Exam 7: Sarbanes-Oxley, internal Control, and Cash

In preparing a bank reconciliation,the amount of an error indicating the recording of a check in the journal for an amount larger than the amount of the check is added to the balance per company's records.

Identify each of the following reconciling items as (a)an addition to the cash balance according to the bank statement, (b)deduction from the cash balance according to the bank statement, (c)an addition to the cash balance according to the company's records,or (d)a deduction from the cash balance according to the company's records.Assume that none of the transactions reported by bank debit and credit memos have been recorded by the company.Also,indicate by writing (Entry)those items that will require a journal entry in the company's accounts.

The petty cash fund eliminates the need for a bank checking account.

When the voucher system is used,the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.

Bank customers are considered creditors of the bank so the bank shows their accounts with credit balances on the bank's records.

The Sarbanes-Oxley Act of 2002 was passed by Congress due to the public outcry after the financial scandals of the early 2000s.

All bank memos reported on the bank reconciliation require entries in the company's accounts.

Which of the following would be subtracted from the balance per books on a bank reconciliation?

The bank reconciliation

Separating the responsibilities for purchasing,receiving,and paying for equipment is an example of the control procedure: separating operations,custody of assets,and accounting.

The reconciliation of the cash register tape with the cash in the register is an example of

An example of good internal controls over cash payments is the taking of all cash discounts offered.

Accompanying the bank statement was a debit memo for an NSF check received from a customer.This item would be included on the bank reconciliation as a(n)

The actual cash received during the week ended October 31 for cash sales was $23,447.00 and the amount indicated by the cash register total was $23,457.00.Journalize the entry to record the cash receipts and cash sales. Journal

List the objectives of internal control and give an example of how each is implemented. Internal control provides reasonable assurance that

The following items may appear on a bank statement: Indicate whether the item would appear as debit or credit memo on the bank statement and whether the item would increase or decrease the balance of your account.Use the following format:

On April 3rd,Snappy Sales decides to establish a $135.00 Petty Cash Account to relieve the burden on Accounting. (a)Journalize this event. (b)On April 11th,the petty cash fund has receipts for mail and postage of $32.75,contributions and donations of $25.25,meals and entertainment of $68.00 and $9.75 in cash.Journalize the replenishment of the fund. (c)On April 12th,Snappy Sales decides to increase petty cash to $175.00.Journalize this event.

Jamison Company developed the following reconciling information in preparing its June bank reconciliation: Using the above information,determine the cash balance per books (before adjustments)for the Jamison Company.

A $135 petty cash fund has cash of $28 and receipts of $110.The journal entry to replenish the account would include a

You began your new job as the accountant for Morton Company.You were surprised to find that the company had a $2,000 petty cash fund,which sits in the break room.The President of the company told you: "Our petty cash system here works quite smoothly.Since everyone is honest here,everyone has access to the fund for incidentals that might pop up in the course of the business day.Most of these situations don't have any receipts tied to them,so I just put the money back in the fund when my secretary tells me that we have run out and debit the amount to Miscellaneous Expense." Required: (a)Should you implement some controls on petty cash? Why? (b)If so,what controls could be used for petty cash?