MBUS 300 Exam 2 QUESTIONS WITH
COMPLETE SOLUTIONS 2025/2026
Bank reconciliation - CORRECT ANSWER ✔✔The process of comparing the bank's balance of an
account with the company's balance and explaining any differences to make them agree.
Bank statement - CORRECT ANSWER ✔✔A monthly statement from the bank that shows the
depositor's bank transactions and balances.
Bonding - CORRECT ANSWER ✔✔Obtaining insurance protection against theft by employees.
Cash - CORRECT ANSWER ✔✔Resources that consist of coins, currency, checks, money orders,
and money on hand or on deposit in a bank or similar depository.
Cash equivalents - CORRECT ANSWER ✔✔Short-term, highly liquid investments that can be
converted to a specific amount of cash.
Check - CORRECT ANSWER ✔✔A written order signed by a bank depositor, directing the bank to
pay a specified sum of money to a designated recipient.
Deposits in transit - CORRECT ANSWER ✔✔Deposits recorded by the depositor but not yet
recorded by the bank
Electronic funds transfer EFT - CORRECT ANSWER ✔✔A disbursement system that uses wire,
telephone, or computers to transfer funds from one location to another.
,Fraud - CORRECT ANSWER ✔✔A dishonest act by an employee that results in personal benefit
to the employee at a cost to the employer.
Fraud Triangle - CORRECT ANSWER ✔✔The three factors that contribute to fraudulent activity
by employees: opportunity, financial pressure, and rationalization.
Internal auditors - CORRECT ANSWER ✔✔Company employees who continuously evaluate the
effectiveness of the company's internal control system.Company employees who continuously
evaluate the effectiveness of the company's internal control system.
Internal control - CORRECT ANSWER ✔✔A process designed to provide reasonable assurance
regarding the achievement of company objectives related to operations, reporting, and
compliance.
NSF check - CORRECT ANSWER ✔✔A check that is not paid by a bank because of insufficient
funds in a customer's bank account.
Outstanding checks - CORRECT ANSWER ✔✔Checks issued and recorded by a company but not
yet paid by the bank.
Petty cash fund - CORRECT ANSWER ✔✔A cash fund used to pay relatively small amounts.
Restricted cash - CORRECT ANSWER ✔✔Cash that must be used for a special purpose.
Sarbanes-Oxley Act (SOX): - CORRECT ANSWER ✔✔Regulations passed by Congress to try to
reduce unethical corporate behavior.
Voucher - CORRECT ANSWER ✔✔An authorization form prepared for each payment in a
voucher system.
, Voucher System - CORRECT ANSWER ✔✔A network of approvals by authorized individuals
acting independently to ensure that all disbursements by check are proper.
Accounts Receivable - CORRECT ANSWER ✔✔Amounts owed by customers on account.
Accounts Receivable Turnover - CORRECT ANSWER ✔✔A measure of the liquidity of accounts
receivable; computed by dividing net credit sales by average net accounts receivable.
aging of accounts receivable - CORRECT ANSWER ✔✔The analysis of customer balances by the
length of time they have been unpaid.
allowance method - CORRECT ANSWER ✔✔A method of accounting for bad debts that involves
estimating uncollectible accounts at the end of each period.
average collection period - CORRECT ANSWER ✔✔The average amount of time that a receivable
is outstanding; calculated by dividing 365 days by the accounts receivable turnover.
bad debt expense - CORRECT ANSWER ✔✔An expense account to record uncollectible
receivables.
Cash (net) realizable value - CORRECT ANSWER ✔✔The net amount a company expects to
receive in cash.
direct write-off method - CORRECT ANSWER ✔✔A method of accounting for bad debts that
involves expensing accounts at the time they are determined to be uncollectible.
dishonored (defaulted) note - CORRECT ANSWER ✔✔A note that is not paid in full at maturity.
COMPLETE SOLUTIONS 2025/2026
Bank reconciliation - CORRECT ANSWER ✔✔The process of comparing the bank's balance of an
account with the company's balance and explaining any differences to make them agree.
Bank statement - CORRECT ANSWER ✔✔A monthly statement from the bank that shows the
depositor's bank transactions and balances.
Bonding - CORRECT ANSWER ✔✔Obtaining insurance protection against theft by employees.
Cash - CORRECT ANSWER ✔✔Resources that consist of coins, currency, checks, money orders,
and money on hand or on deposit in a bank or similar depository.
Cash equivalents - CORRECT ANSWER ✔✔Short-term, highly liquid investments that can be
converted to a specific amount of cash.
Check - CORRECT ANSWER ✔✔A written order signed by a bank depositor, directing the bank to
pay a specified sum of money to a designated recipient.
Deposits in transit - CORRECT ANSWER ✔✔Deposits recorded by the depositor but not yet
recorded by the bank
Electronic funds transfer EFT - CORRECT ANSWER ✔✔A disbursement system that uses wire,
telephone, or computers to transfer funds from one location to another.
,Fraud - CORRECT ANSWER ✔✔A dishonest act by an employee that results in personal benefit
to the employee at a cost to the employer.
Fraud Triangle - CORRECT ANSWER ✔✔The three factors that contribute to fraudulent activity
by employees: opportunity, financial pressure, and rationalization.
Internal auditors - CORRECT ANSWER ✔✔Company employees who continuously evaluate the
effectiveness of the company's internal control system.Company employees who continuously
evaluate the effectiveness of the company's internal control system.
Internal control - CORRECT ANSWER ✔✔A process designed to provide reasonable assurance
regarding the achievement of company objectives related to operations, reporting, and
compliance.
NSF check - CORRECT ANSWER ✔✔A check that is not paid by a bank because of insufficient
funds in a customer's bank account.
Outstanding checks - CORRECT ANSWER ✔✔Checks issued and recorded by a company but not
yet paid by the bank.
Petty cash fund - CORRECT ANSWER ✔✔A cash fund used to pay relatively small amounts.
Restricted cash - CORRECT ANSWER ✔✔Cash that must be used for a special purpose.
Sarbanes-Oxley Act (SOX): - CORRECT ANSWER ✔✔Regulations passed by Congress to try to
reduce unethical corporate behavior.
Voucher - CORRECT ANSWER ✔✔An authorization form prepared for each payment in a
voucher system.
, Voucher System - CORRECT ANSWER ✔✔A network of approvals by authorized individuals
acting independently to ensure that all disbursements by check are proper.
Accounts Receivable - CORRECT ANSWER ✔✔Amounts owed by customers on account.
Accounts Receivable Turnover - CORRECT ANSWER ✔✔A measure of the liquidity of accounts
receivable; computed by dividing net credit sales by average net accounts receivable.
aging of accounts receivable - CORRECT ANSWER ✔✔The analysis of customer balances by the
length of time they have been unpaid.
allowance method - CORRECT ANSWER ✔✔A method of accounting for bad debts that involves
estimating uncollectible accounts at the end of each period.
average collection period - CORRECT ANSWER ✔✔The average amount of time that a receivable
is outstanding; calculated by dividing 365 days by the accounts receivable turnover.
bad debt expense - CORRECT ANSWER ✔✔An expense account to record uncollectible
receivables.
Cash (net) realizable value - CORRECT ANSWER ✔✔The net amount a company expects to
receive in cash.
direct write-off method - CORRECT ANSWER ✔✔A method of accounting for bad debts that
involves expensing accounts at the time they are determined to be uncollectible.
dishonored (defaulted) note - CORRECT ANSWER ✔✔A note that is not paid in full at maturity.
