6.1   Learning Objective 6-1

 

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) Monthly bank statements should be sent to and reconciled by the same employees who authorize payments and write checks.

C) The owner (or responsible employee) signs all checks after receiving authorization to pay from the departments concerned.

D) At time of payment, all supporting invoices or documents will be stamped “paid.”

 

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 are 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 person or company to whom a check is payable is called the:

A) payer.

B) drawer.

C) drawee.

D) payee.

9) The check is written and signed by the:

A) drawer.

B) drawee.

C) payee.

D) payer.

 

10) The drawee is the:

A) person who writes the check.

B) bank that drawer has an account with.

C) the person to whom the check is payable.

D) the person who reconciles the account.

 

 

 

 



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