FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Internal Control and Accounting for Cash

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Essay

Review LaterAdd Note

Review Later

For internal control purposes, what is meant by "separation of duties?"

Correct Answer

verified

The functions of authorization, recordin...

View Answer

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Ramsey Company's true cash balance at October 31, 2013 is $3,710. The following information is available for the bank reconciliation: Outstanding checks, $600 Deposits in transit, $450 Bank service charges, $90 The bank had collected an account receivable for Ramsey Company, $1,000 The bank statement included an NSF check written by one of Ramsey's customers for $600. Based on this information Ramsey's unadjusted book balance at October 31 is:

A) $3,870.
B) $4,400.
C) $3,400.
D) $3,490.

E) A) and B)
F) None of the above

Correct Answer

verified

Show Answer

Question 3

Short Answer

Review LaterAdd Note

Indicate whether each of the following statements regarding internal controls is true or false. _____ a) Internal controls are used to provide absolute assurance that the objectives of an enterprise will be accomplished. _____ b) Internal controls can be divided into accounting controls and administrative controls. _____ c) The mechanics of internal control systems vary from company to company. _____ d) Accounting controls are concerned with the evaluation of performance and the assessment of the degree of compliance with company policies and public laws. _____ e) Administrative controls are composed of policies and procedures that are designed to safeguard the assets and to assure that accounting records contain reliable information.

On September 30, 2013, the bank statement of Gomez Company showed a balance of $7,300. The following information was revealed by the bank statement: (1) deposits in transit amounted to $3,150 (2) outstanding checks amounted to $6,200 (3) a $550 check was incorrectly drawn on Gomez's account (4) NSF checks returned by the bank were $750 (5) bank service charge was $29 (6) credit memo for $75 for the collection of one of the company's account receivable Based on the above information the true cash balance was:

Indicate whether each of the following statements regarding internal controls is true or false. _____ a) Cash receipts should be deposited in a bank when they reach a predetermined level of materiality. _____ b) To improve operating efficiency, a company should make most of its disbursements in currency instead of checks. _____ c) Supporting documents are required when checks are presented to the check signer. _____ d) Supporting documents should not be marked "paid" until the check clears the bank. _____ e) All spoiled and voided checks should be defaced and retained.

For which of the following bank reconciliation adjustments would an adjusting journal entry not be necessary?

On May 1, 2013, Cook Company established a petty cash fund in the amount of $200. a) Is the establishment of the fund an asset source, asset use, or asset exchange transaction? b) Record the establishment of the petty cash fund in the horizontal financial statements model, below. Show dollar amounts of increases and decreases; for accounts that are not affected, indicate NA. If the event affects cash flow, classify the cash flow as operating, investing, or financing.

A bank statement debit memo describes a transaction that increases a customer's account balance.

In a company's bank reconciliation, an outstanding check is a check that:

Which of the following is not a primary role of an independent auditor?

What is a fidelity bond and what is its purpose?

What is meant by the term "materiality?"

Separation of duties in an organization should be required to reduce the likelihood of theft.

Torres Company established a petty cash fund for $300 on January 1, 2013. At the end of the month, the petty cash fund contained cash of $37.60 and vouchers for the following cash payments: freight on goods shipped to customers, $68.00; postage, $74.00; miscellaneous expense, $80.22; entertainment expense, $36.00. Three distinct events affected the petty cash fund during January: 1. establishment of the fund; 2. making payments for various items from the fund; and 3. recognizing expenses and replenishing the fund at the end of the month Required: a) Record each of the events in the horizontal statements model below. Indicate with the dollar amount of the increase or decrease, or NA if the element is not affected. b) Prepare journal entries for these events.

Explain the role of the independent auditor. What certification is required of an independent auditor?

Petty cash funds are maintained on an imprest basis. Explain the advantage of using the imprest basis in accounting for petty cash.

Which of the following statements regarding the Securities and Exchange Commission (SEC) is not true?

Which of the following is not an internal control procedure for the control of cash receipts?

Which of the item(s) would be subtracted from the company's unadjusted book balance to determine the true cash balance?

Even a good system of internal controls can be overridden by collusion among employees.