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61. Maximum benefit from independent internal verification is obtained when a. it is made on a pre-announced basis. b. it is done by the employee possessing custody of the asset. c. discrepancies are reported to management. d. it is done at the time of the audit.

62. If employees are bonded a. it means that they are not allowed to handle cash. b. they have worked for the company for at least 10 years. c. they have been insured against misappropriation of assets. d. it is impossible for them to steal from the company.

63. Mrs. Smith has worked for Arcco Inc., for 20 years without taking a vacation. An internal control feature that would address this situation would be a. other controls. b. establishment of responsibility. c. physical controls. d. documentation procedures.

64. A system of internal control a. is infallible. b. can be rendered ineffective by employee collusion. c. invariably will have costs exceeding benefits. d. is premised on the concept of absolute assurance.

65. For accounting purposes postdated checks (checks payable in the future) are considered to be a. money orders. b. cash. c. petty cash. d. accounts receivable.

66. Postage stamps on hand are considered to be a. cash. b. petty cash. c. cash equivalents. d. a prepaid expense.

67. Which one of the following items would not be considered cash? a. Coins b. Money orders c. Currency d. Postdated checks

68. Checks received through the mail should a. immediately be endorsed "For Deposit Only." b. be sent to the accounts receivable subsidiary ledger clerk for immediate posting to the customer's account. c. be cashed at the bank as soon as possible. d. be "rung up" on a cash register immediately.

69. Proper control for over-the-counter cash receipts includes a. a cash register with totals visible to the customer. b. using electronic cash registers with no tapes. c. cash count sheets requiring only the supervisor's signature. d. cash count sheets requiring only the cashier's signature.

70. A company stamps checks received in the mail with the words "For Deposit Only". This endorsement is called a. a blank endorsement. b. a rubber stamp. c. a restrictive endorsement. d. an operational endorsement.

71. The daily cash count of cash register receipts made by department supervisors is an example of a. other controls. b. independent internal verification. c. establishment of responsibility. d. segregation of duties.

72. The use of remittance advices for mail receipts is an example of a. documentation procedures. b. other controls. c. physical controls. d. independent internal verification.

73. Control over cash disbursements is generally more effective when a. all bills are paid in cash. b. disbursements are made by the accounts payable subsidiary clerk. c. payments are made by check. d. all purchases are made on credit.

74. An exception to disbursements being made by check is acceptable when cash is paid a. to an owner. b. to employees as wages. c. from petty cash. d. to employees as loans.

75. Allowing only the treasurer to sign checks is an example of a. documentation procedures. b. separation of duties. c. other controls. d. establishment of responsibility.

76. Blank checks a. should be safeguarded. b. should be pre-signed. c. do not need to be safeguarded since they must be signed to be valid. d. should not be pre-numbered.

77. An employee authorized to sign checks should not record a. owner cash contributions. b. mail receipts. c. cash disbursement transactions. d. sales transactions.

78. A voucher system is a series of prescribed control procedures a. to check the credit worthiness of customers. b. designed to assure that disbursements by check are proper. c. which eliminates the need for a sales journal. d. specifically designed for small firms who may not have checking accounts.

79. Under a voucher system, a prenumbered voucher is prepared for every a. cash receipt, regardless of source. b. transaction entered into by the business. c. expenditure except those made from petty cash. d. journal entry.

80. The entry to replenish a petty cash fund includes a credit to a. Petty Cash. b. Cash. c. Freight-in. d. Postage Expense.

81. A debit balance in Cash Over and Short is reported as a a. contra asset. b. miscellaneous asset. c. miscellaneous expense. d. miscellaneous revenue.

82. A petty cash fund of $100 is replenished when the fund contains $5 in cash and receipts for $93. The entry to replenish the fund would a. credit Cash Over and Short for $2. b. credit Miscellaneous Revenue for $2. c. debit Cash Over and Short for $2. d. debit Miscellaneous Expense for $2.

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