MBUS 300 Exam 2 Questions with
Complete Answers
The use of remittance advices for mail receipts is an example of - ANSWER-
documentation procedures.
The principles of internal control do not include - ANSWER-management
responsibility.
The principles of internal control include all of the following - ANSWER-physical
controls, independent internal verification, establishment of responsibility
Having different individuals receive cash, record cash receipts, and hold the cash is
an example of - ANSWER-segregation of duties
Counting of daily cash receipts by a supervisor is an application of which internal
control principle? - ANSWER-Independent internal verification
An employee authorized to sign checks should not record - ANSWER-cash
disbursement transactions
Entries are made to the Petty Cash account whe - ANSWER-establishing the fund-
includes a debit to petty cash and a credit to cash
A petty cash fund of $200 is replenished when the fund contains $5 in cash and
receipts of $190. The entry to replenish the fund would - ANSWER-debit the related
expense accounts for the receipts, $190, debit Cash Over and Short, $5 ($195 -
$190) and credit cash, $195.
The party who issues a check is the - ANSWER-maker
On a bank reconciliation, deposits in transit are - ANSWER-added to the bank
balance on a bank reconciliation
Cash is locked in a safe overnight. - ANSWER-physical controls
Employees who receive shipments of goods do not have access to the accounting
records for merchandise. - ANSWER-segregation of duties
Shipping documents are prenumbered. - ANSWER-documentation procedures
The bookkeeper does not have physical custody of assets. - ANSWER-segregation
of duties
Only the treasurer of the company can sign checks. - ANSWER-establishment of
responsibility
, EFT transfer to a supplier - ANSWER-deducted from the book balance
Bank service charge - ANSWER-deducted from the book balance
Check printing charge - ANSWER-deducted from the book balance
Error recording check # 214 which was written for $450 but recorded for $540 -
ANSWER-added to the book balance
Collection of note and interest by bank on company's behalf - ANSWER-added to the
book balance
Once a month, the sales department sends sales invoices to the accounting
department to be recorded. - ANSWER-documentation procedures
Leah Hutcherson orders merchandise for Rice Lake Company; she also receives
merchandise and authorizes payment for merchandise. - ANSWER-segregation of
duties
Several clerks at Great Foods use the same cash register drawer. - ANSWER-
establishment of responsibility
Buehler Company on June 15 sells merchandise on account to Chaz Co. for $1,000,
terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth $300 to Buehler
Company. On June 24, payment is received from Chaz Co. for the balance due.
What is the amount of cash received? - ANSWER-This amount constitutes payment
in full. Because it is received within 10 days of the purchase, the cash received is
$686 ($1,000 - $300) - (($1,000 - $300) X 2%).
If a company fails to record estimated bad debt expense, - ANSWER-expenses are
understated.
Voight Company's account balances at December 31 for Accounts Receivable and
Allowance for Doubtful Accounts were $1,400,000 and $70,000 (Cr.), respectively.
An aging of accounts receivable indicated that $128,000 are expected to become
uncollectible. The amount of the adjusting entry for bad debts at December 31 is
Entry field with correct answer
$128,000.
$198,000.
$58,000.
$70,000. - ANSWER-The desired ending balance in the Allowance for Doubtful
Accounts is $128,000. The current balance is $70,000, therefore the amount of the
adjusting entry is $128,000 - $70,000 = $58,000.
Hughes has a debit balance of $5,000 in its Allowance for Doubtful Accounts before
any adjustments are made at the end of the year. Based on the review and aging of
its accounts receivable at the end of the year, Hughes estimates that $60,000 of its
receivables are uncollectible In this situation, the amount of bad debt expense that
should be reported for the year is - ANSWER-The amount of bad debt expense is
Complete Answers
The use of remittance advices for mail receipts is an example of - ANSWER-
documentation procedures.
The principles of internal control do not include - ANSWER-management
responsibility.
The principles of internal control include all of the following - ANSWER-physical
controls, independent internal verification, establishment of responsibility
Having different individuals receive cash, record cash receipts, and hold the cash is
an example of - ANSWER-segregation of duties
Counting of daily cash receipts by a supervisor is an application of which internal
control principle? - ANSWER-Independent internal verification
An employee authorized to sign checks should not record - ANSWER-cash
disbursement transactions
Entries are made to the Petty Cash account whe - ANSWER-establishing the fund-
includes a debit to petty cash and a credit to cash
A petty cash fund of $200 is replenished when the fund contains $5 in cash and
receipts of $190. The entry to replenish the fund would - ANSWER-debit the related
expense accounts for the receipts, $190, debit Cash Over and Short, $5 ($195 -
$190) and credit cash, $195.
The party who issues a check is the - ANSWER-maker
On a bank reconciliation, deposits in transit are - ANSWER-added to the bank
balance on a bank reconciliation
Cash is locked in a safe overnight. - ANSWER-physical controls
Employees who receive shipments of goods do not have access to the accounting
records for merchandise. - ANSWER-segregation of duties
Shipping documents are prenumbered. - ANSWER-documentation procedures
The bookkeeper does not have physical custody of assets. - ANSWER-segregation
of duties
Only the treasurer of the company can sign checks. - ANSWER-establishment of
responsibility
, EFT transfer to a supplier - ANSWER-deducted from the book balance
Bank service charge - ANSWER-deducted from the book balance
Check printing charge - ANSWER-deducted from the book balance
Error recording check # 214 which was written for $450 but recorded for $540 -
ANSWER-added to the book balance
Collection of note and interest by bank on company's behalf - ANSWER-added to the
book balance
Once a month, the sales department sends sales invoices to the accounting
department to be recorded. - ANSWER-documentation procedures
Leah Hutcherson orders merchandise for Rice Lake Company; she also receives
merchandise and authorizes payment for merchandise. - ANSWER-segregation of
duties
Several clerks at Great Foods use the same cash register drawer. - ANSWER-
establishment of responsibility
Buehler Company on June 15 sells merchandise on account to Chaz Co. for $1,000,
terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth $300 to Buehler
Company. On June 24, payment is received from Chaz Co. for the balance due.
What is the amount of cash received? - ANSWER-This amount constitutes payment
in full. Because it is received within 10 days of the purchase, the cash received is
$686 ($1,000 - $300) - (($1,000 - $300) X 2%).
If a company fails to record estimated bad debt expense, - ANSWER-expenses are
understated.
Voight Company's account balances at December 31 for Accounts Receivable and
Allowance for Doubtful Accounts were $1,400,000 and $70,000 (Cr.), respectively.
An aging of accounts receivable indicated that $128,000 are expected to become
uncollectible. The amount of the adjusting entry for bad debts at December 31 is
Entry field with correct answer
$128,000.
$198,000.
$58,000.
$70,000. - ANSWER-The desired ending balance in the Allowance for Doubtful
Accounts is $128,000. The current balance is $70,000, therefore the amount of the
adjusting entry is $128,000 - $70,000 = $58,000.
Hughes has a debit balance of $5,000 in its Allowance for Doubtful Accounts before
any adjustments are made at the end of the year. Based on the review and aging of
its accounts receivable at the end of the year, Hughes estimates that $60,000 of its
receivables are uncollectible In this situation, the amount of bad debt expense that
should be reported for the year is - ANSWER-The amount of bad debt expense is
