TEST BANK FOR Cash and Internal Control CHAPTER 6 LATEST
EXAM 2026/2026 UPDATED VERSION WITH A CORRECT
ANSWERS.
True / False
1. A six-month certificate of deposit would be considered to be a cash equivalent.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
2. Petty cash typically is composed of coins and currency kept on hand in a business to make minor disbursements.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
3. The key to the classification of an amount as cash is that it be available to pay debts within a three-month period of
time.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
4. Some cash equivalents appear in the long term investment section of a balance sheet.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
5. If collection of accounts receivable is assured, then accounts receivable are considered to be cash equivalents.
a. True
b. False
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 6: Cash and Internal Control
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 6: Cash and Internal Control
6. Treasury notes with a maturity of six months or less that are issued by the Federal Government are cash equivalents.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
7. A check written by a company but not yet presented to the bank for payment is called a check in transit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
8. When reconciling a bank account, the company does not have to prepare an adjusting entry for outstanding checks.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
9. When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
10. In a sound internal control system, all cash receipts should be deposited daily intact.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 6: Cash and Internal Control
11. Checks received from customers are considered to be cash in the company’s books.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
12. The bank informs a customer that a service charge has been assessed on their account by including a credit
memorandum in the monthly bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
13. On a bank reconciliation, outstanding checks are added to the cash balance per the bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
14. When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a
debit memorandum.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
15. When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a
credit memorandum.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
EXAM 2026/2026 UPDATED VERSION WITH A CORRECT
ANSWERS.
True / False
1. A six-month certificate of deposit would be considered to be a cash equivalent.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
2. Petty cash typically is composed of coins and currency kept on hand in a business to make minor disbursements.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
3. The key to the classification of an amount as cash is that it be available to pay debts within a three-month period of
time.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
4. Some cash equivalents appear in the long term investment section of a balance sheet.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
5. If collection of accounts receivable is assured, then accounts receivable are considered to be cash equivalents.
a. True
b. False
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 6: Cash and Internal Control
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 6: Cash and Internal Control
6. Treasury notes with a maturity of six months or less that are issued by the Federal Government are cash equivalents.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-01 - LO: 06-01
KEYWORDS: Bloom's: Remembering
7. A check written by a company but not yet presented to the bank for payment is called a check in transit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
8. When reconciling a bank account, the company does not have to prepare an adjusting entry for outstanding checks.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
9. When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
10. In a sound internal control system, all cash receipts should be deposited daily intact.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 6: Cash and Internal Control
11. Checks received from customers are considered to be cash in the company’s books.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
12. The bank informs a customer that a service charge has been assessed on their account by including a credit
memorandum in the monthly bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
13. On a bank reconciliation, outstanding checks are added to the cash balance per the bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
14. When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a
debit memorandum.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
KEYWORDS: Bloom's: Remembering
15. When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a
credit memorandum.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.06-02 - LO: 06-02
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
