Quiz
Chapter 6 acct
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Questions in this quiz (25)
1The number of days' sales uncollected:
- AIs used to evaluate the liquidity of receivables.
- BIs calculated by dividing accounts receivable by sales.
- CMeasures a company's ability to pay its bills on time.
- DMeasures a company's debt to income.
- EIs calculated by dividing sales by accounts receivable.
2A properly designed internal control system is a key part of accounting information systems' design, analysis, and performance.
- ATrue
- BFalse
3The number of days' sales uncollected is calculated by:
- ADividing accounts receivable by net sales.
- BDividing accounts receivable by net sales and then multiplying by 365.
- CDividing net sales by accounts receivable.
- DDividing net sales by accounts receivable and then multiplying by 365.
- EMultiplying net sales by accounts receivable and dividing the result by 365.
4An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):
- AInternal audit.
- BBank reconciliation.
- CBank audit.
- DTrial reconciliation.
- EAnalysis of debits and credits.
5The main principles of internal control include which of the following:
- AEstablish responsibilities.
- BMaintain minimal records.
- CUse only computerized systems.
- DBond all employees.
- ERequire automated sales systems.
6Two important limitations of internal control systems are (1) human error or human fraud and (2) cost-benefit.
- ATrue
- BFalse
7Good internal control dictates that a person who controls an asset should also maintain the accounting records for that asset.
- ATrue
- BFalse
8A company had net sales of $31,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected is equal to:
- A11.7 days
- B23.3 days
- C31.3 days
- D42.5 days
- E46.6 days
9Outstanding checks refer to checks that have been:
- AWritten, recorded, sent to payees, and received and paid by the bank.
- BWritten and not yet recorded in the company books.
- CHeld as blank checks.
- DWritten, recorded on the company books, sent to the customer, supplier, or creditor but not yet paid by the bank.
- EIssued by the bank.
10A 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:
- AAdded to the book balance of cash.
- BDeducted from the book balance of cash.
- CAdded to the bank balance of cash.
- DDeducted from the bank balance of cash.
- ENot included as a reconciling item.
11A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.
- ATrue
- BFalse
12Outstanding checks refer to checks that have been:
- AWritten, recorded, sent to payees, and received and paid by the bank.
- BWritten and not yet recorded in the company books.
- CHeld as blank checks.
- DWritten, recorded on the company books, sent to the customer, supplier, or creditor but not yet paid by the bank.
- EIssued by the bank.
13Fluffy Pet Groomingdeposits all cash receipts on the day when they are received and all cash payments are made by check. At the close of business on June 30, its Cash account shows a $14,811 debit balance. Fluffy Pet Grooming's June 30 bank statement shows $14,472 on deposit in the bank. Prepare a bank reconciliation for Fluffy Pet Grooming using the following information:
a. Outstanding checks as of June 30 total $2,261.
b. The June 30 bank statement included a $75 debit memorandum for bank services.
c. Check No. 919, listed with the canceled checks, was correctly drawn for $789 in payment of a utility bill on June 15. Fluffy Pet Grooming mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $798.
d. The June 30 cash receipts of $2,534 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement.
What is the adjusted bank balance?- A$14,265
- B$14,745
- C$14,677
- D$14,538
- E$14,877
14A 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:
- AAdded to the book balance of cash.
- BDeducted from the book balance of cash.
- CAdded to the bank balance of cash.
- DDeducted from the bank balance of cash.
- EIgnored in preparing the period's bank reconciliation.
15Which of the following is the most serious limitation of internal controls?
- AComputer error
- BHuman fraud or human error
- CCost-benefit principle
- DCybercrime
- EManagement fraud
16Deposits in transit are deposits made and recorded by the depositor but not yet recorded on the bank statement.
- ATrue
- BFalse
17In 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:
- ADeduct $3,600 from the book balance of cash.
- BAdd $3,600 to the bank statement balance.
- CAdd $7,390 to the book balance of cash.
- DDeduct $3,600 from the bank statement balance.
- EAdd $3,600 to the book balance of cash.
18A company's internal control system:
- AEliminates the risk of loss.
- BMonitors and controls business activities.
- CEliminates human error.
- DEliminates the need for audits.
- EIs not necessary in large companies.
19The following information is available to reconcile Sleepy Time Bedding's book balance of cash with its bank statement cash balance as of July 31:
a. On July 31, the company's Cash account has a $25,862 debit balance, but its July bank statement shows a $28,177 cash balance.
b. Check No. 1531 for $1,520 and Check No. 1540 for $752 were outstanding on the June 30 bank reconciliation. Check No. 1540 is listed with the July canceled checks, but Check No. 1531 is not. Also, Check No. 1565 for $536 and Check No. 1569 for $2,288, both written in July, are not among the canceled checks on the July 31 statement.
c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 1556 for July rent was correctly written and drawn for $1,240 but was erroneously entered in the accounting records as $1,230.
d. A credit memorandum enclosed with the July bank statement indicates the bank collected $9,500 cash on a noninterest-bearing note for Sleepy Time Bedding, deducted a $48 collection fee, and credited the remainder to its account. Sleepy Time Bedding had not recorded this event before receiving the statement.
e. A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Sleepy Time Bedding has not yet recorded this check as NSF.
f. Enclosed with the July statement is a $14 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.
g. Sleepy Time Bedding July 31 daily cash receipts of $10,652 were placed in the bank's night depository on that date but do not appear on the July 31 bank statement.
