Question 1

All of the following are true of the number of days' sales uncollected ratio except:

Accepted Answer

A)  Is most effective in evaluating the cash sales of a company.
B)  Can be used for comparisons to other companies in the same industry.
C)  Can be used for comparisons between current and prior periods.
D)  Reflects the liquidity of receivables.
E)  Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.F) B) and E)
G) A) and B)

Question 2

The document that the purchasing department prepares and sends to the vendor to place an order is called the:

Accepted Answer

A)  Purchase requisition.
B)  Purchase order.
C)  Invoice.
D)  Receiving report.
E)  Invoice approval.F) None of the above
G) A) and B)

Question 3

According to good internal control policies,a person who controls an asset also maintains that asset's accounting records.

Accepted Answer

A) True 
 B)False

Question 4

Cash equivalents:

Accepted Answer

A)  Include savings accounts.
B)  Include checking accounts.
C)  Are readily converted to a known cash amount.
D)  Include time deposits.
E)  Have no immediate value.F) A) and D)
G) A) and B)

Question 5

The following account balances are taken from Ferguson Sports at December 31.
  Calculate the number of days' sales uncollected for both years.According to this analysis,is the company's collection of receivables improving? Explain.

Accepted Answer

Days' Sales Uncollected Ratio = Ending A...

Question 6

Silver Co.has a $200 petty cash fund.At the end of the first month the accumulated receipts represent $43 for delivery expenses,$127 for merchandise inventory,and $12 for miscellaneous expenses.The fund has a balance of $18.The journal entry to record the reimbursement of the account includes a:

Accepted Answer

A)  Debit to Petty Cash for $200.
B)  Debit to Cash Over and Short for $18.
C)  Credit to Cash for $182.
D)  Credit to Inventory for $127.
E)  Credit to Cash Over and Short for $18.F) All of the above
G) A) and E)

Question 7

Most large thefts occur from payment of fictitious invoices,which makes control of cash disbursements especially important for companies.

Accepted Answer

A) True 
 B)False

Question 8

Assume that the custodian of a $450 petty cash fund has $65 in coins and currency plus $382 in receipts at the end of the month.The entry to replenish the petty cash fund will include:

Accepted Answer

A)  A debit to Cash for $382.
B)  A credit to Cash Over and Short for $3.
C)  A debit to Petty Cash for $385.
D)  A credit to Cash for $385.
E)  A debit to Cash for $450.F) C) and D)
G) A) and D)

Question 9

At the end of the day,the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010.The proper entry to record the cash sales is:

Accepted Answer

A)  Debit Cash $1,000; credit Sales $1,000.
B)  Debit Cash $1,010; credit Sales $1,010.
C)  Debit Cash $1,010; credit Sales $1,000; credit Cash Over and Short $10.
D)  Debit Cash $1,000; debit Cash Over and Short for $10; credit Sales $1,010.
E)  Debit Cash Over and Short $10; credit Cash $10.F) C) and D)
G) B) and C)

Question 10

The following information is available for Fenton Manufacturing Company at June 30:  Based on this information,Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Accepted Answer

A)  $28,495
B)  $29,286
C)  $23,286
D)  $12,095
E)  $22,495F) A) and E)
G) C) and D)

Question 11

Freeman Co.had net sales of $4.2 million and ending accounts receivable of $0.8 million.Its days' sales uncollected equals: (Use 365 days a year.)

Accepted Answer

A)  5.3 days.
B)  69.5 days.
C)  19.2 days.
D)  11.5 days.
E)  292 days.F) A) and D)
G) D) and E)

Question 12

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and verify the system of internal controls.

Accepted Answer

A) True 
 B)False

Question 13

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

Accepted Answer

A) True 
 B)False

Question 14

A ________ is a document explaining the payment of a check.

Accepted Answer

The answer of A ________ is a document explaining the...

Question 15

A remittance advice is a(n) :

Accepted Answer

A)  Explanation for a payment by check.
B)  Bank statement.
C)  Internal voucher.
D)  Electronic funds transfer.
E)  Cancelled check.F) C) and D)
G) A) and B)

Question 16

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ________.

Accepted Answer

The answer of The internal document that is used to...

Question 17

The impact of technology on internal controls includes:

Accepted Answer

A)  Reduced processing errors.
B)  Elimination of the need for regular audits.
C)  Elimination of the need to bond employees.
D)  Elimination of separation of duties.
E)  Elimination of fraud.F) A) and E)
G) B) and D)

Question 18

A debit memorandum on a bank statement indicates:

Accepted Answer

A)  An increase in the bank's asset account.
B)  A decrease in the bank's asset account.
C)  A decrease in the bank's liability account.
D)  An increase in the bank's liability account.
E)  An increase in the bank's expense account.F) A) and E)
G) B) and C)

Question 19

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Accepted Answer

A) True 
 B)False

Question 20

________ includes currency,coins,and amounts on deposit in checking accounts and savings accounts.

Accepted Answer

The answer of ________ includes currency,coins,and amounts on deposit in...

Exam 6: Reporting and Analyzing Cash,fraud,and Internal Control

According to good internal control policies,a person who controls an asset also maintains that asset's accounting records.

Correct AnswerverifiedShow Answer

Freeman Co.had net sales of $4.2 million and ending accounts receivable of $0.8 million.Its days' sales uncollected equals: (Use 365 days a year.)

Correct AnswerverifiedShow Answer

Cash equivalents:

Correct AnswerverifiedShow Answer

Most large thefts occur from payment of fictitious invoices,which makes control of cash disbursements especially important for companies.

Correct AnswerverifiedShow Answer

The following information is available for Fenton Manufacturing Company at June 30: Based on this information,Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Correct AnswerverifiedShow Answer

All of the following are true of the number of days' sales uncollected ratio except:

Correct AnswerverifiedShow Answer

At the end of the day,the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010.The proper entry to record the cash sales is:

Correct AnswerverifiedShow Answer

A remittance advice is a(n) :

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and verify the system of internal controls.

Correct AnswerverifiedShow Answer

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ________.

Correct AnswerverifiedShow Answer

Silver Co.has a $200 petty cash fund.At the end of the first month the accumulated receipts represent $43 for delivery expenses,$127 for merchandise inventory,and $12 for miscellaneous expenses.The fund has a balance of $18.The journal entry to record the reimbursement of the account includes a:

Correct AnswerverifiedShow Answer

A ________ is a document explaining the payment of a check.

Correct AnswerverifiedShow Answer

The document that the purchasing department prepares and sends to the vendor to place an order is called the:

Correct AnswerverifiedShow Answer

The following account balances are taken from Ferguson Sports at December 31. Calculate the number of days' sales uncollected for both years.According to this analysis,is the company's collection of receivables improving? Explain.

Correct AnswerverifiedDays' Sales Uncollected Ratio = Ending A...View AnswerShow Answer

A debit memorandum on a bank statement indicates:

Correct AnswerverifiedShow Answer

Assume that the custodian of a $450 petty cash fund has $65 in coins and currency plus $382 in receipts at the end of the month.The entry to replenish the petty cash fund will include:

Correct AnswerverifiedShow Answer

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Correct AnswerverifiedShow Answer

The impact of technology on internal controls includes:

Correct AnswerverifiedShow Answer

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

Correct AnswerverifiedShow Answer

________ includes currency,coins,and amounts on deposit in checking accounts and savings accounts.

Correct AnswerverifiedShow Answer

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Days' Sales Uncollected Ratio = Ending A...
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