error by an employee, whether honest or not, probably would be detected by one of the other employees.

6. Indicate the letter of where each of the following documents would be prepared and the letter of where it would be sent. a. Requesting department b. Purchasing department c. Receiving department d. Accounting department e. Treasurer f. Vendor _____ 1) Purchase requisition _____ 2) Receiving report _____ 3) Invoice _____ 4) Check authorization _____ 5) Check

Where Prepared // Where Sent 1) Purchase req (A) Req Dept (B) Purch Dep 2) Receiving rep (B) Red Dept (D) Acctg Dept 3) Invoice (F) Vendor (D) Acctg Dept 4) Check auth (D) Acctg Dep (E) Treasurer 5) Check (E) Treasurer (F) Vendor

17. Compute the correct amount for each letter in the following table: Case 1 Case 2 Case 3 Case 4 Bal per bank statement $ a $17,800 $630 $3,980 Deposits in transit 1,200 b 100 250 Outstanding checks 3,000 2,000 c 150 Bal per books 6,900 18,800 450 d

a. $8,700 b. $3,000 c. $280 d. $4,080

3. Indicate whether each business practice listed below strengthens (S) or weakens (W) a company's system of internal control. _____ a. Bonding of employees _____ b. Limiting the number of people who have access to cash _____ c. Combining the recordkeeping and custodianship functions _____ d. Making all payments with cash _____ e. Keeping rotation of key employees to a minimum _____ f. Using pre-numbered sales tickets

a. Bonding of employees (Strengthens) b. Limiting the number of people who have access to cash (Strengthens) c. Combining the recordkeeping and custodianship functions (Weakens) d. Making all payments with cash (Weakens) e. Keeping rotation of key employees to a minimum (Weakens) f. Using pre-numbered sales tickets (Strengthens)

55. An NSF check should appear in which section of the bank reconciliation? a. Deduction from the balance per books b. Deduction from the balance per bank c. Addition to the balance per books d. Addition to the balance per bank

a. Deduction from the balance per books

4. Indicate whether each business practice listed below strengthens (S) or weakens (W) a company's system of internal control. _____ a. Discouraging employees from taking paid vacations _____ b. Using banking facilities as much as possible _____ c. Having employees bonded _____ d. Conducting surprise audits of cash on hand _____ e. Having one person open the mail _____ f. Having the receiving department compare goods received with goods ordered

a. Discouraging employees from taking paid vacations (Weakens) b. Using banking facilities as much as possible (Strengthens) c. Having employees bonded (Strengthens) d. Conducting surprise audits of cash on hand (Strengthens) e. Having one person open the mail (Weakens) f. Having the receiving department compare goods received with goods ordered (Weakens)

5. For each description below, state which document is being described. a. Document issued to permit the treasurer to make a payment b. Bill sent by the vendor to the purchaser c. Written request prepared by a department asking the purchasing department to make a purchase d. Document accompanying money put in the bank e. Document describing items in a shipment of goods delivered f. Document sent to a vendor requesting shipment of goods

a. Document issued to permit the treasurer to make a payment // a. Check authorization b. Bill sent by the vendor to the purchaser //b. Invoice c. Written request prepared by a department asking the purchasing department to make a purchase //c. Purchase requisition d. Document accompanying money put in the bank // d. Deposit ticket e. Document describing items in a shipment of goods delivered // e. Receiving report f. Document sent to a vendor requesting shipment of goods // f. Purchase order

7. Which of the following is not a primary concern of internal control? a. Fairness of financial statements b. Accuracy of accounting records c. Safeguarding assets d. Efficiency of company operations

a. Fairness of financial statements

50. Which of the following would not be considered cash? a. Postage stamps b. Checks from customers c. Money orders from customers d. Bank deposits

a. Postage stamps

49. The most liquid of all assets is a. cash. b. inventory. c. marketable securities. d. accounts receivable.

a. cash.

4. Under the perpetual inventory system, the entry to recognize inventory losses would contain a a. debit to Cost of Goods Sold. b. debit to Merchandise Inventory. c. credit to Gross Margin. d. credit to Cash.

a. debit to Cost of Goods Sold.

46. Use the following information regarding Sanders Company to answer the question below. 1. Established a petty cash fund in the amount of $200. 2. Reimbursed the petty cash fund given the following petty cash fund disbursements: a. Payment for postage, $20. b. Payment for supplies, $70. 3. Increased the petty cash fund by $100. 4. Cash over at the end of the first period was $5. The entry to record the increase in the Petty Cash account would include a a. debit to the Petty Cash account for $100. b. credit to the Petty Cash account for $100. c. memorandum entry only in the ledger. d. debit to the Cash account for $100.

a. debit to the Petty Cash account for $100.

