7)

Which of the following is not an example of internal control over cash?

A)Preparation of a cash budget

B)Daily deposits of cash receipts at the bank

C)Preparation of bank reconciliation

D)Combining the functions of signing checks with the approval of expenditures

8) The purpose of establishing a petty cash fund is to:

A)Keep enough cash on hand in the office to cover all normal operating expenses of the business for a period of time.

B)Ensure that the amount of cash in the bank does not become excessive.

C)Achieve internal control over small cash disbursements not made by check.

D)Keep track of expenditures paid out of cash receipts from customers prior to deposit.

9) A good system of internal control will include all of the following except:

A)Separating the handling of cash from the maintenance of accounting records.

B)Reconciling bank statements with accounting records.

C)Making all major payments by check.

D)Preparing a pro-forma financial statement on a monthly basis.

10) Efficient management of cash includes which of the following concepts?

A)Pay suppliers in cash out of cash sales receipts before depositing them in the bank.

B)Pay each bill as soon as the invoice is received.

C)Deposit all cash receipts and make all cash disbursements at the end of each week.

D)Prepare control listing of cash receipts at the time and place the money is received.

11) After preparing a bank reconciliation, a journal entry would be required for which

of the following:

A)Interest earned on the company's checking account.

B)A check for $48 given to a supplier but not yet recorded by the company's bank.

C)A deposit made by a company with a similar name and credited to your account.

D)A deposit in transit.

12)

When preparing a bank reconciliation, outstanding checks will:

A) Increase the balance per depositor's records.

B) Increase the balance per the bank statement.

C) Decrease the balance per the bank statement.

D) Decrease the balance per depositor's records.

13)

In reconciling a bank statement, which of the following items could cause the cash

per the bank statement to be greater than the balance of cash shown in the

depositor's accounting records?

A)A check returned to the depositor marked NSF

B)A bank service charge

C)An outstanding check

D)Check 457 written for $643 was recorded by the depositor as $463

14) Which of the following items would cause cash per the bank statement to be

smaller than the balance of cash shown in the accounting records?

A)Check no. 824, in the amount of $620.30, is recorded by the bank as $602.30

B)Outstanding checks

C)Deposits in transit

D)Interest earned on the average balance of the checking account

15) While preparing the bank reconciliation, an accountant discovered that a $426

check returned with the bank statement had been recorded erroneously in the depositor's accounting records as $462.In preparing the bank reconciliation the appropriate action to correct this error would be to:

A) Deduct $36 from the balance per the bank statement.

B) Add $36 to the balance per the depositor's records.

C) Deduct $36 from the balance per the depositor's records.

D) Add $36 to the balance per the bank statement.

The Cash account in the ledger of Hensley, Inc. showed a balance of $3,100 at June 30. The bank statement, however, showed a balance of $3,900 at the same date. The only reconciling items consisted of a $700 deposit in transit, a bank service charge of $7, and a large number of outstanding checks.

16)

What is the "adjusted cash balance" at June 30?

A) $3,093.

B) $3,900.

C) $7,600.

D) $2,400.

17)

What is the total amount of the outstanding checks at June 30?

A) $1,500.

B) $1,486.

C) $1,513.

D) $1,507.

18)

Upon completion of the bank reconciliation, a journal entry will be required to

update the depositor's accounting records. This entry will include a:

A)Debit to Bank Service Charge Expense for $7.

B)Debit to Cash for $7.

C)Debit to Cash for $700.

D)Credit to Cash for $700.