Question 1The balance in the Petty Cash ledger account will be larger after the petty cash fund is replenished than itwas before.TrueFalse
Question 2It is impossible to construct a foolproof system of internal control.TrueFalse
Question 3Sales rung on the cash register equaled $980.50. Cash in the drawer totaled $975.00. What entrycorrectly records this day’s sales?A. Cash980.50SalesB. CashSales980.50975.00975.00C. Cash980.50Cash Short and Over5.50Sales975.00D. CashCash Short and OverSales975.005.50980.50
Question 4Deposits in transit will appear as additions to the company’s balance at the bank on the next bankstatement.TrueFalse
Question 5The bank reconciliation:A. has as its only purpose the disclosure of errors made by the bank in handling thedepositor’s account.B. need not be prepared when a daily cash position statement is prepared.C. begins with the balance per bank statement and the balance per the ledger for cashand reconciles both balances with the adjusted Cash balance in the general ledger.D. is prepared monthly by the bank for each of its depositors.
Question 6The custodian of the petty cash fund presented the following vouchers for reimbursement:No.223 Transportation-in$124.70No.224 Postage expense72.00No.225 Miscellaneous expense15.92No.226 Transportation-in51.00The fund was set up for $400. The current amount of cash in the fund is $135.98. The journal entry torecord the reimbursement would be:A. Transportation-in175.70Postage Expense72.00Miscellaneous Expense15.92Cash Short and Over.40CashB. Transportation-in264.02175.70Postage Expense72.00Miscellaneous Expense15.92Cash Short and Over.40Petty Cash264.02C. Transportation-in175.70Miscellaneous Expense15.92Postage Expense72.00CashD. Miscellaneous ExpenseCash263.62263.62263.62
Question 7The bank statement is a report sent to a depositor by a bank showing the activity in a company’schecking account for a period of time, usually a month.TrueFalse
Question 8The functions of handling cash receipts and cash disbursements should be completely separated, ifpossible.TrueFalse
Question 9Each disbursement from the petty cash fund should be supported by a petty cash voucher.TrueFalse
Question 10At any time, the sum of the cash in the petty cash fund and the total of the petty cash vouchers shouldequal the total amount for which the petty cash fund was established.TrueFalse
Question 11Control of cash is especially important to a business because:A. there is usually so little on hand.B. it represents such a large portion of the assets in a business.C. thieves desire cash because it can be used to purchase almost anything.D. the manner in which a company manages its cash makes a significant impression onthe public.
Question 12Employees should be rotated in their job assignments when possible.TrueFalse
Question 13Making deposits of cash is not worth the effort.TrueFalse
Question 14Depreciation accounting could best be defined as:A. a systematic cost allocation process.B. the recognition of a cash expense.C. the process of building up a fund of cash to replace plant assets.D. All of the above answers are correct
Question 15A machine with an estimated useful life of six years is being depreciated using the straight-line method.After recording depreciation at the end of the third year, the Accumulated Depreciation account balanceis $6,000. What will be the depreciation expense for the fourth year?A. $1,000B. $1,500C. $2,000D. Cannot be determined from the data provided.
Question 16Under the straight-line method of depreciation, the annual depreciation charge is a constant amount.TrueFalse
Question 17The costs of land and land improvements should be recorded in the same account.TrueFalse
Question 18In general, plant assets should be recorded initially at their cash price or cash equivalent price.TrueFalse
Question 19Companies do not have to disclose in their financial statements the method(s) of depreciation they areusing.TrueFalse
Question 20Capital expenditures increase the net book value of the plant asset.TrueFalse
Question 21Cost of a plant asset includes all normal, reasonable, and necessary outlays to obtain and get the assetready for use.TrueFalse
Question 22The cost to demolish an unwanted structure on newly acquired land should be debited to the Landaccount.TrueFalseQuestion 23A machine with a cost of $40,000, an estimated useful life of four years, and an estimated salvage valueof $8,000 is being depreciated using the straight-line method. How much depreciation will be chargedfor the third year?A. $ 8,000B. $16,000C. $10,000D. $ 4,000sQuestion 24The units-of-production method of depreciation produces a constant charge per year of depreciation fora plant asset.TrueFalseQuestion 25The basis of valuation or measurement of plant assets is called historical cost.TrueFalse