Exam 6: Reporting and Analyzing Cash and Internal Controls

An effective voucher system has limited ability to prevent a dishonest employee from colluding with a dishonest supplier to fraudulently acquire cash payments for goods and services not received.

(True/False)

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Question 61

Internal control systems used to monitor and control operations are a low priority for managers within the company.

(True/False)

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Question 62

The accountant for Gotham Inc.prepared the bank reconciliation when the June 30 bank statement was received in the mail.A debit memorandum enclosed with the bank statement listed service charges in the amount of $50.These charges were not recorded by Gotham prior to receiving the bank statement.How would the company record the required adjusting entry for this item?

(Multiple Choice)

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Question 63

Match the following terms with the appropriate definition:.

Liquid asset

Currency, coins, and amounts on deposit in bank checking and many savings accounts.

Petty cash fund

An asset such as cash that can be readily used to settle short-term obligations.

Internal control system

An itemized statement of goods prepared by the vendor that lists the customer's name, the items sold, the sales price of each item, and the terms of sale.

Correct Answer:

Verified

Liquid asset

Petty cash fund

Internal control system

Cash

Outstanding checks

Cash equivalent

Purchase requisition

Check

Invoice

Vendor

(Matching)

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Question 64

At the end of the day,the cash register's record shows $1,250,but the count of cash in the cash register is $1,245.The correct entry to record the cash sales for the day is:

(Multiple Choice)

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Question 65

Identify whether each of the following items would on appear on the bank side or the book side of a bank reconciliation:

(Essay)

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Question 66

The use of internal controls provides guaranteed protection against losses due to operating activities.

(True/False)

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Question 67

A customer's check is deposited by a company.The check is uncollectible because the balance in the customer's account is not large enough to cover the check.This check is referred to as a __________ check.

(Short Answer)

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Question 68

The days' sales uncollected ratio reflects the liquidity of accounts receivable.

(True/False)

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Question 69

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

(Short Answer)

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Question 70

For good internal controls over cash,all payments should be made from the petty cash,except for very large payments.

(True/False)

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Question 71

Which of the following is the most serious limitation of internal controls?

(Multiple Choice)

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Question 72

A __________________________ is a document explaining the payment of a check.

(Short Answer)

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Question 73

A company established a petty cash fund of $100 on September 1.On September 10,the petty cash fund was replenished when there was $16 remaining and there were petty cash receipts for: office supplies,$27; courier,$32; and postage,$22.On September 15,the petty cash fund was increased to $125 in total.Record the above transactions in general journal form.

(Essay)

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Question 74

________________________ are checks written (or drawn) by the depositor,deducted on the depositor's records and sent to the payee,but not yet recorded by the bank for payment at the bank statement date.

(Short Answer)

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Question 75

Given the following information: What is the amount that needs to be recorded for cash over and short?

(Multiple Choice)

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Question 76

________________ includes currency,coins,and amounts on deposit in checking accounts and many savings accounts.

(Short Answer)

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Question 77

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

(True/False)

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Question 78

Based on the following information,prepare the November bank reconciliation for the Avisa Company. The following information is available for the Avisa Company for the month of November: a.On November 30,after all transactions have been recorded,the balance in the company's Cash account has a balance of $27,202. b.The company's bank statement shows a balance on November 30 of $29,279. c.Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459. d.A credit memo included with the bank statement indicates that the bank collected $780 on a noninterest-bearing note receivable for Avisa.The bank deducted a $10 collection fee and credited the remainder of $770 to Avisa's account. e.A debit memo included with the bank statement shows a $67 NSF check from a customer,J.Brown. f.A deposit was placed in the bank's night depository on November 30 totaled $1,675 and did not appear on the bank statement. g.Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450,but was recorded in the accounting records as $2,540. h.Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges.It has not been recorded on the company's books.

(Essay)

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Question 79

Cash,not including cash equivalents,includes:

(Multiple Choice)

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Question 80

An effective voucher system has limited ability to prevent a dishonest employee from colluding with a dishonest supplier to fraudulently acquire cash payments for goods and services not received.

Internal control systems used to monitor and control operations are a low priority for managers within the company.

At the end of the day,the cash register's record shows $1,250,but the count of cash in the cash register is $1,245.The correct entry to record the cash sales for the day is:

Identify whether each of the following items would on appear on the bank side or the book side of a bank reconciliation:

The use of internal controls provides guaranteed protection against losses due to operating activities.

A customer's check is deposited by a company.The check is uncollectible because the balance in the customer's account is not large enough to cover the check.This check is referred to as a __________ check.

The days' sales uncollected ratio reflects the liquidity of accounts receivable.

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

For good internal controls over cash,all payments should be made from the petty cash,except for very large payments.

Which of the following is the most serious limitation of internal controls?

A __________________________ is a document explaining the payment of a check.

________________________ are checks written (or drawn) by the depositor,deducted on the depositor's records and sent to the payee,but not yet recorded by the bank for payment at the bank statement date.

Given the following information: What is the amount that needs to be recorded for cash over and short?

________________ includes currency,coins,and amounts on deposit in checking accounts and many savings accounts.

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

Cash,not including cash equivalents,includes:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

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