Question 1

A voucher is an internal document or file used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Accepted Answer

This is true. A voucher is used to document and control cash disbursements and ensure proper recording of transactions.

Question 2

Assume that at the end of the day,the cash register tape shows a balance of $635.However,the cash drawer has a balance of $650,this difference should be debited to Miscellaneous Expense.

Accepted Answer

The difference should be credited to Cash Over and Short, not debited to Miscellaneous Expense, as it represents an overage in the cash drawer.

Question 3

Deposits in transit are deposits made and recorded by the depositor,but not yet recorded on the bank statement.

Accepted Answer

Deposits in transit are deposits made by the depositor but not yet recorded on the bank statement, so they will not appear on the bank statement until a later time.

Question 4

The journal entry for petty cash reimbursement involves a debit to the appropriate expenses and a credit to Petty Cash.

Accepted Answer

The journal entry for petty cash reimbursement involves a debit to the appropriate expenses and a credit to Cash (not Petty Cash), as the Petty Cash account was initially funded from the main Cash account and is being replenished.

Question 5

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Accepted Answer

Outstanding checks are checks that have been issued by the customer but have not yet been cashed or cleared by the bank. They are not yet deducted from the customer's account.

Question 6

The Petty Cash account is a separate checking account used for small amounts.

Accepted Answer

Petty Cash is not a separate checking account, but rather a fund of cash set aside for small purchases or expenses. It is typically managed through a manual or digital log or ledger, and may be replenished periodically by a designated employee or department.

Question 7

Cash receipts by mail require only two people: One to open the mail and a second person to deposit the cash in the bank and record the cash receipt in the accounting records.

Accepted Answer

In addition to opening the mail and depositing the cash, a third person should be involved in reconciling the bank statement to ensure all deposits were made and recorded accurately in the accounting records.

Question 8

Vouchers should be used only for purchases.Other expenditures do not need to go through the voucher system.

Accepted Answer

All expenditures, including reimbursements and other non-purchase related expenses, should go through the voucher system for proper tracking and documentation.

Question 9

An effective voucher system has limited ability in preventing a dishonest employee from colluding with a dishonest supplier to fraudulently acquire cash payments for goods and services not received.

Accepted Answer

The answer of An effective voucher system has limited ability...

Question 10

A voucher system establishes procedures for verifying,approving and recording obligations for eventual cash disbursement.

Accepted Answer

A voucher system is a process used by businesses to document and approve transactions before they are paid for. It involves verifying the authenticity of the transaction, approving it for payment, and then recording the obligation for eventual cash disbursement.

Question 11

Receiving and paying for merchandise should be performed by one individual or department to streamline a voucher system and simplify the procedures for purchasing.

Accepted Answer

The answer of Receiving and paying for merchandise should be...

Question 12

A voucher system's control over cash disbursements begins when a company incurs an obligation that will result in eventual payment of cash.

Accepted Answer

A voucher system is designed to control cash disbursements by generating documentation, or vouchers, for each payment made. This process begins when a company incurs an obligation that will eventually require payment of cash, such as receiving an invoice from a vendor. The voucher system helps ensure that all payments are properly authorized, documented, and accounted for, reducing the risk of errors, fraud, or misuse of company funds.

Question 13

All disbursements from petty cash should be documented by a petty cash receipt.

Accepted Answer

Petty cash receipts should be used to document all disbursements from petty cash to ensure proper tracking and accountability of the funds.

Question 14

If the Cash Over and Short account has a debit balance at the end of the period,the amount is reported as miscellaneous revenue.

Accepted Answer

If the Cash Over and Short account has a debit balance at the end of the period, it indicates a shortage and is reported as a miscellaneous expense, not revenue.

Question 15

The entry to increase the balance in petty cash from $50 to $75 would be to credit the Petty Cash account in the amount of $25.

Accepted Answer

The answer of The entry to increase the balance in...

Question 16

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

Accepted Answer

This is a correct statement about bank reconciliations.

Question 17

The clerk who has access to the cash in the cash register should not have access to the cash register tape or file.

Accepted Answer

This is a principle of internal control aimed at preventing fraud or theft, by separating the duties of handling cash and recording transactions to ensure checks and balances.

Question 18

For good internal controls over cash,all payments should be made from the petty cash,except for very large payments.

Accepted Answer

All payments should not be made from petty cash. Petty cash should only be used for small, routine expenses such as office supplies or minor repairs. Large payments should still be made through the regular accounts payable process and approved by a supervisor or manager. This helps maintain proper segregation of duties and reduces the risk of fraud or error.

Question 19

Assume that cash sales according to the register file total $705 but the amount of cash in the register is $685.This cash shortage of $20 represents a Miscellaneous Expense.

Accepted Answer

The $20 cash shortage represents a miscellaneous expense because it is not accounted for by any other transaction or discrepancy.

Question 20

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

Accepted Answer

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared to ensure accurate financial statements and maintain an appropriate amount of cash on hand.

Quiz 6: Reporting and Analyzing Cash and Internal Controls