Question 1

A remittance advice is a(n):

Accepted Answer

A remittance advice is a document sent by a customer to a supplier to inform them that their invoice has been paid, often accompanying a payment by check.

Question 2

Freeman Co.had net sales of $4.2 million and ending accounts receivable of $0.8 million.Its days' sales uncollected equals:

Accepted Answer

Days' sales uncollected is calculated by dividing ending accounts receivable by daily sales (net sales divided by 365 days). For Freeman Co., this is $0.8 million / ($4.2 million / 365 days) = 69.5 days.

Question 3

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Accepted Answer

Option C weakens control over cash receipts because it allows only one person to handle the mail and the cash, which increases the risk of theft or misappropriation. In addition, the person who opens the mail and handles the cash should not be the same person to deposit the money into the bank, which ensures segregation of duties and reduces the risk of errors or fraud. Options A, B, D, and E strengthen control over cash receipts by providing proper documentation, segregation of duties, accountability, and compliance with the policies and procedures.

Question 4

The Cash Over and Short account:

Accepted Answer

The Cash Over and Short account is used to record the income effects of errors in making change and/or processing petty cash transactions. When there is a discrepancy between the actual cash on hand and the amount recorded in the cash account, the difference is recorded in the Cash Over and Short account. This account can have either a debit or credit balance, depending on whether there is more cash or less cash on hand than expected. While it may not be necessary in a computerized accounting system, it is still used in many businesses for manual record-keeping purposes.

Question 5

A bank does not reduce the account of the depositor of which of the following?

Accepted Answer

A deposit to a depositor's account increases or adds to the account balance rather than reducing it, unlike withdrawals, fees, uncollectible checks, and periodic payments, which all decrease the account balance.

Question 6

A bank statement provided by the bank includes:

Accepted Answer

A bank statement provided by the bank includes the beginning and ending balance of the depositor's account. While some statements may also include A) a list of outstanding checks, D) a listing of deposits in transit, and E) a reconciliation to the depositor cash account, the basic information provided by the bank always includes the account balance. B) A list of petty cash amounts is not typically included on a bank statement.

Question 7

The following information is taken from Reagan Company's December 31 balance sheet: If net sales for the current year were $612,000,the firm's days' sales uncollected for the year is: $\bold{\text{(Use 365 days a year.)}}$

Accepted Answer

The answer of The following information is taken from Reagan...

Question 8

At the end of the day,the cash register's record shows $2,050,but the count of cash in the cash register is $2,058.The correct entry to record the cash sales is

Accepted Answer

The count of cash in the cash register is the actual amount of cash received, which is $2,058. However, the cash register's record shows $2,050. This means there is a cash overage of $8 ($2,058 - $2,050). Therefore, we need to debit Cash for the actual amount received ($2,058), credit Sales for the recorded amount ($2,050), and credit Cash Over and Short for the difference ($8). This entry will reconcile the discrepancy between the recorded amount and the actual amount of cash in the register.

Question 9

The number of days' sales uncollected:

Accepted Answer

The number of days' sales uncollected is a metric used to evaluate the liquidity of receivables, indicating how quickly a company can convert its receivables into cash.

Question 10

Preparing a bank reconciliation on a monthly basis is an example of:

Accepted Answer

Preparing a bank reconciliation on a monthly basis is an example of protecting assets by proving the accuracy of cash records. This helps to detect any errors or fraud in recording transactions and ensures the accuracy of the company's financial statements.

Question 11

The number of days' sales uncollected is used to:

Accepted Answer

The number of days' sales uncollected is a measure of how many days, on average, it takes for a company to collect payment from its customers, from the time the sale is made to when the cash is received. It estimates how much time is likely to pass before the current amount of accounts receivable is received in cash.

Question 12

The number of days' sales uncollected is calculated by:

Accepted Answer

The number of days' sales uncollected is a measure of the average number of days it takes for a company to collect its accounts receivable. It is calculated by taking accounts receivable and dividing it by net sales, and then multiplying the result by 365. This gives an estimate of how long it takes for a company to collect its accounts receivable. Option A is incorrect because it only divides accounts receivable by net sales, without taking into account the time period. Option C is incorrect because it divides net sales by accounts receivable, which does not provide any meaningful information about how long it takes to collect accounts receivable. Option D is also incorrect because it only divides net sales by accounts receivable, without multiplying by 365. Option E is incorrect because it multiplies net sales by accounts receivable, which does not result in the calculation of number of days' sales uncollected.

Question 13

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period.Its days' sales uncollected equals: (Use 365 days a year.)

Accepted Answer

Days' Sales Uncollected = (Ending Accounts Receivable / Net Sales) x Number of days in the year
= ($2,700 / $21,500) x 365
= 45.8 days

Question 14

A voucher is an internal document or file:

Accepted Answer

A voucher is a document used to control cash payments and ensure proper recording of transactions. It is prepared before the actual payment is made and includes important information such as vendor details, amount to be paid, and the account codes to be charged. Vouchers are also used to document approvals and authorization of payments.

