Exam 5: Sarbanes-Oxley, Internal Control, and Cash

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

Explain why one person should not be permitted to purchase, receive, and pay for supplies.

The bank statement for Marley Co. indicates a cash balance of $10,000.50 on June 30, 2013. The cash account in Marley's records had a balance of $4,677.10. Illustrate the adjustments to the accounts and their effect on Marley's financial statements, based on the following reconciling items: (a)Cash sales of $\$ 342$ had been erroneously recorded in the cash receipts joumal as $\$ 324$ . (b)Deposits in transit not reconded by bank, $\$ 700$ . (c)Bank debit memorandun for service charges, $\$ 30$ . (d)Bank credit memorandum for note collected by bank, $\$ 2,050$ , including $\$ 50$ interest. (e)Bank debit memoranchum for $\$ 207.40$ NSF (not sufficient funds) check from Alice Martin, a customer. (f)Checks outst anding $\$ 4,192.80$ .

Discuss what would be included under personnel policies.

If a business has several bank accounts, it will have a separate record for each of them.

A bank reconciliation should be prepared periodically because:

Employing internal auditors is part of which element of internal control?

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per bank.

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the cash balance per bank.

The Sarbanes-Oxley Act of 2002 applies to all publicly held companies.

A minimum cash balance required by a bank is called:

A check drawn by a depositor for $295 in payment of a liability was recorded in the depositor's book as $925. The $630 difference would be included on the bank reconciliation as a(n):

Identify each of the following as related to (a) the control environment, (b) risk assessment, or (c) control procedures. (1) Mandatory vacations (2) Personnel policies (3) Report of outside consultants on future market changes

The amount of the outstanding checks is included on the bank reconciliation as a(n):

EFT:

Information and communication are essential elements of an organization's internal control.

For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

A business's organizational structure influences which of the following elements of internal control?

A voucher is a written authorization to make a cash payment.

An element of internal control is: