Exam (elaborations)

LSU ACCT 2001 EXAM 2 TEST QUESTIONS WITH COMPLETE SOLUTIONS GRADED A+

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LSU ACCT 2001

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LSU ACCT 2001

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lsu acct 2001
lsu acct 2001 exam
lsu acct 2001 exam 2 test questions

Institution LSU ACCT 2001
Course LSU ACCT 2001

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LSU ACCT 2001 EXAM 2 TEST
QUESTIONS WITH COMPLETE
SOLUTIONS GRADED A+
Which of the following is a primary concern of internal control?

a) Promote training programs and control incentives.
b) Enhancing the accuracy and reliability of accounting data.
c) Ensuring fairness of the financial statements.
d) Encouraging adherence to prescribed managerial performance. - Answer-b)
Enhancing the accuracy and reliability of accounting data.

Which of the following is not correct regarding internal controls?

a) Internal controls are based on reasonable assurance.
b) The purpose of internal controls is to safeguard assets and enhance the accuracy
and reliability of the accounting records.
c) Internal controls are enhanced when one person is responsible for all related
activities of a process such as the entire sales process.
d) Internal controls are limited by cost vs. benefit, human element such as collusion,
and the size of the business. - Answer-c) Internal controls are enhanced when one
person is responsible for all related activities of a process such as the entire sales
process.

Which of the following is not an example of a principle of internal controls?

a) Each cashier has a separate cash drawer.
b) Employees are required to use a time clock to record time worked.
c) One employee is responsible for ordering merchandise, another for receiving goods,
and third for making payments.
d) The cost of establishing a control should not exceed its benefits. - Answer-d) The
cost of establishing a control should not exceed its benefits.

Limitation of Internal Controls

a) Accountability
c) Segregation of Duties

Adjusted cash balance per books - Answer-Initial Cash Balance per Books + Notes
Receivable and Interest Collected by Bank - Bank Service Charge - Bank Charge for
Collecting Notes Receivable - NSF Checks Returned by Bank - Corrections to Checks

, Journal entries are required for all of the following except:

a) Bank service charges such as check printing charges
b) NSF Checks and related bank fees
c) Collection of notes receivable by the bank
d) Deposits in transit - Answer-d) Deposits in transit

included on Bank side of reconciliation

A company issues a check for $75 but records it incorrectly as $57. On the bank
Reconciliation, the $18 should be:

a) Deducted from the balance per bank.
b) Added to the balance per bank.
c) Deducted from the balance per books.
d) Deducted from the balance per books and added to the balance per bank. - Answer-
c) Deducted from the balance per books.

Lower number was recorded so subtract

The bank statement included an EFT debit on July 17 for $700 representing Rankin's
July insurance payment to EverReady Car Insurance

How do you fix? - Answer-Deduct from the book balance

Included on the bank statement was a deduction for $40 for a safe deposit box; Rankin
does not have a safe deposit box at the bank.

How do you fix? - Answer-Add to the bank statement balance

The bank reported $38 of interest earned by the account during July.

How do you fix? - Answer-Add to the book balance

A check written to Connally Supplies Company in June for $420 was not among the
checks returned by the bank in either the June or the July bank statement.

How do you fix? - Answer-Deduct from the bank statement balance

While preparing the bank reconciliation for March, the accountant for Oliver & Company
discovered that a $694 check in payment of an account payable had been entered
incorrectly in the journal as $649. Which of the following statements is true?

a) An adjusting entry must be made to debit Accounts Payable and credit Cash for $45.
b) An adjusting entry must be made to debit Cash and credit Accounts Payable for $45.

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Exam (elaborations)

LSU ACCT 2001 EXAM 2 TEST QUESTIONS WITH COMPLETE SOLUTIONS GRADED A+

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