Accounting I – Week 5

• Question 1

1 out of 1 points

	Cash equivalents ______.
	Selected Answer: all of the above choices are cash equivalents   Response Feedback: Correct! Cash equivalents include short-term investments purchased within three months of their maturity dates, have a market value that is not sensitive to interest rate changes, and include short-term U.S. treasury bills.

• Question 2

1 out of 1 points

	Which of the following is in violation of the internal control of cash?
	Selected Answer: An employee (with access to cash receipts) should compare the total cash recorded by the register with the record of cash receipts reported by the cashier.   Response Feedback: Correct! A violation of the internal control of cash would be an employee (with access to cash receipts) comparing the total cash recorded by the register with the record of cash receipts reported by the cashier.

• Question 3

0 out of 1 points

	The following information is available for Holland Company on December 31: Money market balance                                                                                $2,790 Certificate of deposit, maturing June of next year                            $15,000 Postdated checks from customer                                                             $1,475 Cash in bank account                                                                                      $22,431 Non-sufficient fund check from customer, returned by bank      $650 Cash in petty cash fund                                                                                 $200 Inventory of postage stamps                                                                      $18 U.S. Treasury bill maturing in February of upcoming year               $10,000 Based on this information, Holland Company should report cash and cash equivalents on December 31 of _______.
	Selected Answer: $50,421   Response Feedback: Try again! Cash equivalents are liquid assets because they can be readily used to settle near-term obligations. A cash equivalent is a short-term, highly liquid investment asset that meets two criteria: (a) is readily convertible to a known cash amount, and (b) is sufficiently close to the due date so that the market value is not sensitive to interest rate changes. Only investments purchased within three months of their due date usually satisfy these criteria. For this example, add $2,790 in money market fund + $22,431 of cash in bank + $200 of cash in petty cash fund + $10,000 of U.S. Treasury bill with maturity of less than three months on date of purchase = $35,421. Review the Cash, Cash Equivalents, and Liquidity section in Chapter 8 of the textbook for more information.

• Question 4

0 out of 1 points

	Which of the following is true about Enterprise Resource Planning (ERP) software?
	Selected Answer: ERP can speed up business decision making and help reduce costs.   Response Feedback: Try again. ERP software includes the programs that manage a company’s vital operations. They extend from order tracking to manufacturing to accounting, all internal to the company. ERP is not designed to be used to share data with others outside the company, such as customers and suppliers. Review the Enterprise Resource Planning Software section in Chapter 7 of the textbook for more information.

• Question 5

1 out of 1 points

	A company purchased equipment costing $32,000 on credit. Identify the journal in which this transaction would be recorded.
	Selected Answer: purchases journal   Response Feedback: Correct! This transaction would be recorded in the purchases journal.

• Question 6

1 out of 1 points

	Special journals allow an efficient division of labor, which is also an effective control procedure.
	Selected Answer: True   Response Feedback: Correct! Special journals support efficiency in processing transactions and events.

• Question 7

1 out of 1 points

	The basic components of an accounting information system include all of the following except ______.
	Selected Answer: warehouses   Response Feedback: Correct! The basic components of an accounting information system include all of these items except warehouses.

• Question 8

1 out of 1 points

	The five fundamental principles of accounting information systems are: ______.
	Selected Answer: control, relevance, compatibility, flexibility, and cost benefit   Response Feedback: Correct! The five fundamental principles of accounting information systems are: control, relevance, compatibility, flexibility, and cost-benefit.

• Question 9

1 out of 1 points

	A sales journal is used to record cash sales.
	Selected Answer: False   Response Feedback: Correct! The purchase journal is used to record all purchases made on credit, and the disbursements journal (also called the payments journal) is used to record all cash payments. On the other side, the sales journal is used to record sales of inventory on credit, and the cash receipts journal is used to record all receipts of cash.

• Question 10

1 out of 1 points

	Outstanding checks are checks the bank has paid and deducted from the customer’s account during the month.
	Selected Answer: False   Response Feedback: Correct! Outstanding checks are checks that are recorded as paid in the company’s records, not the bank’s records, and therefore must be deleted from the bank’s statement during a period’s reconciliation.

 

• Question 1

1 out of 1 points

	Accounting information processes are structured to eliminate the need for professional judgment.
	Selected Answer: False   Response Feedback: Correct! Accounting information processes are not structured to eliminate the need for professional judgment; nothing in accounting does that.

