CHAPTER 7 MULTIPLE CHOICE QUESTIONS

ACCT 2301

CHAPTER 7

INTERNAL CONTROL AND CASH

MULTIPLE CHOICE QUESTIONS

1) Check number 2351 was written for $823 as rent payment for a month. Mistakenly this check check was recorded on the Journal as debit to rent expense for    $ 328.00.Which of the following statement is|are true.

a) Add $495 to balance per bank statement.  b) Before reconciliation balance per book is overstated.  C) Credit the bank account(cash account) by $495.           d) Both (a) and (c) are correct. e) Both (b) and (c) are correct.

2) Deposit in transit is $3000.Which of the following statement is|are true.

a) Deduct $3000 from balance as per book.  b) Debit cash account by $3000. c) Add $3000 to balance per bank statement. d) Both (a) and (c) are true.

d) Both  (b) and (c) are true.

3) The important aspect of internal control over cash sales is.

a) Setting up change fund. b) Depositing cash from cash register on a daily basis.  c) Separation of cash handling and cash accounting duties.                                  d) Both (a) and (b) are true.  e) Both (a) and (c) are true.

4) Cash sales during the day are $3400.The cash deposited in the bank that day is $3450. Which of the following is a true statement?

a)      Debit cash $3400. b) Debit cash short or over $50.  c) Credit sales $ 3400. d) None of the above.

5) Balance per book is $2000.Balance per bank statement is $3000. Deposit in transit is $ 1000.Outstanding checks are $500. Interest income is $50.Notes collected by the bank is $1500.Bank service charge is $5 and NSF checks charged back are $45.The adjusted correct cash balance should be.

a) $3550 b) $5000  c) $3500  d) 3590  e) None of the above.