Accounting Chp 8

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  1. An internal control system consists of the policies & procedures managers use to:
    A. Protect assets
    B. Ensure reliable accounting
    C. Promote efficient operations
    D. Urge adherence to company policies
    E. All of the above
  2. The principles of internal control include:
    A. Establish responsibilities
    B. Maintain minimal records.
    C. Use only computerized systems.
    D. Bond all employees
    E. Require automated sales systems.
  3. Principles of internal control include:
    A. Apply technological controls
    B. Divide responsibilities for related transactions.
    C. Perform regular and independent reviews
    D. Separate recordkeeping from custody of assets.
    E. All of the above
  4. A company's internal control system:
    A. Eliminates the risk of loss
    B. Monitors and controls business activities.
    C. Eliminates human error.
    D. Eliminates the need for audits.
    E. All of the above
  5. When two clerks share the same cash register it is a violation of which internal control principle?
    A. Establish responsibilities
    B. Maintain adequate records
    C. Insure assets
    D. Bond key employees
    E. Apply technological controls
  6. The most serioud limitation of internal control is:
    A. Computer error
    B. Human fraud or human error
    C. Cost-benefit priniciple
    D Cybercrime
    E. Management fraud
  7. Cash, not including cash equivalents, includes:
    A. Postage stamps
    B. Coins, currency, and checking accounts
    C. IOUs
    D. Two-year certificates of deposit
    E. Money market funds
  8. Cash equivalents:
    A. Are short-term, highly liquid investments
    B. Include 6-month CDs
    C. Include checking accounts
    D. Are recorded in petty cash
    E. Include money orders
  9. Banking activities include:
    A. Bank accounts
    B. Bank deposits
    C. Checking
    D. Electronic funds transfer
    E. All of the above
  10. A bank statement includes:
    A. A list of outstanding checks
    B. A list of petty cash amounts
    C. The beginning and the ending balance of the depositor's checking account
    D. A listing of deposits in transit
    E. All of the above
  11. The number of days' sales uncollected:
    A. Is used to evaluate the liquidity of receivables
    B. Is calculated by dividing accounts receivable by sales
    C. Measures a company's ability to pay its bills on time.
    D. Measures a company's debt to income
    E. Is calculated by dividing sales by accounts receivable.
  12. The days' sales uncollected ratio is used to:
    A. Measure how many days of sales remain until the end of the year
    B. Determine the number of days that have passed w/o collecting on accounts receivable
    C. Identify the likelihood of collecting sales on account
    D. Estimate how much time is likely to pass before the amount of accounts receivable is received in cash
    E. Measure the amount of layaway sales for a period
  13. Cash Over and Short account:
    A. Is used to record a credit balance in the cash account
    B. Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and from missing petty cash receipts.
    C. Is not necessary in a computerized accounting system.
    D. Can never have a debit balance.
    E. Can never have a credit balancd.
  14. A voucher is an internal file that:
    A. Is prepared after an invoice is received.
    B. Is used as a substitute for an invoice.
    C. Is used to accumulate info needed to control cash disbursements and to ensure that transactions are properly recorded.
    D. Takes the place of a bank check.
    E. Is prepared before the company orders goods.
  15. The entry necessary to establish a petty cash fund should include:
    A. A debit to Cash and a credit to Petty Cash
    B. A debit to Cash and a credit to Petty Cash.
    C. A debit to Petty Cash and a credit to Cash.
    D. A debit to Petty Cash and a credit to Accounts Receivable.
    E. A debit to Cash and a credit to Petty Cash Over and Short.
  16. The entry to record reimbursement of the petty cash fund for postage expense should include:
    A. A debit to Postage Expense
    B. a debit to Petty Cash
    C. A debit to Cash
    D. A debit to Cash Short and Over
    E. A debit to Supplies
  17. When a petty cash fund is in use:
    A. Expenses paid with petty cash are recorded when the fund is replenished
    B. Petty Cash is debited when funds are replenished
    C. Petty Cash is credited when funds are replenished
    D. Expenses are not recorded
    E. Cash is debited when funds are replenished
  18. In reimbursing the petty cash fund:
    A. Cash is debited
    B. Petty Cash is credited
    C. Petty Cash is debited
    D. Appropriate expense accounts are debited
    E. No expenses are recorded
  19. Outstanding checks refer to checks that have been:
    A. Written, recorded, sent to payees, and received & paid by the bank.
    B. Written and not yet recorded in the company books
    C. Held as blank checks
    D. Written, then recorded on the company books and sent to the customer, but have not yet been paid by the bank.
    E. Issued by the bank.
  20. A seller of goods or services, usually a manufacturer or wholesaler, is known as a:
    A. Vendor
    B. Payee
    C. Vendee
    D. Creditor
    E. Debtor
  21. An expense resulting from failing to take advantage of cash discounts on purchases is called:
    A. Sales discounts
    B. Trade discounts
    C. Purchases discounts
    D. Discounts lost
    E. Discounts earned
Card Set
Accounting Chp 8
Multiple Choice on chp 8 Cash & Internal Controls
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