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Question(s) / Instruction(s):

Weygandt, Accounting Principles, 9e

1.            Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

a.            external verification.

b.            segregation of duties.

c.             duplication of effort.

d.            inadequate internal control.


 

2.            From an internal control standpoint, the asset most susceptible to improper diversion and use is

a.            cash.

b.            land.

c.             buildings.

d.            prepaid insurance.


 

3.            Reconciling the bank statement monthly is an example of

a.            independent internal verification.

b.            segregation of duties.

c.             establishment of responsibility.

d.            documentation procedures.


 

4.            An employee authorized to sign checks should not record

a.            cash disbursement transactions.

b.            sales transactions.

c.             owner cash contributions.

d.            mail receipts.


 

5.            replenishing the petty cash fund requires

a.            a credit to Petty Cash.

b.            a debit to various expense accounts.

c.             no accounting entry.

d.            a debit to Cash.


 

6.            If the month-end bank statement shows a balance of $54,000, outstanding checks are $18,000, a deposit of $6,000 was in transit at month end, and a check for $750 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

a.            $30,750.

b.            $65,250.

c.             $41,250.

d.            $42,750.


7.            Bank reconciliation should be prepared

a.            to explain any difference between the depositors balance per books and the balance per bank.

b.            by the person who is authorized to sign checks.

c.             when an employee is suspected of fraud.

d.            whenever the bank refuses to lend the company money.


8.            If a check correctly written and paid by the bank for $491 is incorrectly recorded on the companys books for $419, the appropriate treatment on the bank reconciliation would be to

a.            deducts $72 from the banks balance.

b.            subtracts $72 from the books balance.

c.             deducts $491 from the books balance.

d.            adds $72 to the books balance.


9.            An application of good internal control over cash disbursements is

a.            blank checks should be stored in the treasurers desk.

b.            each check should be compared with the approved invoice after the check is issued.

c.             check signers should record the cash disbursements.

d.            following payment, the approved invoice should be stamped PAID.


10.          Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

a.            1 month or less when purchased.

b.            3 months or less when purchased.

c.             6 months or less when purchased.

d.            1 year or less when purchased.


 

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