1) The reconciliation of the cash register tape with the cash in the register is an example of
A. other controls.
B. independent internal verification.
C. establishment of responsibility.
D. segregation of duties.

2) Deposits in transit
A. have been recorded on the company's books but not yet by the bank.
B. have been recorded by the bank but not yet by the company.
C. have not been recorded by the bank or the company.
D. are customers' checks that have not yet been received by the company

3) Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?
A. An error by the bank.
B. Outstanding checks.
C. A bank service charge.
D. A deposit in transit

4) Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:
A. Accounts Receivable/Cash
B. Cash/Accounts Receivable
C. Miscellaneous Expense/Accounts Receivable
D. No adjusting entry is necessary.

5) Why do pension and mutual funds invest in debt and equity securities?
A. They have excess cash.
B. They want to generate earnings from investment income.
C. They invest for strategic reasons.
D. They invest for speculative reasons

6) Which of the following is a debt security?
A. IBM stock.
B. Treasury stock.
C. Treasury bills.
D. Real Estate.

7) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. The journal entry to record this investment includes a debit to
A. Debt Investments for $80,000.
B. Debt Investments for $82,000.
C. Cash for $82,000.
D. Stock Investments for $80,000.

8) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. Assume Holmes pays interest semiannually and the July 1 entry was done correctly. The journal entry at December 31, 2012 would include a credit to
A. Interest Receivable for $4,000.
B. Interest Revenue for $8,000.
C. Accrued Expense for $8,000.
D. Interest Revenue for $4,000.

9) A company that owns more than 50% of the common stock of another company is known as the
A. charge company.
B. subsidiary company.
C. parent company.
D. management company

10) If a parent company has two wholly owned subsidiaries, how many legal and economic entities are there from the viewpoint of the shareholders of the parent company?
A. Legal 3 Economic 3
B. Legal 1 Economic 2
C. Legal 3 Economic 1
D. Legal 2 Economic 1