63. A company issues a check for $362 but records it as $326. On the bank reconciliation, the $36 error should be a. deducted from the balance per books. b. added to the balance per bank. c. deducted from the balance per bank. d. added to the balance per books.

a. deducted from the balance per books.

3. A company's merchandise inventory includes all of the following, except a. goods in possession, but which cannot be sold. b. goods on shelves. c. damaged goods that can be sold at a reduced price. d. goods in storerooms.

a. goods in possession, but which cannot be sold.

11. Each of the following is a feature of internal control, except a. management planning. b. periodic independent verification. c. limited access to assets. d. authorization of transactions.

a. management planning.

28. A purchase order is sent from a company's a. purchasing department to the supplier. b. requesting department to the supplier. c. requesting department to its accounting department. d. treasurer to the supplier.

a. purchasing department to the supplier.

27. When payment is received by mail, a detailed list of such receipts would not be retained by the a. receiving department. b. accounting department. c. person who opens the mail. d. cashier.

a. receiving department.

36. Which of the following documents would be prepared (by a buyer of goods) after the others? a. Purchase order b. Check c. Purchase requisition d. Receiving report

b. Check

66. Which of the following bank reconciliation items would result in a journal entry on the company's books? a. Bank error b. Interest income c. Deposit in transit d. Outstanding checks

b. Interest income

24. Which of the following sets of documents are in the correct sequence? a. Purchase order, check, receiving report b. Purchase requisition, purchase order, invoice c. Purchase requisition, receiving report, purchase order d. Purchase order, purchase requisition, invoice

b. Purchase requisition, purchase order, invoice

13. The bonding of employees is an example of which feature of a good system of internal control? a. Authorization of transactions b. Sound personnel policies c. Separation of duties d. Limited access to assets

b. Sound personnel policies

34. Which of the following is an appropriate internal control activity for cash? a. Recordkeeping and custodianship over cash should be performed by the same person. b. The amount of cash on hand should be kept to a minimum. c. Banking facilities should be used as little as possible. d. All payments should be made with currency, not checks.

b. The amount of cash on hand should be kept to a minimum.

10. Each of the following is a feature of internal control, except a. recording of all transactions. b. a sound marketing plan. c. sound personnel policies. d. separation of duties.

b. a sound marketing plan.

59. On a bank reconciliation, interest earned on a checking account should be a. deducted from the balance per books. b. added to the balance per books. c. added to the balance per bank. d. deducted from the balance per bank.

b. added to the balance per books.

23. A remittance advice is attached to a(n) a. receiving report. b. check. c. purchase order. d. invoice.

b. check.

43. Use the following information regarding Sanders Company to answer the question below. 1. Established a petty cash fund in the amount of $200. 2. Reimbursed the petty cash fund given the following petty cash fund disbursements: a. Payment for postage, $20. b. Payment for supplies, $70. 3. Increased the petty cash fund by $100. 4. Cash over at the end of the first period was $5. The entry to establish the petty cash fund would include a a. debit to the Cash account for $200. b. debit to the Petty Cash account for $200. c. memorandum entry only in the ledger. d. credit to the Petty Cash account for $200.

b. debit to the Petty Cash account for $200.

9. A traditional definition of internal control specifically includes all of the following features, except a. reliability of accounting data. b. detection of employee theft. c. promotion of operational efficiency. d. adherence to prescribed managerial policies.

b. detection of employee theft.

18. In a small business, because it is often cost-prohibitive to hire extra employees, the lack of certain separations of duties can best be overcome by a. bonding the employees. b. getting the owner actively involved. c. hiring only honest employees. d. holding one person responsible for a given set of transactions.

b. getting the owner actively involved.

2. A company's merchandise inventory includes all of the following, except a. goods in warehouses. b. goods sold, but not yet delivered. c. goods in transit from suppliers, if title has passed to the merchandiser. d. goods in trucks between the warehouse and the store.

b. goods sold, but not yet delivered.

21. In a purchase system, the most appropriate department to control goods upon arrival at the company is the a. accounting department. b. receiving department. c. treasury department. d. requesting department.

b. receiving department.

17. Internal control is weakened by all of the following, except a. collusion. b. separation of duties. c. human error. d. effects of changing conditions.

b. separation of duties.

31. When a company makes payment for goods or services, the check is prepared by the company's a. requesting department. b. treasurer. c. accounting department. d. receiving department.

b. treasurer.

