Week 9 Quiz

At the bicycle shop (illustrative), someone who does not handle cash prepares the bank reconciliation every month. Under which of the Green Book's common categories of control activities does this control fall?

Select one.

• Physical control activities over vulnerable assets
• Management of human capital
• Control activities over complete, accurate, and timely recording of valid transactions
• Access restrictions to and accountability for resources and records

What does segregation of duties do for a business's cash?

Select one.

• It keeps any one person from both handling the cash and keeping its records
• It guarantees that no theft of cash can ever occur, even when employees collude
• It shows the owners that they distrust their employees
• It requires two people to approve every journal entry together

True or false: when a petty cash fund is refilled, the refill entry debits Petty Cash for the amount of the receipts.

True or false.

• True
• False

The bicycle shop's (illustrative) bank statement at the end of Month 3 shows a balance of $8,450. The shop has a $1,200 deposit in transit and two outstanding checks, No. 211 for $400 and No. 214 for $750. What is the adjusted bank balance?

Select one.

• $10,800
• $8,500
• $8,400
• $9,650

Check No. 214 for $750 was written and recorded by the bicycle shop (illustrative) but had not been paid by the bank when the statement was prepared. How does the reconciliation treat it?

Select one.

• Added to the balance per books in the Cash account
• Subtracted from the balance per books
• Added to the balance per bank statement
• Subtracted from the balance per bank statement

The bicycle shop's (illustrative) end-of-Month 3 reconciliation lists the items below. Select every item that requires a journal entry in the shop's books.

Select every option that applies.

• The $25 bank service charge
• The $1,200 deposit in transit
• The $300 NSF check from a customer
• The $10 of interest earned
• Outstanding check No. 211 for $400
• The $36 error on check No. 209

The bicycle shop's (illustrative) Cash account shows $8,851 at the end of Month 3. The bank statement shows a $25 service charge, a $300 NSF check from a customer, and $10 of interest earned, and check No. 209 was written for $95 but recorded as $59. What is the adjusted book balance?

Select one.

• $8,572
• $8,480
• $8,500
• $8,536

Check No. 209 was written for $95 but recorded as $59, a difference of $36. Which feature of that difference points to a transposition error?

Select one.

• It is less than the amount of the check
• It is an even number of dollars
• It matches no other reconciling item
• It is evenly divisible by 9

A customer's $300 check that the bicycle shop (illustrative) had deposited is returned as an NSF check. Which journal entry does the shop record?

Select one.

• Debit Cash 300; credit Accounts Receivable 300
• Debit Accounts Receivable 300; credit Cash 300
• Debit Bank Service Charge Expense 300; credit Cash 300
• Debit Accounts Receivable 300; credit Service Revenue 300

Check No. 209 paid a supplier on account (an illustrative detail). It was written for $95 but recorded as $59. Which journal entry corrects the bicycle shop's books?

Select one.

• Debit Accounts Payable 36; credit Cash 36
• Debit Cash 36; credit Accounts Payable 36
• Debit Accounts Payable 95; credit Cash 95
• Debit Accounts Payable 59; credit Cash 59