• Question 2

1 out of 1 points

	The entry necessary to establish a petty cash fund should include ____________.
	Selected Answer: a debit to petty cash and a credit to cash   Response Feedback: Correct! The entry necessary to establish a petty cash fund should include a debit to petty cash and a credit to cash.

• Question 3

1 out of 1 points

	A company purchased equipment costing $32,000 on credit. Identify the journal in which this transaction would be recorded.
	Selected Answer: purchases journal   Response Feedback: Correct! This transaction would be recorded in the purchases journal.

• Question 4

1 out of 1 points

	The number of days’ sales uncollected ______.
	Selected Answer: is used to evaluate the liquidity of receivables   Response Feedback: Correct! The number of days’ sales uncollected is used to evaluate the liquidity of receivables.

• Question 5

1 out of 1 points

	Which of the following is in violation of the internal control of cash?
	Selected Answer: An employee (with access to cash receipts) should compare the total cash recorded by the register with the record of cash receipts reported by the cashier.   Response Feedback: Correct! A violation of the internal control of cash would be an employee (with access to cash receipts) comparing the total cash recorded by the register with the record of cash receipts reported by the cashier.

• Question 6

1 out of 1 points

	The basic components of an accounting information system include all of the following except ______.
	Selected Answer: warehouses   Response Feedback: Correct! The basic components of an accounting information system include all of these items except warehouses.

• Question 7

1 out of 1 points

	The following information is available for Holland Company on December 31: Money market balance                                                                                $2,790 Certificate of deposit, maturing June of next year                            $15,000 Postdated checks from customer                                                             $1,475 Cash in bank account                                                                                      $22,431 Non-sufficient fund check from customer, returned by bank      $650 Cash in petty cash fund                                                                                 $200 Inventory of postage stamps                                                                      $18 U.S. Treasury bill maturing in February of upcoming year               $10,000 Based on this information, Holland Company should report cash and cash equivalents on December 31 of _______.
	Selected Answer: $35,421   Response Feedback: Correct! Based on this information, Holland Company should report cash and cash equivalents on December 31 of $35,421.

• Question 8

1 out of 1 points

	Special journals allow an efficient division of labor, which is also an effective control procedure.
	Selected Answer: True   Response Feedback: Correct! Special journals support efficiency in processing transactions and events.

• Question 9

1 out of 1 points

	The five fundamental principles of accounting information systems are: ______.
	Selected Answer: control, relevance, compatibility, flexibility, and cost benefit   Response Feedback: Correct! The five fundamental principles of accounting information systems are: control, relevance, compatibility, flexibility, and cost-benefit.

• Question 10

0 out of 1 points

	Which of the following is true about Enterprise Resource Planning (ERP) software?
	Selected Answer: ERP can include programs that extend from order taking to manufacturing to accounting.   Response Feedback: Try again. ERP software includes the programs that manage a company’s vital operations. They extend from order tracking to manufacturing to accounting, all internal to the company. ERP is not designed to be used to share data with others outside the company, such as customers and suppliers. Review the Enterprise Resource Planning Software section in Chapter 7 of the textbook for more information.

 

• Question 1

1 out of 1 points

	The voucher system of control ______.
	Selected Answer: establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement   Response Feedback: Correct! The voucher system of control establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.

• Question 2

1 out of 1 points

	Special journals allow an efficient division of labor, which is also an effective control procedure.
	Selected Answer: True   Response Feedback: Correct! Special journals support efficiency in processing transactions and events.

• Question 3

1 out of 1 points

	The number of days’ sales uncollected ______.
	Selected Answer: is used to evaluate the liquidity of receivables   Response Feedback: Correct! The number of days’ sales uncollected is used to evaluate the liquidity of receivables.

• Question 4

0 out of 1 points

	Which of the following is true about Enterprise Resource Planning (ERP) software?
	Selected Answer: ERP refers to programs that help manage a company’s vital operations.   Response Feedback: Try again. ERP software includes the programs that manage a company’s vital operations. They extend from order tracking to manufacturing to accounting, all internal to the company. ERP is not designed to be used to share data with others outside the company, such as customers and suppliers. Review the Enterprise Resource Planning Software section in Chapter 7 of the textbook for more information.

• Question 5

1 out of 1 points

	The basic components of an accounting information system include all of the following except ______.
	Selected Answer: warehouses   Response Feedback: Correct! The basic components of an accounting information system include all of these items except warehouses.

• Question 6

1 out of 1 points

	A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should ______.
	Selected Answer: add the deposit to the bank statement balance   Response Feedback: Correct! The company should add the deposit to the bank statement balance.