62. Which of the following items on a bank reconciliation would require a journal entry on the company's books? a. A deposit in transit b. Outstanding checks c. A bank service charge d. A bank error on the bank statement

c. A bank service charge

38. A $200 petty cash fund has cash of $20 and valid receipts of $164. The entry to replenish the fund would be a. Cash 184 Petty Cash 184 b. Cash Short or Over 16 Petty Cash 16 c. Cash Short or Over 16 Cash 16 d. Petty Cash 164 Cash 164

c. Cash Short or Over 16 Cash 16

30. Which of the following documents is prepared by a company's accounting department? a. Bank statement b. Receiving report c. Check authorization d. Invoice

c. Check authorization

33. Which of the following documents would be sent to the treasurer? a. Purchase order b. Invoice c. Check authorization d. Bank statement

c. Check authorization

65. For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation? a. A returned $300 check recorded by bank as $200 b. Check for $52 recorded as $25 c. Deposit of $400 recorded by bank as $100 d. Check for $37 recorded as $73

c. Deposit of $400 recorded by bank as $100

14. Which of the following would not be found in a good system of internal control? a. Requiring all employees to take earned vacations b. Establishing a system of checks and balances c. Having one person handle all the responsibilities of a department d. Establishing an internal audit staff

c. Having one person handle all the responsibilities of a department

35. Which of the following is not a goal of a system of internal control over merchandising transactions? a. Keep credit losses as low as possible. b. Prevent the theft of cash and inventory. c. Keep the maximum amount of inventory on hand at all times. d. Keep enough cash on hand to take advantage of purchase discounts.

c. Keep the maximum amount of inventory on hand at all times.

57. Which of the following would be deducted from the balance per bank? a. An issued check that the company forgot to record on its books b. Bank service charge c. Outstanding checks d. NSF check

c. Outstanding checks

42. The entry for establishing a $200 petty cash fund would be a. Cash 200 Petty Cash 200 b. Miscellaneous Expense 200 Cash 200 c. Petty Cash 200 Cash 200 d. Cash 200 Miscellaneous Expense 200

c. Petty Cash 200 Cash 200

44. Use the following information regarding Sanders Company to answer the question below. 1. Established a petty cash fund in the amount of $200. 2. Reimbursed the petty cash fund given the following petty cash fund disbursements: a. Payment for postage, $20. b. Payment for supplies, $70. 3. Increased the petty cash fund by $100. 4. Cash over at the end of the first period was $5. The entry to record the reimbursement of the petty cash fund as related to postage only would include a. Cash 20 Postage Expense 20 b. Postage Expense 20 Petty Cash 20 c. Postage Expense 20 Cash 20 d. Petty Cash 20 Postage Expense 20

c. Postage Expense 20 Cash 20

20. Which of the following documents is mailed to the vendor (seller) of goods? a. Receiving report b. Invoice c. Purchase order d. Purchase requisition

c. Purchase order

37. Which of the following documents remains with the originating company in a purchase transaction? a. Check b. Invoice c. Purchase requisition d. Purchase order

c. Purchase requisition

53. Which of the following would be deducted from the balance per books on a bank reconciliation? a. Notes collected by the bank b. Deposits in transit c. Service charges d. Outstanding checks

c. Service charges

45. Use the following information regarding Sanders Company to answer the question below. 1. Established a petty cash fund in the amount of $200. 2. Reimbursed the petty cash fund given the following petty cash fund disbursements: a. Payment for postage, $20. b. Payment for supplies, $70. 3. Increased the petty cash fund by $100. 4. Cash over at the end of the first period was $5. The entry to record the reimbursement of the petty cash fund as related to supplies only would include a. Cash 70 Petty Cash 70 b. Petty Cash 70 Cash 70 c. Supplies Expense 70 Cash 70 d. Cash 70 Supplies Expense 70

c. Supplies Expense 70 Cash 70

19. Which of the following is not an internal control activity for cash? a. Surprise audits of cash on hand should be made occasionally. b. The number of persons who have access to cash should be limited. c. The functions of recordkeeping and keeping custody of cash should be combined. d. All cash receipts should be recorded promptly.

c. The functions of recordkeeping and keeping custody of cash should be combined.

A physical inventory is usually taken a. in the middle of the fiscal year. b. at the peak of the busy season. c. at the end of the fiscal year. d. at December 31.

c. at the end of the fiscal year.

8. All of the following are examples of internal control activities, except a. bank reconciliation. b. rotation of key personnel. c. customer satisfaction surveys. d. insistence that employees take earned vacations.

c. customer satisfaction surveys.

40. As the controller of a large company, you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished. You probably will want to a. increase the amount of the fund. b. decrease the amount of the fund. c. find a new custodian for the fund. d. offer the custodian your congratulations.

c. find a new custodian for the fund.

29. Before a check authorization is issued, the following documents must be in agreement, except for the a. purchase order. b. receiving report. c. remittance advice. d. invoice.

c. remittance advice.

6. The Sarbanes-Oxley Act of 2002 requires all of the following to certify a public company's system of internal control, except for the a. chief financial officer. b. auditors. c. stockholders. d. chief executive officer.

c. stockholders

26. Which of the following is not an internal control activity for cash? a. The amount of cash on hand should be kept to a minimum. b. Banking facilities should be used as much as possible. c. Employees who have access to cash should be bonded. d. All payments should be made with currency, not checks.

d. All payments should be made with currency, not checks.

