Deck 7: Banking and Payroll

Question 1

COBRA is a law that gives many workers the right to continue their health insurance through a former employer's group plan for a limited time.

Answer 1

True

Question 2

A type of internal control that seeks to find losses that have taken place is a

A) preventive internal control
B) detective internal control
C) corrective internal control
D) both A and C

Answer 2

B

Question 3

Under a salary plan, an employee is paid a certain amount per week, month, or year.

Answer 3

True

Question 4

Which type of check endorsement provides little protection because anyone who has the check can easily transfer it to another person or cash the check?

A) blank endorsement
B) restrictive endorsement
C) special endorsement
D) none of the above

Question 5

The goal of detective internal controls is to reduce the loss of cash due to employee error or theft.

Question 6

Federal income tax deductions from pay are recommended but not required by law.

Question 7

Audits are done to see whether internal controls are being applied correctly.

Question 8

A deposit form or slip is used to record

A) currency, coins, and checks to be added to a bank account
B) only checks to be added to a bank account
C) cash but not checks to be added to a bank account
D) none of the above

Question 9

An IRA (individual retirement arrangement) account is a personal savings plan.

Question 10

A 403(b) retirement account is for employees of private companies.

Question 11

Electronic funds transfer

A) can be used for a one-time payment but not for regular monthly payments
B) is the use of a computer network to transfer funds from one party to another
C) is used for transactions between companies only
D) all the above

Question 12

A certified check is a check written by a bank on its own funds and can be purchased with cash or with an ordinary check

Question 13

Proving cash (balancing a cash register drawer) is an important type of internal control.

Question 14

Health insurance pays a benefit to a designated person or company in the event of the covered person's death.

Question 15

When preparing a check

A) the amount of the check is written in numbers and words on the check
B) the check register should show the check number, the date of the check, the payee, and the amount of the check
C) the purpose of the payment can be shown on the face of the check on the memo line
D) all the above

Question 16

Before depositing a check, you should carefully stamp or write an endorsement on the right edge of the back of the check.

Question 17

Many companies allow customers the option of having payments deducted directly from a bank account.

Question 18

A bank reconciliation is a report used to compare bank and company account records.

Question 19

Bank deposits can be made electronically at some automated teller machines.

Question 20

Business checks should always be prepared by hand rather than printed via computer software.

Question 21

Social Security benefits are paid

A) when a person retires
B) if a person becomes disabled
C) to a surviving spouse in the vent of that person's death
D) All of the above

Question 22

Examples of voluntary deductions from pay include

A) charitable donations
B) local income taxes
C) employee contributions to retirement plans
D) both A and C

Question 23

Which of the following statements is true about a Roth IRA?

A) You cannot deduct money placed in a Roth IRA on your tax return.
B) The earnings on your investment is subject to federal taxes.
C) You must be under age 70 ½ and have taxable income
D) both A and C

Question 24

The balance shown on the bank statement is $25,304.75. There is one outstanding check for $2,005.53, and one outstanding deposit for $5000.00.  What should the adjusted bank statement balance be on the bank reconciliation?

A) $20,304.75
B) $27,310.28
C) $28,299.22
D) $32,310.28

Question 25

A bank reconciliation is a type of

A) preventative internal control
B) detective internal control
C) corrective internal control
D) deductive internal control

Question 26

Overtime pay is

A) for hours worked beyond the set standard hours per week
B) typically for workers paid on a salary plan
C) typically for workers paid on an hourly wage plan
D) both A and C

Question 27

Electronic funds transfer (EFT) is the use of a computer network to transfer funds from

A) one company to another company
B) a company to an individual
C) an individual to an individual
D) All of the above

Question 29

A document that shows the earnings and deductions for all employees for the payroll period is

A) an employee earnings record
B) a payroll register
C) a wage and tax statement
D) both A and C

Question 30

Which of the following are not detailed on a bank statement?

A) Any automatic withdrawals
B) The balance on the closing date of the statement
C) The amount of the checks that are outstanding
D) both A and C

Question 31

Retirement accounts that are fully paid for by the employer are called

A) defined benefit pension plans
B) 401(k) retirement accounts
C) 403(b) retirement accounts
D) individual retirement arrangements

Question 32

When preparing a bank reconciliation, you should

A) compare the amount of each check with that shown on the bank statement
B) add outstanding check amounts to the check register balance
C) subtract outstanding deposit amounts from the bank balance
D) all the above

Question 33

The type of internal control to reduce loss of cash due to employee error or theft is a

A) preventative
B) detective
C) corrective
D) deductive

Question 34

Insurance that helps pay for costs such as doctors' bills, medicine, and hospital stays is

A) life insurance
B) disability insurance
C) health insurance
D) both A and C

Question 35

A salesperson is paid $500 per week plus 5 percent commission on sales. The sales for the week were $2,500. What is this person's gross pay for the week?

A) $3,000
B) $625
C) $750
D) $650

Question 36

Deductions from payroll that are required by law include

A) federal income tax
B) contributions to Social Security and Medicare
C) charitable contributions
D) both A and B

Question 37

A bank reconciliation is used to

A) Determine that all deposits made have been recorded by the bank
B) Verify that all checks were written by authorized persons in the company
C) Determine the cash balance at the date of the bank statement
D) All of the above

Question 38

Salary or wages earned before deductions are made is called

A) net pay
B) gross pay
C) overtime pay
D) disability pay