Accounting Chp 8

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

The principles of internal control include:
A. Establish responsibilities
B. Use only computerized systems.
C. Maintain minimal records.
D. Require automated sales systems.
E. Bond all employees

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

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

When two clerks share the same cash register it is a violation of which internal control principle?
A. Insure assets
B. Bond key employees
C. Establish responsibilities
D. Apply technological controls
E. Maintain adequate records

The most serioud limitation of internal control is:
A. Human fraud or human error
B. Cost-benefit priniciple
C. Computer error
D Cybercrime
E. Management fraud

Cash, not including cash equivalents, includes:
A. Coins, currency, and checking accounts
B. Two-year certificates of deposit
C. Money market funds
D. IOUs
E. Postage stamps

Cash equivalents:
A. Are short-term, highly liquid investments
B. Include 6-month CDs
C. Are recorded in petty cash
D. Include money orders
E. Include checking accounts

Banking activities include:
A. Bank accounts
B. Bank deposits
C. Checking
D. Electronic funds transfer
E. All of the above

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

The number of days' sales uncollected:
A. Measures a company's debt to income
B. Is calculated by dividing sales by accounts receivable.
C. Is used to evaluate the liquidity of receivables
D. Is calculated by dividing accounts receivable by sales
E. Measures a company's ability to pay its bills on time.

The days' sales uncollected ratio is used to:
A. Estimate how much time is likely to pass before the amount of accounts receivable is received in cash
B. Measure how many days of sales remain until the end of the year
C. Measure the amount of layaway sales for a period
D. Determine the number of days that have passed w/o collecting on accounts receivable
E. Identify the likelihood of collecting sales on account

Cash Over and Short account:
A. Is not necessary in a computerized accounting system.
B. Can never have a credit balancd.
C. 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.
D. Can never have a debit balance.
E. Is used to record a credit balance in the cash account

A voucher is an internal file that:
A. Is prepared after an invoice is received.
B. Is prepared before the company orders goods.
C. Takes the place of a bank check.
D. Is used to accumulate info needed to control cash disbursements and to ensure that transactions are properly recorded.
E. Is used as a substitute for an invoice.

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 Petty Cash and a credit to Accounts Receivable.
C. A debit to Cash and a credit to Petty Cash.
D. A debit to Petty Cash and a credit to Cash.
E. A debit to Cash and a credit to Petty Cash Over and Short.

The entry to record reimbursement of the petty cash fund for postage expense should include:
A. a debit to Petty Cash
B. A debit to Postage Expense
C. A debit to Cash Short and Over
D. A debit to Supplies
E. A debit to Cash

When a petty cash fund is in use:
A. Petty Cash is debited when funds are replenished
B. Cash is debited when funds are replenished
C. Petty Cash is credited when funds are replenished
D. Expenses paid with petty cash are recorded when the fund is replenished
E. Expenses are not recorded

In reimbursing the petty cash fund:
A. Appropriate expense accounts are debited
B. Petty Cash is credited
C. Petty Cash is debited
D. Cash is debited
E. No expenses are recorded

Outstanding checks refer to checks that have been:
A. Written, then recorded on the company books and sent to the customer, but have not yet been paid by the bank.
B. Written and not yet recorded in the company books
C. Written, recorded, sent to payees, and received & paid by the bank.
D. Issued by the bank.
E. Held as blank checks

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:
A. Debtor
B. Vendee
C. Payee
D. Vendor
E. Creditor

An expense resulting from failing to take advantage of cash discounts on purchases is called:
A. Discounts lost
B. Sales discounts
C. Trade discounts
D. Purchases discounts
E. Discounts earned