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Chapter 07 - Internal Control and Cash
Copyright Cengage Learning. Powered by Cognero.
Page 41
= $6,435
POINTS:
1
DIFFICULTY:
Challenging
Bloom's: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-05 - LO: 07-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 - Bank Reconciliation
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
102. Thompson Corporation gathered the following reconciling information in preparing its October bank reconciliation:
Cash balance per bank, 10/31
$17,000
Note receivable collected by bank
4,800
Outstanding checks
6,500
Deposits in transit
3,000
Bank service charge
50
NSF check
2,300
Using the above information, determine the cash balance per books (before adjustments) for Thompson Corporation.
a.
$11,050
b.
$19,450
c.
$15,950
d.
$11,150
ANSWER:
a
RATIONALE:
Adjusted balance = Cash balance per bank on October 31 + Deposits in transit –
Outstanding checks = $17,000 + $3,000 – $6,500 = $13,500
Cash balance per books (before adjustments) = Adjusted balance + NSF checks +
Bank service charge – Note receivable collected by bank = $13,500 + $2,300 + $50 –
$4,800 = $11,050
POINTS:
1
DIFFICULTY:
Challenging
Bloom's: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-05 - LO: 07-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 - Bank Reconciliation
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
103. During a bank reconciliation process,
Chapter 07 - Internal Control and Cash
Copyright Cengage Learning. Powered by Cognero.
Page 42
a.
outstanding checks and deposits in transit are added to the bank statement balance
b.
outstanding checks are subtracted and deposits in transit are added to the bank statement balance
c.
outstanding checks and deposits in transit are subtracted from the bank statement balance
d.
outstanding checks are added and deposits in transit are subtracted from the bank statement balance
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom's: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-05 - LO: 07-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 - Bank Reconciliation
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
104. The following data were gathered to use in reconciling the bank account of Savannah Company:
Balance per bank
$16,750
Balance per company records
16,125
Bank service charges
80
Deposit in transit
2,195
NSF check
950
Outstanding checks
3,850
What is the adjusted balance on the bank reconciliation?
a.
$14,470
b.
$10,705
c.
$15,095
d.
$15,720
ANSWER:
c
RATIONALE:
Adjusted balance from bank section of reconciliation = Balance as per bank + Deposit
in transit – Outstanding checks = $16,750 + $2,195 – $3,850 = $15,095
Adjusted balance from company section of reconciliation = Balance as per company
records – Bank service charges – NSF check = $16,125 – $80 – $950 = $15,095
POINTS:
1
DIFFICULTY:
Moderate
Bloom's: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-05 - LO: 07-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 - Bank Reconciliation
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
Chapter 07 - Internal Control and Cash
Copyright Cengage Learning. Powered by Cognero.
Page 44
include a
a.
credit to Petty Cash for $120
b.
debit to Cash for $120
c.
credit to Cash Short and Over for $3
d.
credit to Cash for $102
ANSWER:
c
RATIONALE:
Cash short and over amount = Cash in petty cash fund + Cash receipts – Petty cash
fund = $18 + $120 – $135 = $3
The journal entry to replenish the account would include a credit to Cash Short and
Over account for $3.
POINTS:
1
DIFFICULTY:
Easy
Bloom's: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-06 - LO: 07-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
108. Entries are made to the petty cash account when
a.
making payments out of the fund
b.
recording shortages in the fund
c.
replenishing the petty cash fund
d.
establishing the fund
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom's: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-06 - LO: 07-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
109. The type of account and normal balance of Petty Cash is a(n)
a.
revenue, credit
b.
asset, debit
Chapter 07 - Internal Control and Cash
Copyright Cengage Learning. Powered by Cognero.
Page 45
c.
liability, credit
d.
expense, debit
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom's: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-06 - LO: 07-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
110. The debit recorded in the journal to reimburse the petty cash fund is to
a.
Petty Cash
b.
Accounts Receivable
c.
Cash
d.
various accounts for which the petty cash was disbursed
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
Bloom's: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-06 - LO: 07-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
111. A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would
include a credit to
a.
Cash for $20
b.
Cash Short and Over for $3
c.
Petty Cash for $190
d.
Cash for $180
ANSWER:
d
RATIONALE:
Amount required to replenish the petty cash fund = Petty cash fund – Cash remaining
in the petty cash fund = $200 – $20 = $180
The journal entry to replenish the account would include a credit to Cash for $180.
Chapter 07 - Internal Control and Cash
Copyright Cengage Learning. Powered by Cognero.
Page 48
c.
cash, short-term investments, and accounts receivable by daily cash operating expenses.
d.
average cash over the period by daily cash operating expenses.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom's: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-08 - LO: 08
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 - Financial Statement Analysis
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
117. Which is the better choice for evaluating across companies: Days' Cash on Hand or the amount in the company's
Cash account?
a.
The amount in the Cash account, because the company with the largest amount of cash is the most liquid.
b.
Days' Cash on Hand, because it is calculated as a ratio, which expresses cash relative to the cash requirements
of the business.
c.
Days' Cash on Hand, because a daily cash amount is more accurate.
d.
The amount in the Cash account, because companies with a lower cash balance are considered a greater credit
risk.
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom's: Understanding
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-08 - LO: 08
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 - Financial Statement Analysis
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
118. Which of the following statements is true about the Days' Cash on Hand ratio?
a.
It is not useful in comparing different businesses to one another.
b.
It uses all current assets in the numerator of the ratio.
c.
The only operating expense used in the denominator of the ratio is depreciation expense.
d.
It may be useful in determining whether a business is able to meet its cash commitments.
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom's: Understanding
Moderate
QUESTION TYPE:
Multiple Choice