• Question 7

1 out of 1 points

	Accounting information processes are structured to eliminate the need for professional judgment.
	Selected Answer: False   Response Feedback: Correct! Accounting information processes are not structured to eliminate the need for professional judgment; nothing in accounting does that.

• Question 8

1 out of 1 points

	A sales journal is used to record cash sales.
	Selected Answer: False   Response Feedback: Correct! The purchase journal is used to record all purchases made on credit, and the disbursements journal (also called the payments journal) is used to record all cash payments. On the other side, the sales journal is used to record sales of inventory on credit, and the cash receipts journal is used to record all receipts of cash.

• Question 9

1 out of 1 points

	The following information is available for Holland Company on December 31: Money market balance                                                                                $2,790 Certificate of deposit, maturing June of next year                            $15,000 Postdated checks from customer                                                             $1,475 Cash in bank account                                                                                      $22,431 Non-sufficient fund check from customer, returned by bank      $650 Cash in petty cash fund                                                                                 $200 Inventory of postage stamps                                                                      $18 U.S. Treasury bill maturing in February of upcoming year               $10,000 Based on this information, Holland Company should report cash and cash equivalents on December 31 of _______.
	Selected Answer: $35,421   Response Feedback: Correct! Based on this information, Holland Company should report cash and cash equivalents on December 31 of $35,421.

• Question 10

1 out of 1 points

	The impact of technology on internal controls includes ______.
	Selected Answer: reduced processing errors   Response Feedback: Correct! The impact of technology on internal controls includes reduced processing errors.

 

 

• Question 1

1 out of 1 points

	A bank statement includes ______.
	Selected Answer: the beginning and the ending balances of the depositor’s account   Response Feedback: Correct! A bank statement includes the beginning and the ending balances of the depositor’s account.

• Question 2

1 out of 1 points

	The voucher system of control ______.
	Selected Answer: establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement   Response Feedback: Correct! The voucher system of control establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.

• Question 3

1 out of 1 points

	A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should ______.
	Selected Answer: add the deposit to the bank statement balance   Response Feedback: Correct! The company should add the deposit to the bank statement balance.

• Question 4

1 out of 1 points

	Which of the following is in violation of the internal control of cash?
	Selected Answer: An employee (with access to cash receipts) should compare the total cash recorded by the register with the record of cash receipts reported by the cashier.   Response Feedback: Correct! A violation of the internal control of cash would be an employee (with access to cash receipts) comparing the total cash recorded by the register with the record of cash receipts reported by the cashier.

• Question 5

1 out of 1 points

	Cash equivalents ______.
	Selected Answer: all of the above choices are cash equivalents   Response Feedback: Correct! Cash equivalents include short-term investments purchased within three months of their maturity dates, have a market value that is not sensitive to interest rate changes, and include short-term U.S. treasury bills.

• Question 6

1 out of 1 points

	The following information is available for Holland Company on December 31: Money market balance                                                                                $2,790 Certificate of deposit, maturing June of next year                            $15,000 Postdated checks from customer                                                             $1,475 Cash in bank account                                                                                      $22,431 Non-sufficient fund check from customer, returned by bank      $650 Cash in petty cash fund                                                                                 $200 Inventory of postage stamps                                                                      $18 U.S. Treasury bill maturing in February of upcoming year               $10,000 Based on this information, Holland Company should report cash and cash equivalents on December 31 of _______.
	Selected Answer: $35,421   Response Feedback: Correct! Based on this information, Holland Company should report cash and cash equivalents on December 31 of $35,421.

• Question 7

1 out of 1 points

	The five fundamental principles of accounting information systems are: ______.
	Selected Answer: control, relevance, compatibility, flexibility, and cost benefit   Response Feedback: Correct! The five fundamental principles of accounting information systems are: control, relevance, compatibility, flexibility, and cost-benefit.

• Question 8

1 out of 1 points

	Accounting information processes are structured to eliminate the need for professional judgment.
	Selected Answer: False   Response Feedback: Correct! Accounting information processes are not structured to eliminate the need for professional judgment; nothing in accounting does that.

• Question 9

1 out of 1 points

	The impact of technology on internal controls includes ______.
	Selected Answer: reduced processing errors   Response Feedback: Correct! The impact of technology on internal controls includes reduced processing errors.

• Question 10

1 out of 1 points

	The number of days’ sales uncollected ______.
	Selected Answer: is used to evaluate the liquidity of receivables   Response Feedback: Correct! The number of days’ sales uncollected is used to evaluate the liquidity of receivables.