Question 1

The treasurer of a company is responsible for cash management.List five cash management principles that are essential for effective cash management.

Accepted Answer

The answer of The treasurer of a company is responsible...

Question 2

The use of internal controls provides guaranteed protection against losses due to operating activities.

Accepted Answer

A) True 
 B)False

Question 3

A company records invoices at net amounts.On March 5,the company recorded merchandise purchased,invoice price $17,000,terms 2/15,n/60.On March 24,this company discovered that the invoice had been incorrectly filed and the discount had been lost.The invoice was paid on April 1.Prepare journal entries to record these events.

Accepted Answer

The answer of A company records invoices at net amounts.On...

Question 4

Following are seven items a through g that would cause Xavier Company's book balance of cash to differ from its bank statement balance of cash.
a.A service charge imposed by the bank.
b.A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month.
c.A customer's check returned by the bank is marked "Not Sufficient Funds(NSF)".
d.A deposit that was mailed to the bank on the last day of the current month and is unrecorded on this month's bank statement.
e.A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at $109.
f.An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company and deposited the proceeds in the company's account.
g.A check was written in the current period that is not yet paid or returned by the bank.
Indicate where each item a through g would appear on Xavier Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

Accepted Answer

The answer of Following are seven items a through g...

Question 5

Marbel had $2,816 million in sales and $555 million in ending accounts receivable for the current period.For the same period,Maxtel reported $4,885 million in sales and $491 million in ending accounts receivable.Calculate the days' sales uncollected for both companies as of the end of the current period.Which company is doing a better job in managing the collection of its receivables?

Accepted Answer

The answer of Marbel had $2,816 million in sales and...

Question 6

At the end of the day,the cash register's record shows $1,250,but the count of cash in the cash register is $1,245.The correct entry to record the cash sales is

Accepted Answer

A) Debit Cash $1,245; Credit Sales $1,245. 
B) Debit Cash $1,245; debit Cash Over and Short $5; credit Sales $1,250. 
C) Debit Cash $1,250; credit Sales $1,250. 
D) Debit Cash $1,250; credit Sales $1,245, credit Cash Over and Short $5. 
E) Debit Cash Over and Short $5, credit Sales $5.

Question 7

The impact of technology on internal controls includes:

Accepted Answer

A) Reduced processing errors. 
B) Elimination of the need for regular audits. 
C) Elimination of the need to bond employees. 
D) Elimination of separation of duties. 
E) Elimination of fraud.

Question 8

Cash equivalents:

Accepted Answer

A) Include savings accounts. 
B) Include checking accounts. 
C) Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes. 
D) Include time deposits. 
E) Have no immediate value.

Question 9

Cash equivalents:

Accepted Answer

A) Are short-term, highly liquid investment assets. 
B) Include 6-month CDs. 
C) Include checking accounts. 
D) Are recorded in petty cash. 
E) Include money orders.

Question 10

The payee is the person who signs a check,authorizing its payment.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises: A company uses a computerized point of sale system.
No two clerks share the same cash drawer.
A company uses a voucher system.
A company buys an insurance policy to protect against employee theft.
A company has separate departments for purchasing,receiving,and accounts payable.
A company uses a check protector.
The bookkeeper prepares and signs checks.
A company hires CPAs to perform an audit.
Cashier does not have access to the cash register recorded tape or file.
A company has an internal auditor on staff.

Accepted Answer

The Answer of Perform regular and independent reviews and Separate is...

Question 12

A company using the net method of recording purchases failed to take advantage of a discount available.When they pay the full (gross)amount of an invoice at the end of the credit period the journal entry will include a debit to:

Accepted Answer

A) Merchandise Inventory. 
B) Sales Discounts. 
C) Discounts Lost. 
D) Cash. 
E) Accounts Receivable.

Question 13

On August 25,a company purchased $5,000 worth of merchandise on terms 2/10,n/30; on September 4,the amount due was paid.Using the net method of recording purchases,prepare general journal entries to record (a)the purchase on August 25,and (b)the cash payment on September 4.

Accepted Answer

The answer of On August 25,a company purchased $5,000 worth...

Question 14

The days' sales uncollected ratio measures a company's ability to manage its debt.

Accepted Answer

A) True 
 B)False

Question 15

Technology such as cash registers,check protectors,time clocks and personal identification scanners can improve internal control.

Accepted Answer

A) True 
 B)False

Question 16

What is the purpose of the days' sales uncollected ratio?

Accepted Answer

The answer of What is the purpose of the days'...

Question 17

Internal control systems are:

Accepted Answer

A) Developed by the Securities and Exchange Commission for public companies. 
B) Developed by the Small Business Administration for non-public companies. 
C) Developed by the Internal Revenue Service for all U.S.companies. 
D) Required by Sarbanes-Oxley (SOX) to be documented and certified if the company's stock is traded on an exchange. 
E) Required only if a company plans to engage in interstate commerce.

Question 18

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls.What are some of the specific requirements for auditors specifically ?

Accepted Answer

The answer of The Sarbanes-Oxley Act (SOX)requires managers and auditors...

Question 19

At the end of the current period,a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

Accepted Answer

The answer of At the end of the current period,a...

Question 20

________________ are checks written (or drawn)by the depositor,deducted on the depositor's records,and sent to the payee,but not yet recorded by the bank for payment at the bank statement date.

Accepted Answer

The answer of ________________ are checks written (or drawn)by the...

Exam 8: Cash and Internal Controls

The treasurer of a company is responsible for cash management.List five cash management principles that are essential for effective cash management.

The use of internal controls provides guaranteed protection against losses due to operating activities.

At the end of the day,the cash register's record shows $1,250,but the count of cash in the cash register is $1,245.The correct entry to record the cash sales is

The impact of technology on internal controls includes:

Cash equivalents:

Cash equivalents:

The payee is the person who signs a check,authorizing its payment.

Match each of the following transactions 1 through 10 with the applicable internal controlprinciple listed in "a" through "g" (some answers refer to more than one principle).

A company using the net method of recording purchases failed to take advantage of a discount available.When they pay the full (gross) amount of an invoice at the end of the credit period the journal entry will include a debit to:

On August 25,a company purchased $5,000 worth of merchandise on terms 2/10,n/30; on September 4,the amount due was paid.Using the net method of recording purchases,prepare general journal entries to record (a)the purchase on August 25,and (b)the cash payment on September 4.

The days' sales uncollected ratio measures a company's ability to manage its debt.

Technology such as cash registers,check protectors,time clocks and personal identification scanners can improve internal control.

What is the purpose of the days' sales uncollected ratio?

Internal control systems are:

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls.What are some of the specific requirements for auditors specifically ?

At the end of the current period,a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

________________ are checks written (or drawn)by the depositor,deducted on the depositor's records,and sent to the payee,but not yet recorded by the bank for payment at the bank statement date.