Chapter 07 – Internal Control and Cash
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Page 81
Petty Cash
235.00
Cash
235.00
(b)
Office Supplies
74.50
Miscellaneous Administrative
Expense
92.75
Miscellaneous Selling Expense
18.60
Cash Short and Over
6.35
Cash
192.20
(c)
Petty Cash
65.00
Cash
65.00
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
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
179. On August 3, Sonar Sales decides to establish a $275.00 Petty Cash Account to relieve the burden on Accounting.
(a)
(b)
(c)
ANSWER:
(a) Aug. 3
Petty Cash
275.00
Cash
275.00
(b) 11
Mail and Postage Expense
124.75
Contributions and Donations
Expense
53.25
Meals and Entertainment Expense
63.85
Cash Short and Over
0.40
Cash
242.25
(c) 12
Petty Cash
125.00
Cash
125.00
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
Chapter 07 – Internal Control and Cash
Bloom’s: Understanding
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-07 – LO: 07–07
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
30
The amount of cash in the petty cash fund is now $130. The fund is
replenished based on the following receipts: office supplies, $116;
postage, $100.Record any missing funds in the cash short and over
account.
Journal
Date
Description
Post. Ref.
Debit
Credit
ANSWER:
Journal
Date
Description
Post.
Ref.
Debit
Credit
Sept. 1
Petty Cash
350
Cash
350
30
Office Supplies
116
Postage Expense
100
Cash Short & Over
4
Cash
220
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
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
182. (a) Where are cash equivalents disclosed in the financial statements?
(b) List three examples of cash equivalents.
ANSWER:
(a)
Cash account on the balance sheet
(b)
Money market funds; notes of major corporations (commercial paper); and U. S.
Treasury bills
POINTS:
1
DIFFICULTY:
Easy
Copyright Cengage Learning. Powered by Cognero.
Page 86
186. What are the processes and procedures a company uses to safeguard its assets, process information correctly, and
ensure its compliance with laws are regulations called?
a.
Sarbanes-Oxley Act
b.
fraud prevention control
c.
internal controls
d.
external controls
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-01 – LO: 07–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.10 – Internal Control
ACCT.AICPA.BB.03 – Legal
BUSPROG: Ethics
DATE CREATED:
10/5/2017 3:19 PM
DATE MODIFIED:
10/16/2017 5:17 PM
187. How is the Internal Control—Integrated Framework used by companies?
a.
as a standard for designing, analyzing, and evaluating internal controls
b.
as a standard for making statements about a company’s finances to the public
c.
as an extension of internal controls
d.
as an extension of GAAP
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-01 – LO: 07–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.10 – Internal Control
ACCT.AICPA.BB.03 – Legal
BUSPROG: Ethics
DATE CREATED:
10/5/2017 3:23 PM
DATE MODIFIED:
10/16/2017 5:17 PM
188. Which of the following related to a company’s control procedures?
(1) Separating responsibilities for related operations
(2) Safeguarding inventory in a locked storeroom
(3) Identifying a sudden increase in slow payments
(4) Operating style of management
(5) Requiring employees to take vacations
a.
1, 2, and 3
b.
1, 3, and 5
c.
1, 2, and 4
Chapter 07 – Internal Control and Cash
d.
1, 2, and 5
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-01 – LO: 07–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.10 – Internal Control
ACCT.AICPA.BB.03 – Legal
BUSPROG: Ethics
DATE CREATED:
10/5/2017 4:20 PM
DATE MODIFIED:
10/16/2017 5:17 PM
189. Which of the following could signal internal control problems within the accounting system?
(1) Safeguarding inventory in a locked warehouse
(2) Abuse of alcohol or drugs
(3) Gaps in transactions numbers
(4) Operating style of management
(5) Sudden increase in slow payments
a.
1 and 2
b.
3 and 5
c.
2 and 4
d.
1 and 3
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-01 – LO: 07–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.10 – Internal Control
ACCT.AICPA.BB.03 – Legal
BUSPROG: Ethics
DATE CREATED:
10/5/2017 4:23 PM
DATE MODIFIED:
10/16/2017 5:17 PM
190. Hanna Co. sells art supplies and also has a custom framing department. Only two employees are trained to complete
custom framing orders. They place the orders for the supplies they need. Also they are the only ones who take customer
orders, as the ordering process is fairly technical. For the past several years, custom framing has been a very profitable
part of Hanna Co.’s business. However, the financial reports for the most recent period show a substantial drop in
profitability for custom framing. Upon investigation, it was determined that the supplies being used in custom framing had
increased measurably. However, the sales generated did not support the amount of supplies being used. Further
investigation discovered that one of the custom framing specialists had arranged for a co-conspirator to bring in orders