Exam 6: Cash and Internal Control

When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a credit memorandum.

The establishment of a petty cash fund has no effect on the company's total cash balance.

A good system of internal control is important to make a company's accounting records completely foolproof.

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

Marathon Street Bank sent Flank Industries their end of month bank statement for October. The end of month balance by the bank is $11,229. From the statement, it can be determined that a deposit for $4,250 is in transit at the end of the statement period. Also the statement reveals that checks for $86, $106, and $95 are outstanding. Marathon Street collected a 90 day, 12% interest $4,000 note receivable charging $20 for the service. No interest has been accrued on the note. The bank charges a monthly account fee of $35. The end of month balance per company books is $11,127. REQUIRED: Complete a bank/account reconciliation and identify and analyze the relevant transactions that Flank would record for the reconciliation.

Which one of the following items would be added to the balance per bank statement in a bank reconciliation?

If receipts from cash sales of $7,500 were recorded incorrectly as $5,700 in the company's books, then this item would be included on the bank reconciliation as an:

Use the following data to answer the question presented below for Raines Corp.'s preparation of a bank reconciliation on October 31, 2014: What is the net amount of the increase or decrease in Raines' cash balance which must be recorded as a result of The adjustments identified by the bank reconciliation?

Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Check written in May that does not appear on the bank statement

McDonald's Corporation is the largest food service organization in the world. The proper handling of cash and food is important to the profitability of McDonald's. Based on your personal knowledge of McDonald's and the internal control concepts and procedures described in the textbook, answer the following questions. REQUIRED: Describe procedures that you believe McDonald's may use to control cash receipts.

On a bank reconciliation, bank charges for the month are added to the cash balance per the books.

Only one copy of the prelist should be prepared when an employee opens mail with customer payments to avoid complexity in the accounting system and maintain control.

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. Monthly statements, indicating the current balance due, are mailed to customers.

How would outstanding checks be dealt with in a bank reconciliation?

If a company hires honest employees, no internal control procedures are necessary.

For the following items Questions 220-227, indicate whether each should be a included or b excluded from the line item titled Cash and cash equivalents on the balance sheet. -Certificate of deposit maturing in six months

Which of the following is another term for the invoice approval form?

An amount recorded as an increase in the company's cash account at month-end, but which has not yet been reflected on the bank statement is called an .

is the body created by the Sarbanes-Oxley Act that was given the authority to set auditing standards in the United States.

McDonald's Corporation is the largest food service organization in the world. The proper handling of cash and food is important to the profitability of McDonald's. Based on your personal knowledge of McDonald's and the internal control concepts and procedures described in the textbook, answer the following questions. REQUIRED: Most corporations, including McDonald's, include a Report of Management in their annual report. Describe, in general, the main elements that should be included in a Report of Management and give the purpose of this report.