Question 15

The voucher system of control:

Accepted Answer

The voucher system of control involves establishing procedures for verifying, approving, and recording liabilities for eventual cash payment. Option A describes the control of cash receipts and the acceptance of liabilities, which is more related to cash control than the voucher system. Option C describes the procedures for receiving checks, but it does not capture the essence of the voucher system. Option D is not correct, as the voucher system can be used with any supplier, not just in cases of multiple purchases. Finally, option E is incorrect, as small to mid-sized companies can benefit from implementing the voucher system to improve their control over liabilities and expenses.

Question 16

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Accepted Answer

The account used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled "Cash Over and Short."

Question 17

Internal control procedures for cash receipts do not require that:

Accepted Answer

While it is important to collect all sales immediately and for clerks with access to cash to not have access to the register tape or file, these are not the only internal control procedures for cash receipts. The other options listed (A, C, D, and E) are all important procedures to ensure proper handling and recording of cash receipts.

Question 18

A set of procedures and approvals for verifying,approving and recording liabilities for eventual cash payment,and for issuing checks for payment only of verified,approved,and recorded liabilities is referred to as a(n):

Accepted Answer

A voucher system is a set of procedures and approvals for verifying, approving, and recording liabilities for eventual cash payment, and for issuing checks for payment only of verified, approved, and recorded liabilities. This system ensures that all cash disbursements are properly authorized and supported by appropriate documentation. Internal cash system, petty cash system, and cash control system are not specific terms used to describe this process.

Question 19

At the end of the day,the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010.The proper entry to account for this excess is:

Accepted Answer

The excess of $10 needs to be accounted for in the Cash Over and Short account, which is a contra account to Cash. Therefore, the proper entry would be to debit Cash for the actual amount of cash received ($1,010), credit Sales for the actual amount of sales ($1,000), and credit Cash Over and Short for the excess amount ($10).

Question 20

All of the following are true of the number of days' sales uncollected ratio except:

Accepted Answer

The number of days' sales uncollected ratio is not effective in evaluating the cash sales of a company. It only measures how much time is likely to pass before the current amount of accounts receivable is received in cash.

Quiz 6: Cash,fraud,and Internal Controls

A remittance advice is a(n) :

Freeman Co.had net sales of $4.2 million and ending accounts receivable of $0.8 million.Its days' sales uncollected equals:

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

The Cash Over and Short account:

A bank does not reduce the account of the depositor of which of the following?

A bank statement provided by the bank includes:

At the end of the day,the cash register's record shows $2,050,but the count of cash in the cash register is $2,058.The correct entry to record the cash sales is

The number of days' sales uncollected:

Preparing a bank reconciliation on a monthly basis is an example of:

The number of days' sales uncollected is used to:

The number of days' sales uncollected is calculated by:

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period.Its days' sales uncollected equals: (Use 365 days a year.)

A voucher is an internal document or file:

The voucher system of control:

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Internal control procedures for cash receipts do not require that:

A set of procedures and approvals for verifying,approving and recording liabilities for eventual cash payment,and for issuing checks for payment only of verified,approved,and recorded liabilities is referred to as a(n) :

At the end of the day,the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010.The proper entry to account for this excess is:

All of the following are true of the number of days' sales uncollected ratio except:

Quiz 6: Cash,fraud,and Internal Controls

A remittance advice is a(n) :

Freeman Co.had net sales of $4.2 million and ending accounts receivable of $0.8 million.Its days' sales uncollected equals:

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

The Cash Over and Short account:

A bank does not reduce the account of the depositor of which of the following?

A bank statement provided by the bank includes:

The following information is taken from Reagan Company's December 31 balance sheet: If net sales for the current year were $612,000,the firm's days' sales uncollected for the year is: (Use 365 days a year.) \bold{\text{(Use 365 days a year.) }}(Use 365 days a year.)

At the end of the day,the cash register's record shows $2,050,but the count of cash in the cash register is $2,058.The correct entry to record the cash sales is

The number of days' sales uncollected:

Preparing a bank reconciliation on a monthly basis is an example of:

The number of days' sales uncollected is used to:

The number of days' sales uncollected is calculated by:

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period.Its days' sales uncollected equals: (Use 365 days a year.)

A voucher is an internal document or file:

The voucher system of control:

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Internal control procedures for cash receipts do not require that:

A set of procedures and approvals for verifying,approving and recording liabilities for eventual cash payment,and for issuing checks for payment only of verified,approved,and recorded liabilities is referred to as a(n) :

At the end of the day,the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010.The proper entry to account for this excess is:

All of the following are true of the number of days' sales uncollected ratio except: