1. A compensating balance refers to: A) The minimum balance established for a petty cash fund B) A minimum balance that a financial institution requires a firm to maintain in its account as part of a borrowing arrangement C) The final cash balance achieved in a bank reconciliation D) The amount of cash invested temporarily in highly marketable securities 2. Which of the following would you add to the balance per general ledger to arrive at the reconciled cash balance in a bank reconciliation? A) Bank service charge B) Collection of a note by bank C) "NSF checks D) Deposits in transit 3. In reconciling the January bank statement, the vice president discovered that the bookkeeper had recorded a check written for $681 as $816 in the cash disbursements lournal. For the bank reconciliation, the $135 error should be: A) Added to balance per bank statement B) Added to balance per general ledger C) Deducted from balance per bank statement D) Deducted from balance per general ledger 4. The following information pertains to Julianna Company Cash balance per bank statement Cash balance per general ledger Bank service charge Deposits in transit to bank Outstanding checks NSF check returned by bank $28,700 30,160 80 3,600 2,620 400 Julianna should show the following reconciled cash balance from the bank reconciliation on its balance sheet: A) $27,080 B) $33,780 C) $29,680 D) $32,220 5. Identify the principle of internal control that is violated in the following situation: Alexis Company is a very small business. Alexis Bailey, one of the two office clerks, opens the mail each day and removes the cash receipts that come in the mail. Alexis then records the receipts in the cash records and the customer's account and deposits the cash in the bank. A) Insure assets and bond key employee B) Maintain adequate records C) Divide responsibility for related transactions. D) Perform regular and independent reviews Which of the following is not a feature of good internal accounting control over cash? A) All cash receipts are deposited in the bank each day. B) Most bills are paid with paper currency and coins to minimize the bank service charges. C) A bank reconciliation is prepared when each bank statement is received D) Cash is handled separately from the recording of cash transactions. 7. Which of the following features should not be included in a good system of internal accounting control over cash? A) All receipts are deposited daily in the bank. B) All major disbursements are made by check, and an imprest fund is used for petty cash disbursements C) Cash handling is separated from the recording of cash transactions. D) Monthly bank reconciliations are prepared by the person who makes the daily bank deposits. In establishing an effective internal control structure, management should: A) Establish a good control environment. B) Provide an effective accounting system. C) Integrate control procedures into the control environment and accounting system. D) All of the above. 9. Which of the following is desirable in a good system of internal accounting control? A) Responsibility and authority for a given function should be shared among several employees B) Appropriate forms, such as checks and sales invoices, should have preprinted control numbers C) All accounting personnel in a firm should be bonded D) To obtain the benefit of specialization, employees should not be rotated among similar jobs 10. At what amount will accounts receivable for Advantage Company be reported on the balance sheet if the gross receivable balance is $52,000 and the allowance for doubtful accounts is estimated at 4% of gross receivables? A) $52,960 B) $47,000 C) $49.920 D) $28,200 11. Great Landscapes Company estimates its doubtful accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. The Great Landscapes Company computes a total of $3,600 in estimated doubtful accounts as of December 31, 2019. Its Accounts Receivable account has a balance of $112.800 and its Allowance for Doubtful Accounts has a credit balance of $600 before adjustment at December 31, 2019 How much bad debts expense will Great Escapes report in 2019? A) $ 480 B) $3,840 C) $3,000