Name ______
MULTIPLE CHOICE
_____ 1. Internal control over a company's assets should include the following policy:
a) Responsibilities and duties of employees will be divided.
b) All cash receipts will be deposited into the bank the same day they arrive.
c) All cash payments will be made by check (except petty cash).
d) All of these answers are correct.
_____ 2. Company policy for internal control should include all of the following except:
a) Employees will be rotated.
b) The owner (or responsible employee) signs all checks after receiving authorization to pay from the departments concerned.
c) At time of payment, all supporting invoices or documents will be stamped "paid."
d) One employee should have the total responsibility for approving purchases, authorizing payments, and signing checks.
_____ 3. An example of an internal control is:
a) the use of bank account.
b) all checks are prenumbered.
c) all checks written must have reference source documents.
d) All of these answers are correct.
_____ 4. Endorsing a check:
a) guarantees payment.
b) transfers the right to deposit or transfer cash.
c) cancels the transaction.
d) All of these answers are correct.
_____ 5. A blank endorsement on a check:
a) can be further endorsed by someone else.
b) cannot be further endorsed by someone else.
c) is the safest type of endorsement.
d) permits only the original endorser to get the money.
_____ 6. A restrictive endorsement on a check:
a) can be further endorsed by someone else.
b) is the safest endorsement for businesses.
c) permits the bank to use its best judgment.
d) None of these answers is correct.
_____ 7. A full endorsement on a check:
a) is the same as a blank endorsement.
b) can be endorsed only by the person or company named in the original endorsement.
c) is the safest endorsement for businesses.
d) does none of the above.
_____ 8. The party to whose order a check is written is called the:
a) payer.
b) drawer.
c) drawee.
d) payee.
_____ 9. The check is a written order signed by the:
a) drawer.
b) drawee.
c) payee.
d) payer.
_____ 10. The one who pays the check is the:
a) drawee.
b) drawer.
c) payee.
d) payer.
_____ 11. Credit memorandum from the bank:
a) decrease a bank customer’s account.
b) are used to show a bank service charge.
c) show that a company has deposited a customer’s NSF check.
d) show the bank has collected a note receivable for the customer.
_____ 12. Checks paid by the bank are:
a) credited to the depositor's account.
b) debited to the depositor's account.
c) held by the bank until deposits are cleared.
d) None of these answers is correct.
_____ 13. Key points in working with a checkbook should include:
a) the number of the check is preprinted on the check.
b) the stub will be used in recording transactions and future reference.
c) the amount written in words should start on the far left.
d) all of the above.
_____ 14. If the written amount in words on a check does not match the amount expressed in figures, the bank may:
a) pay the amount written in words.
b) do nothing, because of the confusion.
c) call the drawer and verify the amount expressed in figures.
d) do either a or c above.
TRUE/FALSE
_____ 15. One internal control safeguard is to assign all the duties of receiving, depositing, and recording cash to one employee.
_____ 16. Using correct cash handling procedures, deposits should be made by the end of the week.
_____ 17. A signature card is kept in the bank files so that possible forgeries could be spotted.
_____ 18. When a bank debits your account, it is decreasing the balance.
_____ 19. On a bank reconciliation, outstanding checks are deducted from the balance per books.
_____ 20. A signature card shows the signature of only the person who authorizes others in the company to sign checks.
_____ 21. The drawer writes the check.
_____ 22. The drawee of the check is the person receiving the money.
_____ 23. The drawee of a check is normally the bank.
_____ 24. A deposit ticket usually separates checks deposited from coin and currency deposited.