Exam 4: Internal Control And Cash

In the reconciliation of a bank statement, deposits in transit should be

As a result of the bank reconciliation process, a company will prepare an adjusting entry for a debit memo but not for a credit memo.

Items that are included on a bank statement and increase the bank account balance are called ____________________.

Match the following terms with their correct definitions. -Action that reduces the likelihood that records could be used to conceal intentional misstatements, theft, or fraud

The account which records differences between amounts of cash deposited and amounts from the cash register tapes is called

Internal control over financial reporting is concerned with ensuring the reliability of the financial statements.

Dinah Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for June 2019 indicated the following: The correct amount of check # 3549 is $760, but it was recorded as a cash disbursement of $670. The check was issued to pay for merchandise purchased. The check was written correctly and appeared on the bank statement correctly. A)Prepare a bank reconciliation in proper form for June 30, 2019. B)What amount should be reported as the cash balance on the June 30, 2019 balance sheet?

Match the following terms with their correct definitions. -The collection of environmental factors that influence the effectiveness of control procedures

A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?

Which of the following statements is false regarding a credit memo and its relationship to a company's bank reconciliation procedures?

Which internal control activity is followed when the work of one department acts as a check on the work of another?

A cost-cutting measure used in many business organization is the use of a(n) ____________________ fund, whereby a custodian handles disbursements and documentation for small expenditures.

Which of the following statements best describes the term "outstanding check" from a company's point of view?

Which internal control activity is followed when management authorizes the purchasing department to order goods and services for the company?

When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit.

The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.) -The clerk in the accounting department records both purchases and payments of invoices.

The accounting records for Dusek Dentistry, Inc. show the following information for February 28, 2019: Additional information pertaining to this checking account was obtained by comparing the monthly bank statement with the company's records. The following was revealed: 1.The ending cash balance per the bank statement was $7,960. 2.Deposits of 2,100 from February 26-28 are in transit. 3.Checks 347 and 349 are outstanding. 4.An $100 NSF check from a customer did not clear the bank. This NSF check was included in the February 25th deposit. 5.Check #343 was prepared correctly as a $1,400 payment on account. This check was properly recorded by the bank, but was erroneously included on the company's records in the amount of $4,100. 6.A debit memo for $2,000 was shown on the bank statement as notice that the company's rent was automatically paid from the checking account on February 1st. 7.A credit memo for $15 was shown on the bank statement as notice that the company had earned interest on its average daily balance in this checking account. 8.The bank's fees for the month totaled $65. A) Prepare a bank reconciliation to calculate the company's adjusted cash balance at February 28, 2019. B) Prepare the journal entries that must be recorded to adjust the cash records as a result of these bank reconciliation procedures.

The accountant prepared the firm's bank reconciliation and noted the following adjustments to the company records for its checking account. In the table below, indicate the impact on the accounting equation of recording the various adjusting journal entries for these items by inserting an "I" for increase or "D" for decrease. It is possible that an adjustment both increases and decreases an element of the accounting equation, as in the case of the first adjustment which has been completed as an example.

Match the following terms with their correct definitions. -Consists of the methods and records used to identify, measure, record, and communicate financial information about a business

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