Exam 6: Cash and Internal Control

Sarcon Corp.prepares monthly bank reconciliations of its checking account balance. REQUIRED: (1)Explain how checking accounts,bank statements,and bank reconciliations are used by Sarcon to control its cash. (2)Explain how Sarcon can control small payments that must be made in cash rather than by check.

An outstanding check is a check that:

Which one of the following documents is used in the control of cash disbursements?

The accountant for Rogan Corp.was preparing a bank reconciliation as of February 28,2014.The following items were identified: What amount will Rogan report as its adjusted cash balance at February 28,2014?

At Forrest Industries,all sales are on account.Sienna Marcos is responsible for mailing invoices to customers,recording the amount billed,opening mail,recording the payment,and making deposits to the bank.Sienna is very devoted to the family business and never takes off more than one or two days for a long weekend.The customers know Sienna and sometimes send personal notes with their payments.Another clerk handles all aspects of accounts payable.Sienna's brother,who is president of Forrest Industries,has hired an accountant to help with expansion. REQUIRED: 1.List some problems with the current accounts receivable system. 2.What suggestions would you make to improve internal control? 3.How would you explain to Sienna that she personally is not the problem?

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity,identify whether or not the activity adheres to or violates sound internal control procedures. Although the department supervisor can indicate a preferred supplier or vendor on purchase requisitions,the purchasing department has the responsibility for making the final decision on a vendor.

The group within an organization that is responsible for monitoring and evaluating the internal control system is called:

Which of the following statements is false regarding a credit memorandum?

The following set of items describes activities completed by a company in purchasing and paying for merchandise.For each activity,identify whether or not the activity adheres to or violates sound internal control procedures. The clerk in the accounting department records both purchases and payments of invoices.

The ___________________ is a subset of the board of directors that acts as a direct contact between the stockholders and the independent accounting firm.

_________________ is the body created by the Sarbanes-Oxley Act that was given the authority to set auditing standards in the United States.

Pierce Corp.identified the following data in preparing a bank reconciliation on October 31,2014. How much is Pierce's adjusted cash balance on October 31,2014?

How would outstanding checks be dealt with in a bank reconciliation?

On a bank reconciliation,interest earned for the month is added to the cash balance per the books.

The department in an organization that is responsible for preparing the invoice approval form to document all of the information about a particular purchase is:

Which one of the following statements regarding internal control is true?

Herbert and Evita are planning to open a quick copy center near the local college.They will make both cash and credit sales.They will hire college students to make copies and to operate the cash register.Either Herbert or Evita will act as manager during most hours that the business will be open.One student will be designated as assistant manager when they cannot be present. Describe procedures that Herbert and Evita might use to provide adequate internal control over cash and credit sales and bank deposits.

On a bank reconciliation,outstanding checks are added to the cash balance per the bank statement.

______________________________ are the crucial link between economic transactions entered into by an entity and the accounting for these events.

Which one of the following items would be subtracted from the balance per bank statement in a bank reconciliation?