56. Which of the following would be added to the balance per bank? a. Outstanding checks b. Bank service charges c. Collection of a note receivable by the bank d. Deposit in transit

d. Deposit in transit

48. Cash consists of all of the following except a. deposits in savings accounts. b. money orders from customers. c. compensating balances. d. IOUs from customers.

d. IOUs from customers.

54. Which of the following would be added to the balance per books on a bank reconciliation? a. Deposits in transit b. Outstanding checks c. Service charges d. Notes collected by the bank

d. Notes collected by the bank

60. Which of the following bank reconciliation items would not result in a journal entry? a. Service charge b. NSF check of customer c. Collection of a note by the bank d. Outstanding checks

d. Outstanding checks

41. A $100 petty cash fund has cash of $14 and valid receipts for $75. The entry to replenish the fund would include a a. Cash 75 Petty Expenses 75 Cash Short or Over 11 b. Petty Cash 86 Cash 86 c. Cash 89 Petty Cash 89 d. Petty Expenses 75 Cash Short or Over 11 Cash 86

d. Petty Expenses 75 Cash Short or Over 11 Cash 86

12. Which of the following attributes of internal control would be violated if the chief accounting clerk wrote checks to pay accounts payable? a. Adequate design of documents b. Sound personnel procedures c. Periodic independent verification d. Separation of duties

d. Separation of duties

16. A very small company would have the most difficulty in implementing which of the following internal control activities? a. Sound personnel procedures b. Periodic independent verification c. Limited access to assets d. Separation of duties

d. Separation of duties

51. Which of the following would not be included in Cash or Cash Equivalents? a. Ninety-day U.S. Treasury bills held b. Deposits in bank checking accounts c. Checks and money orders received from customers d. Six-month certificates of deposit held

d. Six-month certificates of deposit held

25. All of the following are the goals of internal controls over merchandising transactions except a. To keep the appropriate amount of inventory on hand b. To retain enough cash to take advantage of cash discounts c. To keep credit losses at a minimum d. To decide on the quality of materials to be purchased

d. To decide on the quality of materials to be purchased

52. An example of a cash equivalent is a. a 120-day time deposit. b. notes receivable. c. accounts receivable. d. a 60-day certificate of deposit.

d. a 60-day certificate of deposit

61. During the month, a company learns that a check it issued has been accidentally destroyed. On the bank reconciliation, the company would a. deduct the amount from the balance per bank. b. deduct the amount from the balance per books. c. add the amount to the balance per bank. d. add the amount back to the balance per books.

d. add the amount back to the balance per books

58. A check for $235 is incorrectly recorded by a company as $253. On the bank reconciliation the $18 error should be a. deducted from the balance per books. b. added to the balance per bank. c. deducted from the balance per bank. d. added to the balance per books.

d. added to the balance per books.

5. A good system of internal control is designed to achieve each of the following, except a. efficiency of operations. b. reliability of financial reporting. c. compliance with relevant laws and regulations. d. attainment of target sales.

d. attainment of target sales.

47. Use the following information regarding Sanders Company to answer the question below. 1. Established a petty cash fund in the amount of $200. 2. Reimbursed the petty cash fund given the following petty cash fund disbursements: a. Payment for postage, $20. b. Payment for supplies, $70. 3. Increased the petty cash fund by $100. 4. Cash over at the end of the first period was $5. The entry to record the cash over in the petty cash fund would include a a. credit to the Cash account for $5. b. credit to the Petty Cash account for $5. c. debit to Cash Short or Over for $5. d. credit to Cash Short or Over for $5.

d. credit to Cash Short or Over for $5.

64. All of the following bank reconciliation items would result in a journal entry on the company's books except a. interest income. b. fee for collection of note by bank. c. NSF check of customer. d. deposits in transit.

d. deposits in transit.

39. The petty cash fund should be replenished a. only for the total amount of expense receipts on hand. b. for the total amount that was originally set up in the imprest fund. c. for the total amount of expense receipts on hand plus cash remaining before replenishment. d. for the amount needed to bring the petty cash fund back to its imprest amount.

d. for the amount needed to bring the petty cash fund back to its imprest amount.

22. The document prepared by a department requesting the company to buy something is called a(n) a. purchase order. b. invoice. c. receiving report. d. purchase requisition.

d. purchase requisition.

15. A consequence of a separation of duties is that a. operations become extremely inefficient because of constant training of employees. b. more employees will need to be bonded. c. theft by employees becomes impossible. d. theft is possible only when several employees are involved.

d. theft is possible only when several employees are involved.