Exam 8: Cash and Internal Controls

The __________ requires the managers and auditors of companies whose stock is traded on an exchange (called public companies)to document and certify the system of internal controls.

A ___________ is an internal document (or file)that is used to accumulate information to control cash disbursements.

Franklin Company's bank reconciliation as of August 31 is shown below. The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

On March 1,a company established a $75 petty cash fund.On March 12,the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25;postage,$19.50;and office supplies,$36.Give the general journal entry to reimburse the fund and to increase its amount to $150 on March 12.

Which of the following is not one of the policies and procedures that make up an internal control system?

On June 3,Zhang Co.received and recorded a $3,500 invoice for merchandise on which the terms were 2/10,n/60.The company uses the net method to records invoices.On June 17,the company discovered that the invoice had been incorrectly filed and the discount lost.Prepare the June 3 general journal entry to record the purchase,the June 17 entry to record the discount lost,and the August 2 entry to record payment of the invoice.

Cash,not including cash equivalents,includes:

Freeman Co.had net sales of $4.2 million and ending accounts receivable of $0.8 million.Its days' sales uncollected equals:

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

Following are seven items a through g that would cause Rembrandt Company's book balance of cash to differ from its bank statement balance of cash. a.A service charge imposed by the bank. b.A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month. c.A customer's check returned by the bank is marked "Not Sufficient Funds (NSF)". d.A deposit mailed to the bank on the last day of the current month and not recorded on this month's bank statement. e.A check paid by the bank at its correct $190 amount recorded in error in the company's check register at $109. f.An unrecorded credit memorandum indicating that bank collected a note receivable for Rembrandt Company and deposited the proceeds in the company's account. g.A check written in the current period that is not yet paid or returned by the bank. Indicate where each item,letters a-g,would appear on Rembrandt Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

On a bank reconciliation,an unrecorded debit memorandum for printing checks is:

Which of the following events would cause a bank to debit a depositor's account?

The following information is available for the Victor Company for its March 31 bank reconciliation: From the March 31 bank statement:

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check.Ryan's June bank statement shows $18,361 on deposit in the bank.Ryan's comparison of the bank statement to its cash account revealed the following: Additionally,a $29 check written and recorded by the company correctly was recorded by the bank as a $92 deduction. The adjusted cash balance per the bank records should be:

At the end of the day on March 15,the cash register's record shows $1,957,but the count of cash in the register is $1,965.Prepare the general journal entry to record the day's cash sales.

The entry to record reimbursement of the petty cash fund for postage expense should include:

Easton Co.deposits all cash receipts on the day they are received and makes all cash payments by check.At the close of business on June 30,its Cash account shows a debit balance of $60,209.Easton's June bank statement shows $58,349 on deposit in the bank.Determine the adjusted cash balance using the following information: The adjusted cash balance should be:

On August 25,Barrymore Co.purchased $5,000 worth of merchandise on terms 2/10,n/30;on September 4,the amount due was paid.Using the net method of recording purchases,prepare general journal entries to record (a)the purchase on August 25,and (b)the cash payment on September 4.

Preparing a bank reconciliation on a monthly basis is an example of: