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Exam 7: Internal Control and Cash

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Question 61

Multiple Choice

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Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is

A) a deduction from the balance per company's records
B) an addition to the balance per bank statement
C) a deduction from the balance per bank statement
D) an addition to the balance per company's records

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Question 62

Multiple Choice

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Credit memos from the bank

A) decrease a bank customer's account
B) are used to show a bank service charge
C) show that a company has deposited a customer's NSF check
D) show the bank has collected a note receivable for the customer

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Question 63

Essay

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(a) Where are cash equivalents disclosed in the financial statements? (b) List three examples of cash equivalents.

A bank reconciliation should be prepared

A necessary element of internal control is

A backlog in recording transactions is an example of a warning sign from the accounting system.

Jackson Industries has collected the following information but needs assistance completing the table. The cash payments were 90% of collections. ​ ​ How much was the beginning balance of the cash account?

Identify each of the following as relating 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

Match each item to a bank statement adjustment, a company books adjustment, or either. -Bank charges

Sarbanes-Oxley applies to

Consider the following information from the cash account. Assume cash payments were 84% of collections. How much was the beginning balance of the cash account?

Businesses who have several bank accounts, petty cash, and cash on hand, would maintain a separate ledger account for each type of cash.

The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the company's accounts?

Match each item to a bank statement adjustment, a company books adjustment, or either.

The petty cash fund eliminates the need for a bank checking account.

Match the following elements of internal control:

Match each item to a bank statement adjustment, a company books adjustment, or either. -NSF check

The actual cash received during the week ended June 7 for cash sales was $18,632, and the amount indicated by the cash register total was $18,628. Journalize the entry to record the cash receipts and cash sales. Journal $\begin{array} { | c | c | c | c | c | } \hline \text { Date } & \text { Description } & \begin{array} { c } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}$

A bank statement