Exam 8: Cash and Internal Control

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Which of the following documents is mailed to the vendor (seller)of goods?

Taking a physical inventory is not necessary under a perpetual inventory system.

Sound internal control activities dictate that extra cash should always be on hand.

The degree of separation of duties varies with the size of the business.

Damaged goods that can be sold at a reduced price should be included in a company's merchandise inventory.

Merchandisers usually take a physical inventory when the volume of goods is at its lowest levels.

The Report of Management in Brighton Company's annual report states,"Management has established a system of internal controls to provide reasonable assurance that assets are maintained and accounted for in accordance with its policies and that transactions are recorded accurately on the company's books and records." Name five control activities Townsgate could and probably does implement.

The periodic inventory system provides no means of identifying losses from spoilage,shoplifting,and theft.

The petty cash voucher should be kept by the person being reimbursed.

The Sarbanes-Oxley Act of 2002 requires management to acknowledge its responsibility for internal control

Which of the following is not a goal of a system of internal control over merchandising transactions?

A check authorization would be prepared after a receiving report.

To assure an efficient system of internal control,management should authorize all transactions.

Which of the following is not an internal control activity for cash?

Merchandising companies do not need as good a system of internal control as service companies.

Separation of duties relates to a control activity in the accounting system.