What is the appropriate journal entry to record the collection made by the bank?- ADebit to cash $9,500 credit to accounts receivable $9,500.
- BCredit to accounts receivable $9,500 credit to cash $9,500.
- CDebit to cash $9,452 debit to collection expense $48 credit accounts receivable $9,500.
- DDebit to cash $9,452 debit to collection expense $48 credit notes receivable $9,500.
- ENo adjusting entry is necessary.
20Fluffy Pet Grooming deposits all cash receipts on the day when they are received and all payments are made by check. At the close of business on June 30, its Cash account shows a $14,811 debit balance. Fluffy Pet Grooming's June 30 bank statement shows $14,472 on deposit in the bank. Prepare a bank reconciliation for Fluffy Pet Grooming using the following information:
a. Outstanding checks as of June 30 total $2,261.
b. The June 30 bank statement included a $75 debit memorandum for bank services.
c. Check No. 919, listed with the canceled checks, was correctly drawn for $789 in payment of a utility bill on June 15. Fluffy Pet Grooming mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $798.
d. The June 30 cash receipts of $2,534 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement.
What is the adjusting journal entry required as a result to record the increase in cash for the adjusted bank balance?- ADebit to cash $2,261 credit to accounts receivable $2,261.
- BCredit to accounts receivable $2,261 debit to cash $2,261.
- CNo adjusting entry is necessary.
- DDebit to cash $2,534 credit to accounts receivable $2,534.
- ECredit to cash $2,534 credit to accounts receivable $2,534.
21A 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:
- ADeduct the deposit from the bank statement balance.
- BSend the bank a debit memorandum.
- CDeduct the deposit from the September 30 book balance and add it to the October 1 book balance.
- DAdd the deposit to the book balance of cash.
- EAdd the deposit to the bank statement balance.
22In 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:
- ADeduct $3,600 from the book balance of cash.
- BAdd $3,700 to the bank statement balance.
- CAdd $7,390 to the book balance of cash.
- DDeduct $3,600 from the bank statement balance.
- EAdd 3,600 to the book balance of cash.
23On a bank reconciliation, an unrecorded debit memorandum for printing checks is:
- ANoted as a memorandum only.
- BAdded to the book balance of cash.
- CDeducted from the book balance of cash.
- DAdded to the bank balance of cash.
- EDeducted from the bank balance of cash.
24The following information is available to reconcile Sleepy Time Bedding's book balance of cash with its bank statement cash balance as of July 31:
a. On July 31, the company's Cash account has a $25,862 debit balance, but its July bank statement shows a $28,177 cash balance.
b. Check No. 1531 for $1,520 and Check No. 1540 for $752 were outstanding on the June 30 bank reconciliation. Check No. 1540 is listed with the July canceled checks, but Check No. 1531 is not. Also, Check No. 1565 for $536 and Check No. 1569 for $2,288, both written in July, are not among the canceled checks on the July 31 statement.
c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 1556 for July rent was correctly written and drawn for $1,240 but was erroneously entered in the accounting records as $1,230.
d. A credit memorandum enclosed with the July bank statement indicates the bank collected $9,500 cash on a noninterest-bearing note for Sleepy Time Bedding, deducted a $48 collection fee, and credited the remainder to its account. Sleepy Time Bedding had not recorded this event before receiving the statement.
e. A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Sleepy Time Bedding has not yet recorded this check as NSF.
f. Enclosed with the July statement is a $14 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.
g. Sleepy Time Bedding July 31 daily cash receipts of $10,652 were placed in the bank's night depository on that date, but do not appear on the July 31 bank statement.
What is the adjusted book balance?- A$34,485
- B$34,994
- C$28,150
- D$27,025
- E$31,617
25In 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?
- A$180 decrease to Cash and a $180 decrease to Utility Expense.
- B$180 increase to Cash and a $180 decrease to Utility Expense.
- C$20 decrease to Cash and a $20 decrease to Utility Expense.
- D$20 increase to Cash and a $120 decrease to Utility Expense.
- E$970 increase to Cash.
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- Accounting Quiz on Chapter 6 acct, created by Rachel Cascada on 27/03/2018.
- Author
- Rachel Cascada
- Language
- English
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- Created on 27 Mar 2018 · updated on 27 Mar 2018
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