Exam 8: Internal Control and Cash

Having a cash ratio below 1 is a good thing.

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

The following information is needed to reconcile the cash balance for Fire Steel Inc. • A deposit of $5,800 is in transit. • Outstanding checks total $1,500. • The book balance is $6,800 at February 28, 2013. • The bookkeeper recorded a $1,740 check as $17,400 in payment of the current month's rent. • The bank balance at February 28, 2013 was $18,000. • A deposit of $400 was credited by the bank for $4,000. • A customer's check for $3,700 was returned for nonsufficient funds. • The bank service charge is $60. Based on this information, prepare a bank reconciliation for Fire Steel Inc. as of February 28, 2013.

A check of $300,000, deposited by a company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?

Which of the following describes the internal control component "information system?"

A ________ is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

A strong computer firewall is an essential element of good internal controls for e-commerce.

Journal entries are required if the bank reconciliation includes a book error.

Petty cash is accounted for by maintaining a constant balance in the petty cash account, supported by the fund, cash plus payment tickets, totaling the same amount. Such a system is known as the:

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

Which of the following describes the internal control component "monitoring of controls?"

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

A sequentially numbered document authorizing a cash payment is known as a:

In a bank reconciliation, an NSF check will be shown on the book side of the reconciliation.

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

Which of the following describes the internal control procedure "assignment of responsibilities?"

The bank charged a service fee of $55. How would this information be included on the bank reconciliation?

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

The bank made an EFT payment of a telephone bill of $5,000. How would this information be included on the bank reconciliation?

In the following situation, which internal control procedure needs strengthening? Syria Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment.