Which of the following would NOT represent good controls over cash disbursements?

A) Make all disbursements, other than very small ones, by check, debit card, or credit card.

B) Require only one signature for checks, especially larger ones.

C) Authorize all expenditures before purchase and verify the accuracy of the purchase itself.

D) The employee who authorizes payment should not also be the employee who prepares the check.

Answer: Require only one signature for checks, especially larger ones.

A customer makes a $2,000 purchase at ApplianceWorld, paying with a credit card. ApplianceWorld is charged a 2% fee by the credit card company. When recording this sale, ApplianceWorld would:

A) Debit Accounts Receivable for $2,000.

B) Credit Sales Revenue for $2,000.

C) Credit Sales Revenue for $1,960.

D) Credit Deferred Revenue for $2,000.

Answer: Credit Sales Revenue for $2,000.

McGregor Company allows customers to pay with credit cards. The credit card company charges McGregor 3% of the sale. When a customer uses a credit card to pay McGregor $200 for services provided, McGregor would:

A) Debit Cash for $200.

B) Credit Service Revenue for $194.

C) Debit Service Fee Expense for $6.

D) Credit Service Revenue for $206.

Answer: Debit Service Fee Expense for $6.

The amount of revenue recorded at the time of a sale will be greatest when the customer pays with a:

A) Check.

B) Cash.

C) Credit card.

D) The revenue will be the same amount for each of the above payment methods.

Answer: The revenue will be the same amount for each of the above payment methods.

When a sale is made to a customer who pays with a debit card, the company records:

A) A debit to Accounts Payable.

B) A debit to Accounts Receivable.

C) A debit to Cash.

D) No entry until the debit card transaction clears the bank.

Answer: A debit to Cash.

When a sale is made to a customer who pays with a check, the company records:

A) A debit to Cash.

B) A debit to Accounts Payable.

C) A debit to Accounts Receivable.

D) No entry until the check clears the bank.

Answer: A debit to Cash

Which of the following would not be considered good internal control for cash receipts?

A) Allowing customers to pay with a debit card.

B) Requiring the employee receiving cash from customers to also deposit the cash into the company's bank account.

C) Recording cash receipts as soon as they are received.

D) Allowing customers to pay with a credit card.

Answer: Requiring the employee receiving cash from customers to also deposit the cash into the company's bank account.