Exam 6: Cash and Internal Control

Which of the following statements does not describe the responsibilities of a company's internal audit staff?

The documentation with the bank statement shows a debit memo for bank service charges.Based on this, what possible entry would be made in the company's accounts?

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. Although the department supervisor can indicate a preferred supplier or vendor on purchase requisitions, the purchasing department has the responsibility for making the final decision on a vendor.

Which one of the following statements regarding internal control is true?

Most merchandisers receive checks and currency from customers in two ways: 1) cash received over the counter from cash sales and 2) cash received in the mail from credit sales.

Which of the following statements is false regarding a credit memorandum?

When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit.

If a company has internal auditors, it does not need to have external auditors.

Which internal control procedure is followed when storage areas are secured with limited access?

Which one of the following items would be subtracted from the balance per books in a bank reconciliation

Which one of the following is not a cash equivalent?

A debit memorandum appeared on Cinco Inc.'s May bank statement.How will Cinco treat this amount on its May bank reconciliation?

Which one of the following is not considered to be a cash equivalent?

The use of customer statements as a control device will be effective only if the employees responsible for the custody of cash received through the mail, for record keeping, and for authorization of adjustments to customers' accounts are not allowed to prepare and mail statements to customers.

Which one of the following statements best describes the term "outstanding check?"

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. The clerk in the accounting department records both purchases and payments of invoices.

A voucher is usually supported by

The Dinho Corporation identified the following data when preparing their April bank reconciliation: In addition, Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200. What is the net amount of the adjustment to Dinho's cash balance as a result of the bank reconciliation?

The key to the classification of an amount as cash is that it be available to pay debts within a three-month period of time.

A company's internal control system is designed by its external auditors.