Question 1

On a bank reconciliation,an unrecorded debit memorandum for printing checks is:

Accepted Answer

An unrecorded debit memorandum for printing checks represents a deduction from the book balance of cash since it decreases the company's cash balance when the fees are ultimately paid. This item should be subtracted from the book balance of cash on the bank reconciliation.

Question 2

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

Accepted Answer

A purchase order is a document prepared and sent by the purchasing department to the vendor to request goods or services. It specifies the details of the order such as the quantity, description, price, delivery date, and payment terms. The vendor will use this document as a reference to fulfill the order. The other options listed are documents that are generated after the purchase order has been fulfilled.

Question 3

Which of the following statements is true regarding the documents in a voucher system?

Accepted Answer

Recording a purchase in a voucher system is initiated by invoice approval, which triggers the creation of a voucher. A voucher system is designed to ensure that all purchases are properly authorized and documented, and that payments are made only for valid purchases. It is not true that all voucher systems are the same, or that a well-designed voucher system will allow department managers to place orders directly with suppliers. Additionally, while a voucher system can help to prevent fraud and error, it cannot eliminate them completely. The claim that voucher systems are most commonly used in very small companies is also false.

Question 4

A company made a bank deposit on September 30 that did not appear on the bank statement dated September 30.In preparing the September 30 bank reconciliation,the company should:

Accepted Answer

The deposit is an outstanding deposit that has not yet been recorded by the bank, so it should be added to the bank statement balance to reconcile it with the company's records.

Question 5

A check that was outstanding on last period's bank reconciliation was not included with the canceled checks returned by the bank this period.As a result,in preparing this period's reconciliation,the amount of this check should be:

Accepted Answer

The outstanding check should be deducted from the bank balance of cash because it has not yet cleared the bank, even though it was recorded in the books in the previous period.

Question 6

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 4239 for November's rent was correctly written and drawn for $3,790 but was erroneously entered in the accounting records as $7,390.When reconciling the November bank statement,the company should:

Accepted Answer

The answer of In comparing the canceled checks on the...

Question 7

Which of the following statements best describes how GAAP and IFRS treat cash?

Accepted Answer

Accounting definitions for cash are similar for U.S.GAAP and IFRS. Both define cash as coins, currency, deposits in bank accounts, and negotiable instruments such as checks and money orders.

Question 8

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $790 but was erroneously entered in the accounting records as $970.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?

Accepted Answer

The check was recorded as $970 instead of the correct amount of $790, resulting in an overstatement of $180 in the Utility Expense. To correct this, decrease the Utility Expense by $180 and increase Cash by $180.

Question 9

The internal document prepared by a department manager that informs the purchasing department of its needs is the:

Accepted Answer

A purchase requisition is a document that is prepared by a department manager to inform the purchasing department about the items or services that are needed. This document provides information about the quantity, specifications, and delivery requirements of the items or services needed. The purchasing department can use this information to prepare a purchase order and initiate the procurement process.

Question 10

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $970 but was erroneously entered in the accounting records as $790.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?

Accepted Answer

The correct journal entry to adjust for the error in the accounting records would be to decrease Cash by $180 (the correct amount of the check minus the amount recorded in the books) and increase Utility Expense by $180 (the difference between the amount recorded in the books and the correct amount of the check). Therefore, the correct answer is choice C.

Question 11

A seller of goods or services,which is usually a manufacturer or wholesaler,is known as a:

Accepted Answer

A vendor is a person or company that sells goods or services, usually to a customer or another business. The term "vendor" is commonly used to refer to a manufacturer or wholesaler who sells products in bulk to retailers or other businesses. Therefore, the best choice for this question is A) Vendor.

Question 12

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42,debit office supplies expense $27.33,credit cash over/short $2.19.If the original amount in petty cash is $320,how much was the credit to cash for the reimbursement?

Accepted Answer

The answer of Triple Company's accountant made an entry that...

Question 13

The document,also known as the check authorization,that is a checklist of steps necessary for approving an invoice for approval and payments is the:

Accepted Answer

The document described is the invoice approval, which outlines the steps needed to approve and pay an invoice. The purchase requisition is a request for goods or services, the purchase order is a formal order for goods or services, the invoice is a request for payment, and the receiving report documents the receipt of goods or services.

Question 14

A deposit in transit on last period's bank reconciliation is shown as a deposit on the bank statement this period.As a result,in preparing this period's reconciliation,the amount of this deposit should be:

Accepted Answer

A deposit in transit from the previous period that appears on the current bank statement has already been accounted for in the books, so it should not be included as a reconciling item in the current period.

Question 15

The document that is an itemized statement of goods prepared by a vendor listing the customer's name,items sold,sales prices,and terms of the sale is the:

Accepted Answer

An invoice is the document that lists the itemized statement of goods sold by the vendor to the customer. A purchase requisition is a document requesting to purchase goods, a purchase order is a document authorizing the purchase of goods, a receiving report is a document confirming the receipt of goods, and an invoice approval is a process of verifying and approving the payment of an invoice.

Question 16

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 4239 for November's rent was correctly written and drawn for $7,390 but was erroneously entered in the accounting records as $3,790.When reconciling the November bank statement,the company should:

Accepted Answer

The check was recorded $3,600 less in the accounting records than it should have been. To correct this, $3,600 should be deducted from the book balance of cash.

Question 17

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42,debit office supplies expense $27.33,credit cash over/short $2.19.If the original amount in petty cash is $320,how much is in petty cash before the reimbursement?

Accepted Answer

The total amount of the entries made by the accountant is:
$12.42 (postage) + $27.33 (office supplies) - $2.19 (cash over/short) = $37.56
This means that there is $37.56 less in petty cash than the original amount of $320, so the amount in petty cash before the reimbursement is:
$320 - $37.56 = $282.44
Therefore, the best choice is B.

Question 18

The internal document that is prepared to notify the appropriate persons that ordered goods have been received and describes the quantities and condition of the goods is the

Accepted Answer

The receiving report is the internal document prepared by the company to notify the appropriate persons that ordered goods have been received and describe the quantities and condition of the goods. This document is essential for the company's inventory management and accounts payable processes. The purchase requisition is the document used to request the purchase of goods or services, the purchase order is the document used to authorize the purchase, and the invoice is the document sent by the supplier requesting payment. The invoice approval is the process of reviewing and approving the invoice for payment. None of these documents serve the purpose of notifying that goods have been received.

Question 19

A company wrote a check on September 30 that did not appear on the bank statement dated September 30.In preparing the September 30 bank reconciliation,the company should:

Accepted Answer

The check is an outstanding check, which means it has been written and recorded in the company's books but has not yet cleared the bank. Therefore, it should be deducted from the bank statement balance in the bank reconciliation.

Question 20

Outstanding checks refer to checks that have been:

Accepted Answer

Outstanding checks are checks that have been written, recorded in the company books, sent to the payee (customer, supplier, or creditor), but not yet paid by the bank. This means that the company's bank account balance will be higher than its actual balance until the checks are cleared by the bank. The other choices are incorrect: A describes cleared checks, B describes unrecorded checks, C describes blank checks, and E describes bank-issued checks (which would not be outstanding).

Quiz 6: Reporting and Analyzing Cash and Internal Controls