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08 Internal Controls and Bank Reconciliation
This quiz is about cash and internal controls, specifically focusing on topics such as cash management, bank reconciliation, internal controls over cash, and different scenarios related to cash transactions in a business setting.
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The following statements describe the business’ Cash at bank Account. Which statement is incorrect?
When trade receivables settle their debts, the Cash at bank Account is debited.
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Add RecommendationAdd TagsView All Assigned TagsWhen cash is deposited directly into the bank account, the Cash at bank account is credited.
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Add RecommendationAdd TagsView All Assigned TagsThe Cash at bank Account has a credit balance when the cash outflows exceed the cash inflows.
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Add RecommendationAdd TagsView All Assigned TagsThe Cash at bank Account can have a debit or credit balance.
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reported as a deduction from the current asset section.
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Add RecommendationAdd TagsView All Assigned Tagsreported as a deduction from cash.
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Add RecommendationAdd TagsView All Assigned Tagsnetted against cash and a net cash amount reported.
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Add RecommendationAdd TagsView All Assigned Tagsreported as a current liability.
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To maximize profits
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Add RecommendationAdd TagsView All Assigned TagsTo safeguard assets of the business
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Add RecommendationAdd TagsView All Assigned TagsTo increase liabilities
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Add RecommendationAdd TagsView All Assigned TagsTo minimize taxes
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Custody of cash
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Add RecommendationAdd TagsView All Assigned TagsSegregation of duties
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Add RecommendationAdd TagsView All Assigned TagsAuthorizing transactions
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Add RecommendationAdd TagsView All Assigned TagsIssuing IOUs to employees
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Errors give rise to unintentional misstatements in the financial statements.
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Add RecommendationAdd TagsView All Assigned TagsWhen one individual is responsible for all related activities, the potential for errors and irregularities is decreased.
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Add RecommendationAdd TagsView All Assigned TagsThe responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.
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Add RecommendationAdd TagsView All Assigned TagsFraud is an unintentional act to misappropriate (steal) assets or misstate financial statements.
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To increase cash flow
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Add RecommendationAdd TagsView All Assigned TagsTo verify the accuracy of cash receipts
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Add RecommendationAdd TagsView All Assigned TagsTo check the cash at bank balance against the bank's record
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Add RecommendationAdd TagsView All Assigned TagsTo comply with tax regulations
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What is the primary cause of differences between the business's cash at bank balance and the balance in the bank statement?
Errors made by the business or the bank
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Add RecommendationAdd TagsView All Assigned TagsTiming differences in recorded transactions
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Add RecommendationAdd TagsView All Assigned TagsUnauthorized transactions
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Add RecommendationAdd TagsView All Assigned TagsCurrency exchange fluctuations
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Which of the following is not a reason for the difference in balances between the cash at bank account and the bank statement?
Cheques issued but not yet presented for payment
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Add RecommendationAdd TagsView All Assigned TagsCheques deposited but not yet credited by the bank
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Add RecommendationAdd TagsView All Assigned TagsDeposits made into the bank account not yet recorded by the business
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Add RecommendationAdd TagsView All Assigned TagsDeposits made into the bank account and recorded by the business
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Which of the following is NOT a type of difference typically found in bank reconciliation?
Direct deposits
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Add RecommendationAdd TagsView All Assigned TagsDirect payments
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Add RecommendationAdd TagsView All Assigned TagsPurchase returns
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Add RecommendationAdd TagsView All Assigned TagsDishonored cheques
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Notification by the bank that a customer's deposited cheque was returned unpaid requires that the business make the following adjusting entry?
Dr Trade Receivable; Cr Cash at bank
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Add RecommendationAdd TagsView All Assigned TagsDr Cash at bank; Cr Trade Receivable
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Add RecommendationAdd TagsView All Assigned TagsDr Bank Charges; Cr Trade Receivable
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Add RecommendationAdd TagsView All Assigned TagsNo adjusting entry is necessary.
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The business’ cash at bank account shows a beginning debit balance of $250, whereas the bank statement shows a beginning credit balance of $750. The difference is due to
cheques of $1000 not yet presented
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Add RecommendationAdd TagsView All Assigned Tagsdirect deposit of $1000 by a customer
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Add RecommendationAdd TagsView All Assigned Tagscheque of $500 that was recently issued to a supplier
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Add RecommendationAdd TagsView All Assigned Tagsdirect payment of $750
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A cheque written by the company for $157 is incorrectly recorded as $175. On the bank reconciliation, the $18 error should be
added to the balance in the cash at bank account.
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Add RecommendationAdd TagsView All Assigned Tagsdeducted from the balance in the cash at bank account.
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Add RecommendationAdd TagsView All Assigned Tagsadded to the balance per bank reconciliation statement.
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Add RecommendationAdd TagsView All Assigned Tagsdeducted from the balance per bank reconciliation.
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For which of the following errors should the appropriate amount be added to the balance per Cash at bank during a bank reconciliation?
cheque for $43 recorded as $34 by the depositor
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Add RecommendationAdd TagsView All Assigned Tagsdeposit of $500 recorded by the bank as $50
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Add RecommendationAdd TagsView All Assigned Tagsa paid cheque for $200 recorded by the bank as $20
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Add RecommendationAdd TagsView All Assigned Tagscheque for $35 recorded as $53 by the depositor
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have been recorded on the depositor's books but not yet in the bank statement.
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Add RecommendationAdd TagsView All Assigned Tagshave been recorded by the bank but not yet by the depositor.
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Add RecommendationAdd TagsView All Assigned Tagshave not been recorded by either the bank or the depositor.
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Add RecommendationAdd TagsView All Assigned Tagsare customers' cheques that are in the mail but have not yet been received by the depositor.
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On 31 March 2022 Batman Trading received a cheque of $200 which was recorded in the Cash at Bank account, and banked in on the same day. The bank statement for the month of March does not show this $200. How should Batman Trading deal with this $200 in the bank reconciliation statement?
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As an addition to deposits in transit
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Add RecommendationAdd TagsView All Assigned TagsAs a deduction to deposits in transit
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Add RecommendationAdd TagsView All Assigned TagsAs an addition to cheques not yet presented
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Add RecommendationAdd TagsView All Assigned TagsAs a deduction to cheques not yet presented
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If you didn't pass the quiz on cash and internal controls, don't be discouraged. Use this as an opportunity to identify areas where you may need to focus more attention and study.
Review the concepts related to cash management, bank reconciliation, and internal controls over cash.
Seek additional resources or assistance if needed, and try again. With dedication and effort, you can improve your understanding and succeed in future quizzes.
Review the concepts related to cash management, bank reconciliation, and internal controls over cash.
Seek additional resources or assistance if needed, and try again. With dedication and effort, you can improve your understanding and succeed in future quizzes.
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