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Changing an accounting system, internal controls, purchases

1. Which of the following is NOT one of the three phases which is needed when changing an accounting system, either in its entirety or in part?
Analysis
Design
Review
Implementation

2. Which of the following is NOT an element of Internal Controls?
To protect assets from misuse
Ensure the accuracy of business information
Ensure that laws and regulations are followed
To ensure that the company's policies are in place to maximize profits

3. At the end of the month, the total of the amount column of the revenue journal is posted as a
Debit to Accounts Receivable and a credit to Cash
Debit to Accounts Receivable and a credit to Fees Earned
Debit to Cash and a credit to Fees Earned
Debit to Cash and a credit to Accounts Payable

4. Which of the following transactions is recorded in the purchases journal?
Purchase of store supplies on account
Return of damaged office equipment
Purchase of store supplies for cash
Purchase of office equipment for cash

5. Which of the following transactions is recorded in the revenue journal?
Sale of excess office equipment for cash
Rendering services for cash
Rendering services on account
Sale of excess office equipment on account

6. The objectives of internal control are to
Control the internal organization of the accounting department personnel and
equipment
Provide reasonable assurance that operations are managed to achieve goals,
financial reports are accurate, and laws and regulations are complied with
Prevent fraud, and promote the social interest of the company
Provide control over "internal-use only" reports and employee internal conduct

7. A necessary element of internal control is
Database
Systems design
Systems analysis
Information and communication

8. Which of the following should NOT be considered cash by an accountant?
Money orders
Bank checking accounts
Postage stamps
Travelers' checks

9. The debit balance in Cash Short and Over at the end of an accounting period is reported as
An expense on the income statement
Income on the income statement
An asset on the balance sheet
A liability on the balance sheet

10. Which one of the following would NOT cause a bank to debit a company's account?
Bank service charge
Collection of a note receivable
Checks marked NSF
Wiring of funds to other locations

11. A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. This item would be included on the bank reconciliation as a(n)
Addition to the balance per the company's records
Addition to the balance per the bank statement
Deduction from the balance per the bank statement
Deduction from the balance per the company's records

12. A check drawn by a company for $270 in payment of a liability was recorded in the journal as $720. What entry is required in the company's accounts?
Debit Accounts Payable; credit Cash
Debit Cash; credit Accounts Receivable
Debit Cash; credit Accounts Payable
Debit Accounts Receivable; credit Cash

13. Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?
Debit Miscellaneous Administrative Expense; credit Cash
Debit Cash; credit Other Income
Debit Cash; credit Accounts Payable
Debit Accounts Payable; credit Cash

14. Receipts from cash sales of $7,500 were recorded incorrectly in the cash receipts journal as $5,700. What entry is required in the company's accounts?
Debit Sales; credit Cash
Debit Cash; credit Accounts Receivable
Debit Cash; credit Sales
Debit Accounts Receivable; credit Cash

15. A $150 petty cash fund has cash of $28 and receipts of $110. The journal entry to replenish the account would include a
Credit to Petty Cash for $82.
Debit to Cash for $110.
Debit to Cash Over and Short for $12.
Credit to Cash for $110

16. A $100 petty cash fund contains $89 in petty cash receipts, and $7.50 in currency and coins. The journal entry to record the replenishment of the fund would include a
Credit to Petty Cash for $96.50.
Credit to Cash for $89.
Debit to Cash Short and Over for $3.50.
Credit to Cash Short and Over for $3.50.

17. Which of the following would NOT be included with the Cash and Equivalents on the Balance Sheet?
Commercial Paper
Short-Term Receivables
Certificates of Deposit
Money Market Mutual Funds

6. (Use the data found in the table below) Using the perpetual system, costing by the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on September 30? (TABLE ATTACHED), check the attached file:

$800
$650
$750
$700

8. The following lots of a particular commodity were available for sale during the year (TABLE ATTACHED), check the attached file:

$1,250
$1,150
$1,275
$1,050

Attachments

Solution Preview

1. Which of the following is NOT one of the three phases which is needed when changing an accounting system, either in its entirety or in part?
Analysis
Design
**Review
Implementation

Review is done to determine if change is needed.

2. Which of the following is NOT an element of Internal Controls?
To protect assets from misuse
Ensure the accuracy of business information
Ensure that laws and regulations are followed
**To ensure that the company's policies are in place to maximize profits

Controls safeguard assets, keep records accurate, and ensure compliance. They don't ensure profits.

3. At the end of the month, the total of the amount column of the revenue journal is posted as a
Debit to Accounts Receivable and a credit to Cash
**Debit to Accounts Receivable and a credit to Fees Earned
Debit to Cash and a credit to Fees Earned
Debit to Cash and a credit to Accounts Payable

Sales Revenue journal will be posted to Fees Earned (on credit).

4. Which of the following transactions is recorded in the purchases journal?
**Purchase of store supplies on account
Return of damaged office equipment
Purchase of store supplies for cash
Purchase of office equipment for cash

The Purchases Journal is a special journal designed to record a single type of frequently occurring transaction -- in this case, credit purchases.

5. Which of the following transactions is recorded in the revenue journal?
Sale of excess office equipment for cash
Rendering services for cash
**Rendering services on account
Sale of excess office equipment on account

Sales Revenue journal will be ...

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