Principles of Accounting I Module 7 Quiz

Businesses that have several bank accounts, such as one for general cash payments and another for payroll, normally maintain a separate ledger account for each.

• True

• False

Which of the following items that might appear on a bank reconciliation would not require a journal entry?

• bank service charges

• deposits in transit

• NSF checks

• a check for $630 recorded in the check register for $360

A necessary element of internal control is

• database

• systems design

• systems analysis

• information and communication

The type of account and normal balance of Petty Cash is a(n)

• revenue, credit

• asset, debit

• liability, credit

• expense, debit

On the bank reconciliation, outstanding checks are

• a bank statement adjustment

• a company books adjustment

• a bank statement adjustment or a company books adjustment

• none of these choices

The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.

• True

• False

Which of the following could signal internal control problems within the accounting system?

(1) Safeguarding inventory in a locked warehouse

(2) Abuse of alcohol or drugs

(3) Gaps in transactions numbers

(4) Operating style of management

(5) Sudden increase in slow payments

• 1 and 2

• 3 and 5

• 2 and 4

• 1 and 3

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

• accounting controls

• cash controls

• FASB controls

• GAAP controls

In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the balance per company's records.

• True

• False

A bank reconciliation should be prepared periodically because

• the company's records and the bank's records are in agreement

• the bank has not recorded all of its transactions

• any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected

• the bank must make sure that its records are correct