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ACCOUNTING 131 THOMAS ISU EXAM 2
QUESTIONS AND ANSWERS 2025
Components of Internal Control
C R C I M R - .....ANSWER ...✔✔ - Control
Environment and Ethical Behavior
- Risk Assessment
- Control Activities
- Info and Communications
- Monitoring
- Relationship between Control activities and Accounting
System
Control Activities
C S A S C - .....ANSWER ...✔✔ - Clearly Defined
Authority and responsibility
- Segregation of Duties
- Adequate Documents and Records
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- Safeguards over Assets and Records
- Checks on Recorded Amounts
Bank Reconciliation - .....ANSWER ...✔✔ - Serves
control function by identifying errors and providing an
inspection of detailed records that deter theft
- it serves a transaction detection function by identifying
transactions performed by the bank, so the business can
make the necessary entries in its records
Deposit in Transit - .....ANSWER ...✔✔ a deposit
recorded on the books but not yet reflected on the bank
statement
Service Charges - .....ANSWER ...✔✔ Fees assessed
on a bank account for processing transactions and for
account maintenance
Debit memo - .....ANSWER ...✔✔ Bank reduces
account, but you have not
Credit memo - .....ANSWER ...✔✔ Bank increases
account, but you have not
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Deposit in Transit - .....ANSWER ...✔✔ A deposit
recorded by the company but not yet by its bank.
The four steps of bank reconciliation - .....ANSWER
...✔✔ 1. Compare the "deposits and credits" on the
bank statement to your deposits and credits
2. Compare the paid (aka cancelled) checks that are
electronically returned with the bank statements with
your credits to cash. Any checks credited on your cash
but not the bank statement are prolly outstanding
3. Look for stuff on the bank statement that haven't been
debited or credited to your cash account. Subtract bank
debits, add bank credits to cash accounts
4. If "adjusted cash balances" are still not the same,
search for errors. Most common error is a transposition
error (e.g. '438' instead of '483')
Outstanding checks - .....ANSWER ...✔✔ You issue a
check. The receiver of the check gets it passed by his
bank. His bank sends it to your bank. The bank then lists
the cancelled check in its bank statement to you. You
must then credit the bank statement's cash account for
you
Define this notation:
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$10,000 5/15, n/35 - .....ANSWER ...✔✔ You must
pay $10,000 within 35 days. If paid within 15 days,
you would only have to pay back $9,500
Sales Returns - .....ANSWER ...✔✔ Transactions in
which the seller accepts goods back from the custome
sales allowances - .....ANSWER ...✔✔ price reductions
offered to customers who accept slightly damaged or
soiled merchandise
Debit sales revenue
Cost of Goods sold model - .....ANSWER ...✔✔
Beginning Inventory + Purchases = Cost of goods
available for sale
Cost of goods available for sale - ending inventory =
Cost of Goods sold
Cost of Ending Inventory - .....ANSWER ...✔✔ Ending
Inventory x Cost per item = Cost of Ending Inventory
ACCOUNTING 131 THOMAS ISU EXAM 2
QUESTIONS AND ANSWERS 2025
Components of Internal Control
C R C I M R - .....ANSWER ...✔✔ - Control
Environment and Ethical Behavior
- Risk Assessment
- Control Activities
- Info and Communications
- Monitoring
- Relationship between Control activities and Accounting
System
Control Activities
C S A S C - .....ANSWER ...✔✔ - Clearly Defined
Authority and responsibility
- Segregation of Duties
- Adequate Documents and Records
,2|Page
- Safeguards over Assets and Records
- Checks on Recorded Amounts
Bank Reconciliation - .....ANSWER ...✔✔ - Serves
control function by identifying errors and providing an
inspection of detailed records that deter theft
- it serves a transaction detection function by identifying
transactions performed by the bank, so the business can
make the necessary entries in its records
Deposit in Transit - .....ANSWER ...✔✔ a deposit
recorded on the books but not yet reflected on the bank
statement
Service Charges - .....ANSWER ...✔✔ Fees assessed
on a bank account for processing transactions and for
account maintenance
Debit memo - .....ANSWER ...✔✔ Bank reduces
account, but you have not
Credit memo - .....ANSWER ...✔✔ Bank increases
account, but you have not
,3|Page
Deposit in Transit - .....ANSWER ...✔✔ A deposit
recorded by the company but not yet by its bank.
The four steps of bank reconciliation - .....ANSWER
...✔✔ 1. Compare the "deposits and credits" on the
bank statement to your deposits and credits
2. Compare the paid (aka cancelled) checks that are
electronically returned with the bank statements with
your credits to cash. Any checks credited on your cash
but not the bank statement are prolly outstanding
3. Look for stuff on the bank statement that haven't been
debited or credited to your cash account. Subtract bank
debits, add bank credits to cash accounts
4. If "adjusted cash balances" are still not the same,
search for errors. Most common error is a transposition
error (e.g. '438' instead of '483')
Outstanding checks - .....ANSWER ...✔✔ You issue a
check. The receiver of the check gets it passed by his
bank. His bank sends it to your bank. The bank then lists
the cancelled check in its bank statement to you. You
must then credit the bank statement's cash account for
you
Define this notation:
, 4|Page
$10,000 5/15, n/35 - .....ANSWER ...✔✔ You must
pay $10,000 within 35 days. If paid within 15 days,
you would only have to pay back $9,500
Sales Returns - .....ANSWER ...✔✔ Transactions in
which the seller accepts goods back from the custome
sales allowances - .....ANSWER ...✔✔ price reductions
offered to customers who accept slightly damaged or
soiled merchandise
Debit sales revenue
Cost of Goods sold model - .....ANSWER ...✔✔
Beginning Inventory + Purchases = Cost of goods
available for sale
Cost of goods available for sale - ending inventory =
Cost of Goods sold
Cost of Ending Inventory - .....ANSWER ...✔✔ Ending
Inventory x Cost per item = Cost of Ending Inventory
