21 which statement about internal controls over cash is correct a a bank reconciliat 4306321

21 which statement about internal controls over cash is correct a a bank reconciliat 4306321

21) Which statement about internal controls over cash is correct?

A) A bank reconciliation is the only control required for cash.

B) A bank reconciliation is designed for detection of problems after the fact.

C) A bank reconciliation is a tool to investigate employee fraud.

D) A bank reconciliation is designed to prevent problems from happening.

22) What is one way to segregate duties to improve controls over cash?

A) Request all customers to pay in cash.

B) Separate sales employees from employees who book the accounting entries.

C) Request all customers to pay by cheques made payable to 'CASH.'

D) Separate sales employees from employees who prepare bank reconciliations.

23) Which statement about internal controls over cash is correct?

A) Internal controls should not be designed to be preventative.

B) A bank reconciliation is designed for prevention of problems before the fact.

C) Controls should restrict sales staff ability to modify or delete accounts receivable.

D) Credit notes should not be issued for customer refunds.

24) What are the general recognition criteria for non-cash assets under GAAP?

A) If the item meets the definition of an asset, it must have an indefinite life.

B) If the item meets the definition of an expense, it must be measurable.

C) The item must meet the definition of an 'asset' or an 'expense.'

D) Future transactions can be recorded under GAAP.

25) What are the general criteria for recognizing an asset?

A) The item must have future economic benefits.

B) The item must have an indefinite life.

C) The item must be tangible.

D) The item must be material.

26) A $50,000 sale transaction is made with terms of 2/10, net 30. Assuming that the customer takes the discount, what amount is booked to the 'cash discount' account under the gross method of accounting for cash discounts?

A) $0

B) $1,000 debit

C) $1,000 credit

D) $49,000 debit

27) Which statement about receivables is correct?

A) Receivables are non-monetary items.

B) Monetary items are measured at their present value.

C) Trade receivables generally have payments terms extending beyond 3 months.

D) Trade receivables should generally be recorded at their discounted present value.

28) Which statement best describes the gross method of accounting for cash discounts?

A) Records receivables at their present value amount.

B) Records any discounts forfeited as income.

C) Records any discounts taken as a reduction in revenue.

D) Records any discounts taken as an expense.

29) Which statement best describes the net method of accounting for cash discounts?

A) Records receivables at their face value.

B) Records any discounts forfeited as income.

C) Records any discounts taken as an expense.

D) Records any discounts taken as a reduction in revenue.

30) Which statement is correct?

A) The 'net' method for recording cash discounts is conceptually inferior to the 'gross' method.

B) Under the 'net' method, an entry is needed if the discount is not taken.

C) The 'gross' method for recording cash discounts is conceptually superior to the 'net' method.

D) The gross method overstates revenue.

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