Exam 7: Sarbanes-Oxley, Internal Control, and Cash

For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Cash equivalents include short-term investments that will be converted to cash within 120 days.

Aspen, Inc. reported the following data in its annual report: Cash and cash equivalents $ 460,000 Cash flow from operations 240,000)1) What is the company's "cash burn" per month? 2) What is the company's ratio of cash to monthly cash expenses?

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the company's accounts?

The following procedures were recently implemented at the Health Station, Inc. For each procedure, indicate whether the internal control over cash represents 1) a strength or 2) a weakness. If it is a weakness, please explain why. a) All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. b) The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer's office for approval. c) At the end of each day, all cash receipts are placed in the bank's night depository. d) The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.

The following information is from Madison Corporation's accounting records for May. Check #3269 was returned as a double payment and voided. Checks that have not cleared the bank include #3252, #3260, and series #3275-3278. In addition to the above list of the checks, Madison had check #2264 for $32.98 and check #2655 for $45.99 outstanding previously that have not cleared. 1. Create an outstanding checks list for Madison at the end of May. 2. What is the total amount of checks that cleared the bank written in May)?

Consider the following information from the cash account. Assume cash payments were 84% of collections. Cash ?? Beg. balance Collections ?? Disbursements \ 80,275 End balance How much was the beginning balance of the cash account?

Bank reconciliation information for Kaden Co. for May 31 is as follows: a) The bank statement balance is $2,936. b) The cash account balance is $3,194. c) Outstanding checks amounted to $465. d) Deposits in transit are $655. e) The bank service charge is $50. f) A check for $97 for supplies was recorded as $79 in the ledger. Record the appropriate journal entry for Kaden Co.

Minor Company had checks outstanding totaling $19,200 on its April bank reconciliation. In May, Minor Company issued checks totaling $64,900. The May bank statement shows that $47,600 in checks cleared the bank in May. A check from one of Minor Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be

EFT

Journalize the entries to record the following: Sept. 1 Established a petty cash fund of $350. 30 The amount of cash in the petty cash fund is now $130. The fund is replenished based on the following receipts: office supplies, $116; postage, $100. Journal

Using the following information, prepare a bank reconciliation for Candace Co. for May 31: a) The bank statement balance is $2,936. b) The cash account balance is $3,194. c) Outstanding checks amounted to $465. d) Deposits in transit are $655. e) The bank service charge is $50. f) A check for $97 for supplies was recorded as $79 in the ledger.

Which of the following would be deducted from the balance per books on a bank reconciliation?

If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortages have exceeded cash overages for the period.

Match the following elements of internal control: -monitoring

Match each item to a bank statement adjustment, a company books adjustment, or either. -Bank charges

Which of the following would not be included with the cash and cash equivalents on the balance sheet?

The main reason that the bank statement cash balance and the company's cash balance do not initially balance is due to timing differences.

The following procedures were recently implemented at the Pampered Pets, Inc. For each procedure, indicate whether the internal control over cash represents 1) a strength or 2) a weakness. If it is a weakness, please explain why. a) At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers. b) At the end of the day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank. c) After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher and supporting documentation to the accounts payable clerk for filing. d) Along with the petty cash receipts for postage, office supplies, etc., several postdated employee checks are in the petty cash fund.