Exam 8: Cash and Internal Controls

The __________ requires the managers and auditors of companies whose stock is traded on an exchange (called public companies)to document and certify the system of internal controls.

____________ are short-term,highly liquid investment assets that are readily convertible to a known amount of cash.

Vouchers should be used only for purchases.Other expenditures do not need to go through the voucher system.

During the month of September,Norris Industries issued a check in the amount of $845 to a supplier on account.The check cleared the bank during September.The disbursement was recorded incorrectly as $854.The journal entry to correct this mistake when discovered will include:

After preparing a bank reconciliation,adjustments must be made for items reconciling the bank balance and items reconciling the book balance.

When merchandise is needed,a department manager must inform the purchasing department of its needs by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

A company had $43 missing from petty cash that was not accounted for by petty cash receipts.The correct procedure is to:

In the process of reconciling Marks Enterprises' bank statement for September,Mr.Marks compiles the following information: The adjusted cash balance per the books on September 30 is:

Reasons that internal controls are crucial to companies that convert from U.S.GAAP to IFRS include all of the following except:

Money orders,cashier's checks,and certified checks are examples of cash equivalents.

The voucher system of control:

The journal entry for petty cash reimbursement involves a debit to the appropriate expenses and a credit to Petty Cash.

The document that is an itemized statement of goods prepared by the vendor listing the customer's name,items sold,sales prices,and terms of the sale is the _________________.

________________ reflects the liquidity of a company's accounts receivable.

The Discounts Lost account represents the savings earned in taking advantage of purchase discounts.

At the end of the day,the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035.The proper entry to account for this excess includes a:

Describe the net method of accounting for purchases.Why do companies use the net method?

Two limitations of internal control systems are ______________ and ________________.

_________________________ is the use of electronic communication to transfer cash from one party to another.

Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month.The entry to replenish the petty cash fund will include: