QUESTION 1
An electronic funds transfer system __________.
| a. | does not include debit card transactions | |
| b. | is seldom used by businesses | |
| c. | transfers cash by electronic communication rather than by paper documents | |
| d. | uses forms such as checks and deposit tickets to transfer cash |
5 points
QUESTION 2
Which of the following is a benefit provided by internal control?
| a. | It ensures timely collection of accounts receivables. | |
| b. | It ensures that collusion will never happen. | |
| c. | It guarantees that a business makes profit. | |
| d. | It promotes operational efficiency. |
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5 points
QUESTION 3
When a check is issued, the party being paid the cash is referred to as the __________.
| a. | Payee | |
| b. | Maker | |
| c. | bank signatory | |
| d. | Depositor |
5 points
QUESTION 4
Which of the following describes the environment in internal control?
| a. | Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate. | |
| b. | The environment starts with the top leaders of the business. | |
| c. | The environment is designed to ensure that the business earns profit. | |
| d. | A company must identify its risks. |
5 points
QUESTION 5
Which of the following describes a firewall?
| a. | A malicious program that enters program code or destroys data without authorization | |
| b. | When two or more people cooperate together to defraud a company | |
| c. | A technique for protecting data | |
| d. | When a company defrauds its suppliers by making false claims |
5 points
QUESTION 6
Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?
| a. | An encryption system | |
| b. | An imprest system | |
| c. | A lock-box system | |
| d. | A firewall system |
5 points
QUESTION 7
Cash and cash equivalents are divided by __________ to determine the cash ratio.
| a. | total current liabilities | |
| b. | fixed assets | |
| c. | equity | |
| d. | total long-term liabilities |
5 points
QUESTION 8
A company's Cash account shows an ending balance of $4,400. Reconciling items included a bookkeeper error of $100 (a $500 check recorded as $600), two outstanding checks totaling $810, a service charge of $25, a deposit in transit of $250, and interest revenue of $30. What is the adjusted book balance?
| a. | $4,295 | |
| b. | $3,840 | |
| c. | $4,505 | |
| d. | $4,960 |
5 points
QUESTION 9
Which of the following would be included in the entry to record the replenishment of a petty cash fund?
| a. | A credit to Petty Cash | |
| b. | A debit to Accounts Receivable | |
| c. | A credit to Cash | |
| d. | A credit to Miscellaneous Expense |
5 points
QUESTION 10
No journal entries are required for the reconciling items on the bank side because __________.
| a. | those transactions have already been recorded in the company's ledger | |
| b. | the adjusted balances on both sides are the same amounts | |
| c. | the amounts are immaterial | |
| d. | those transactions are already included in the bank balance |
5 points
QUESTION 11
The bookkeeper of Fire Steel, Inc. recorded a $1,596 check as $15,960 in payment of the current month's rent. Which of the following journal entries is needed to adjust for this error in the books of the company?
| a. |
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| b. |
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| c. |
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| d. |
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5 points
QUESTION 12
A company received a bank statement with a balance of $6,000. Reconciling items included a bookkeeper error of $300—a $300 check recorded as $800—two outstanding checks totaling $840, a service charge of $21, a deposit in transit of $250, and interest revenue of $19. What is the adjusted bank balance?
| a. | $4,950 | |
| b. | $5,110 | |
| c. | $4,608 | |
| d. | $5,410 |
5 points
QUESTION 13
A company has a cash ratio of 2.3. What does this imply?
| a. | The company has an unnecessarily large amount of cash supply. | |
| b. | The company does not have enough cash supply. | |
| c. | The company is not in a position to pay off its long-term liabilities. | |
| d. | The company is not in a position to pay off its current liabilities. |
5 points
QUESTION 14
A check was written by a business for $507 but was recorded in the journal as $705. 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 |
5 points
QUESTION 15
Fingertips, Inc. had the following financial data for the year ended December 31, 2017.
| Cash |
$41,000 |
| Cash equivalents |
76,000 |
| Long term investments |
58,000 |
| Total current liabilities |
146,000 |
What is the cash ratio as of December 31, 2017, for Fingertips, Inc.? (Round your answer to two decimals.)
| a. | 0.28 | |
| b. | 0.40 | |
| c. | 0.47 | |
| d. | 0.80 |
5 points
QUESTION 16
A company received a bank statement showing a balance of $78,000. Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400. What is the company's adjusted bank balance?
| a. | $66,200 | |
| b. | $71,000 | |
| c. | $85,000 | |
| d. | $68,600 |
5 points
QUESTION 17
Which of the following statements is TRUE of the Sarbanes-Oxley Act?
| a. | Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients. | |
| b. | Those who commit securities fraud must be sentenced to 10 years in prison. | |
| c. | All private and foreign companies must issue an internal control report evaluated by an outside auditor. | |
| d. | The Public Company Accounting Oversight Board oversees the work of auditors of public companies. |
5 points
QUESTION 18
Which one of the following items requires an adjustment on the bank side of the bank reconciliation?
| a. | Interest earned | |
| b. | A bank service charge | |
| c. | A note collected by the bank | |
| d. | Deposits in transit |
5 points
QUESTION 19
The cash ratios of four companies are listed below.
| Company | Cash Ratio |
| Juan Corp. |
0.23 |
| Rose, Inc. |
0.14 |
| Freelance, Inc. |
0.20 |
| Pioneer Corp. |
0.28 |
Which company has the maximum ability to repay its current liabilities?
| a. | Juan Corp. | |
| b. | Rose, Inc. | |
| c. | Freelance, Inc. | |
| d. | Pioneer Corp . |
5 points
QUESTION 20
The petty cash fund had an initial imprest balance of $210. It currently has $17 in cash, $4 in miscellaneous cash receipts, and an additional $183 in specific cash receipts. The debit to Cash Short & Over would be __________.
| a. | $6 | |
| b. | $17 | |
| c. | $183 | |
| d. | $187 |
