BAT Unit 3 Quiz (Ch 7-9)

For internal controls to be most effective, how many people should be responsible for a given task?

• 1
• 2
• 3
• This depends on the size of the company.

Internal control helps an organization achieve all of the following EXCEPT

• reliable financial reporting.
• compliance with relevant laws and regulations.
• absolute assurance that fraud will not occur.
• effective and efficient operations

Two individuals at a retail store work the same cash register. You evaluate this situation as

• a violation of establishment of responsibility.
• a violation of segregation of duties.
• supporting the establishment of responsibility.
• supporting internal performance review.

Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

• documentation procedures are violated.
• internal performance review is violated.
• segregation of duties is violated.
• establishment of responsibility is violated.

When customers make purchases with a bank credit card, the retailer

• is responsible for maintaining customer accounts.
• is not involved in the collection process.
• absorbs any losses from uncollectible accounts.
• receives cash equal to the full price of the merchandise sold from the credit card company.

A petty cash fund of $100 is replenished when the fund contains $5 in cash and receipts for $93. The entry to replenish the fund would include a

• credit to Cash Over and Short for $2.
• credit to Miscellaneous Revenue for $2.
• debit to Cash Over and Short for $2.
• debit to Miscellaneous Expense for $2.

Electronic funds transfer

• occurs when a company has a computerized cash register.
• occurs when a company downloads bank details to a company computer.
• occurs when a certified cheque is requested.
• is a system that electronically transfers funds between parties without the use of paper.

The term "receivables" refers to

• amounts due from individuals or companies.
• merchandise to be collected from individuals or companies.
• cash to be paid to creditors.
• cash to be paid to debtors.

Which of the following would require two journal entries?

• To record merchandise returned that was previously sold on account in a perpetual inventory system
• To record sales of merchandise on account in a periodic inventory system.
• To record cash purchases of inventory.
• To record collection of accounts receivable

If a department store fails to make the entry to accrue the finance charges due from customers,

• accounts receivable will be overstated.
• interest revenue will be understated.
• interest expense will be overstated.
• interest expense will be understated.