Exam 6: Cash and Internal Control

What is the form sent by the seller to the buyer as evidence of a sale?

Jack's Jungle Fun, Inc. is a manufacturer of children's outdoor play equipment. The factory foreman determines when orders for materials are necessary. The orders are sent to the purchasing department that places orders with the vendors recommended by the factory foreman. When the materials are received, they are delivered directly to a central storeroom without counting what has been received. When invoices are received for the materials purchased, they are sent to the accounting department for payment. The accounting department compares the invoices with purchase orders. If the two documents are in agreement, the invoice is approved for payment. The accounting department prepares the checks that are signed by the company treasurer. Recommend improvements in the company's procedures for purchasing and paying for purchases of materials that will provide better internal control over purchases and payment for those purchases.

The following set of items describes activities completed by a company in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. A single employee in the mailroom opens the mail, counts the money received, and prepares a control list of the amount received.

Which of the following is an example of a debit memorandum?

Which internal control procedure is violated when the cashier at the checkout stand also records the daily receipts in the journal?

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

Border Company's cash account had a balance of $962 on August 31. This included a bank deposit of $87 that was in transit on the 31st. The August 31 bank statement contained the following information: Border also had checks outstanding of $169. What is Border's adjusted cash balance at August 31?

The set of items below was identified in preparing a bank reconciliation for Heath Corp. as of August 31, 2014.

Which one of the following items is a reconciling item on the bank side of a bank reconciliation?

If the balance on the bank statement does not equal the balance in the cash account, then it can be assumed that:

Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?

The group within an organization that is responsible for monitoring and evaluating the internal control system is called:

An is a form the accounting department uses before making payment to document the accuracy of all information about a purchase.

If a company erroneously records a $500 deposit as $400 in its books, which of the following must occur when reconciling the bank statement?

Which one of the following statements is true?

The garden club is planning a raffle. The president overheard you talking about internal controls to another member and asked you to set up some guidelines to "make sure" that all money collected for the upcoming raffle is accounted for by the club. REQUIRED: 1. In general, describe some guidelines that the club should follow to achieve an acceptable level of internal control. 2. Regarding the president's request, is it really possible to make sure that all money is collected and recorded?

Which of the following is not a requirement of a company's external auditors under Sarbanes­Oxley?

On January 2, 2014, Viva Stores decided to set up a petty cash fund. The treasurer established the fund by writing and cashing a $250 check and placing the coin and currency in a locked petty cash drawer. Conrad Boswell was designated as the custodian for the fund. During January, the following receipts were given to Boswell in exchange for cash from the fund: A count of the cash in the drawer on January 31 revealed a balance of $53.25. The treasurer wrote and cashed a check on the same day to restore the fund to its original balance of $250. REQUIRED: Identify and analyze the effects of the transactions that Viva should record for January 2 and January 31. Assume that all stamps and office supplies were used during the month. Jan 2, 2014 To record establishment of petty cash fund.

How would bank service charges be dealt with in a bank reconciliation?

Which one of the following documents is used in the control of cash disbursements?