Exam 6: Cash and Internal Control

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

Which one of the following items is not included in cash?

The set of items below was identified in preparing a bank reconciliation for Mars Corp.as of August 31, 2016. Bank statement balance \ 19,500 Mars's book balance (before adjustments) ? Outstanding checks 2,700 Customer's NSF checks 350 Service Charges 100 Deposits in transit 1,000 Interest earned on checking account 60 ? Mars Corp.'s balance per books before the reconciliation is

Which of the following is not a generally recognized internal control procedure?

Use the following data to answer the question presented below for Raines Corp.'s preparation of a bank reconciliation on October 31, 2016: Bank statement balance \ 30,700 Raines' book balance (before adjustments) ? Outstanding checks 4,200 NSF checks 400 Service charges 300 Deposits in transit 3,100 Interest earned on checking account 100 ? ?What is the adjusted cash balance on October 31, 2016?

How would interest earned on a checking account be dealt with in a bank reconciliation?

Match the following terms with the best definitions for questions 212 through 219. -An example of design and use of business documents control.

Which of the following represents a group composed of key officers of a corporation and outside members responsible for the general oversight of the affairs of the company?

Match the following terms with the best definitions for questions 212 through 219. -Form sent by the seller to the buyer as evidence of a sale

A check that is returned or "bounces" because of insufficient funds is called a(n) ____________________.

Sarcon Corp.prepares monthly bank reconciliations of its checking account balance.The bank statement for October, 2016, indicated the following: Balance, October 31, 2016 \ 7,920 Service charge for October 20 Interest earned during October 30 NSF check from Grey Corp. (deposited by Sarcon) 32 Note (\ 1,000) and interest ( \ 40) collected for Sarcon from a customer 1,040 $\text { An analysis of canceled checks and deposits and the records of Sarcon revealed the following item }$ Checking account balance per Sarcon books \ 7,170 Outstanding checks as of October 31 952 Deposit in transit at October 31 1,310 Error in recording a check issued by Sarcon. (Correct amount of the 90 check is \ 450 , but was recorded as a cash disbursement of \ 540 . The check was issued to pay for merchandise purchases.) ​ Required: Prepare a bank reconciliation at October 31, 2016 in proper form.

The only reason a company needs to create an internal control system is to deter intentional fraudulent acts.

Which one of the following is not a generally recognized internal control procedure?

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.

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

Match the term with the statement that best defines it. -Controls that are focused more on efficient operation than with correct reporting of information.

Cash equivalents are investments that are readily convertible to a known amount of cash, where readily means six months or less.

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

Which one of the following procedures is not part of preparing a bank reconciliation of a checking account?

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