Exam 6: Cash and Internal Control

Jack's Jungle Fun,Inc.is a manufacturer of children's outdoor play equipment.The factory foreman determines when orders for materials are necessary.The orders are sent to the purchasing department that places orders with the vendors recommended by the factory foreman.When the materials are received,they are delivered directly to a central storeroom without counting what has been received.When invoices are received for the materials purchased,they are sent to the accounting department for payment.The accounting department compares the invoices with purchase orders.If the two documents are in agreement,the invoice is approved for payment.The accounting department prepares the checks that are signed by the company treasurer. Recommend improvements in the company's procedures for purchasing and paying for purchases of materials that will provide better internal control over purchases and payment for those purchases.

Why is cash management necessary?

Which of the following is not a generally recognized internal control procedure?

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 receiving department compares the quantity received with the quantity printed on the receiving report when the purchase order was prepared.

A check that is returned or "bounces" because of insufficient funds is called a(n)____________________.

Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?

The debit balance in Cash Short and Over at the end of an accounting period is reported as

An advantage of a strong system of internal control is that less testing of the accounting system is done by the outside auditors.

Why are adjustments often necessary after the reconciliation of a bank account?

Your uncle has just started a business and comes to you with a question."I'm confused.I have a memo included with my bank statement indicating a $45 service charge for printing new checks.Since you're an accounting major,maybe you can explain to me why they call it a 'debit memorandum,' even though they are deducting this amount from my account.When I took Accounting in school,I could have sworn that a decrease in the Cash account would be a credit and not a debit. REQUIRED: In a short paragraph,explain this issue to your uncle.

Sarcon Corp.prepares monthly bank reconciliations of its checking account balance.The bank statement for October,2014,indicated the following: An analysis of canceled checks and deposits and the records of Sarcon revealed the following items: REQUIRED: Prepare a bank reconciliation at October 31,2014 in proper form.

Which of the following is not a requirement of Sarbanes-Oxley?

Audit committees are required to consist of only directors who are key officers of the company.

Segregation and rotation of duties is most effective in

Which one of the following is not considered to be a cash equivalent?

Accounting controls primarily concern safeguarding of assets and ensuring the reliability of the financial statements.

__________________ is a report required by section 404 of the Sarbanes-Oxley Act.

If a company records a $310 receipt as $130,this type of error is called a(n)____________________.

Which internal control procedure is followed when storage areas are secured with limited access?

Among the assets listed below,which one is considered the most liquid?