Exam 6: Cash and Internal Control

Match the following terms with the best definitions for questions 212 through 219. -Used to prepare a purchase order.

How are cash equivalents reported or disclosed in the financial statements?

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

Treasury notes with a maturity of six months or less that are issued by the Federal Government are cash equivalents.

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.

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. -Certified check

Each of the following documents is used in the control of cash disbursements except:

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. An employee from the accounting department compares the control list and the cash register tapes with the bank deposit slip.

As part of good internal control, disbursements can be made either by check or cash.

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.

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

Match 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

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

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

The audit committee of the board of directors provides direct contact between the ______________________________ and the ________________________________________.

Realistic Sound's unadjusted bank balance amounted to $3,000.Outstanding checks amounted to $500 and deposits in transit totaled $300.Based on this information alone, Realistic's adjusted cash balance is:

An outstanding check is a check that:

Segregation and rotation of duties is most effective in

Which internal control procedure is followed when the work of one department acts as a check on the work of another?

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