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| 1.
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Which of the following is not a broad principle of internal control? |
| | A) | Responsibilities should be clearly established |
| | B) | Adequate records should be maintained |
| | C) | Assets should be insured and employees bonded |
| | D) | Record-keeping and custody should be combined |
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| 2.
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Which of the following is not a broad principle of internal control? |
| | A) | Responsibilities should be clearly established |
| | B) | Adequate records should be maintained |
| | C) | Regular and dependent reviews |
| | D) | Responsibility for related transactions should be divided |
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| 3.
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The proper treatment of outstanding cheques on a bank reconciliation is to show them as a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 4.
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The proper treatment of unrecorded deposits (deposits in transit) on a bank reconciliation is to show them as a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 5.
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The proper treatment on the bank reconciliation of a debit memorandum issued by the bank is to show it as a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 6.
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The proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 7.
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The proper treatment on the bank reconciliation of an NSF cheque of a customer that is returned with the bank statement is to show it as a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 8.
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Which of the following would require the Petty Cash account to be credited? |
| | A) | the petty cash fund is short by $3.50 |
| | B) | the petty cash fund is over by $4.50 |
| | C) | the petty cash account is being increased |
| | D) | the petty cash account is being decreased |
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| 9.
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If the petty cash fund is not replenished at the end of the accounting reporting period, |
| | A) | the income statement and the balance sheet will not be correct |
| | B) | liabilities will be overstated on the balance sheet |
| | C) | the cash account will be understated |
| | D) | it indicates that the petty cash fund is probably short |
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| 10.
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The bookkeeper recorded a bank deposit at $450, but the bank recorded the deposit at its correct amount of $540. The bank reconciliation will require a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 11.
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The bookkeeper recorded a cheque at $340.56 for store supplies. The cheque was recorded by the bank at its correct amount of $430.65. The bank reconciliation will require a(an) |
| | A) | addition per book balance of cash |
| | B) | deduction per book balance of cash |
| | C) | addition per bank statement balance |
| | D) | deduction per bank statement balance |
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| 12.
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At the end of the day, the cashier: (1) counts the money in the cash drawer, (2) compares the cash count with the recorded sales for the day, and (3) makes notations of differences on a special report that is forwarded, along with the cash, to the accounting department. This procedure is |
| | A) | acceptable practice, adhering to internal control principles |
| | B) | designed to provide adequate internal control over cash |
| | C) | unacceptable practice, not following internal control principles |
| | D) | follows the broad principle of internal control of insuring assets |
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| 13.
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Management's ability to monitor and control business operations is greatly improved with a computerized accounting system because |
| | A) | computers provide more rapid access to large quantities of information |
| | B) | more hard evidence in the form of written forms and documents are used |
| | C) | separation of duties does not have to be maintained |
| | D) | data entry errors are always discovered in the early stages |
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| 14.
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To establish a petty cash fund for a department requires a journal entry that will |
| | A) | debit Cash and credit Petty Cash |
| | B) | debit Petty Cash and credit Cash |
| | C) | debit Miscellaneous Expense and credit Cash |
| | D) | debit Accounts Receivable and credit Petty Cash |
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| 15.
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Which of the following is not one of the principles of internal control. |
| | A) | Maintain adequate records |
| | B) | Separate record keeping from custody of assets |
| | C) | Apply technological controls |
| | D) | Make cash deposits at least every other day |
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| 16.
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A company' trial balance shows the balances on each of the following accounts: Cash $3,280, Short-term deposit $6,260, Accounts Receivable $8,650, Inventory $10,200, Accounts Payable $8,280, Wages Payable $3,640, Short-term Loan $7,420, Mortgage $125,000. What is the Acid-test ratio? |
| | A) | 0.20 |
| | B) | 0.94 |
| | C) | 1.47 |
| | D) | 5.08 |
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| 17.
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Which of the following statements is correct regarding the items affecting the bank side of a reconciliation: |
| | A) | add outstanding cheques |
| | B) | add unrecorded deposits |
| | C) | add NSF cheques |
| | D) | add interest earned. |
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| 18.
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Which of the following statements is not true regarding the item affecting the book side of a reconciliation: |
| | A) | subtract bank service charges |
| | B) | subtract debit memo |
| | C) | add NSF cheques |
| | D) | add interest earned |
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