Exam 4: Internal Control And Cash

Match the following terms with their correct definitions. -Providing physical protection of the company's assets

Which one of the following statements is true?

According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and maintaining a system of internal control over the company's financial reporting?

Explain how a company can control small cash payments that are made in cash rather than by check.

When a bank pays interest on a company's checking account balance, the bank will likely issue a credit memo.

Why is cash management necessary?

Match the following terms with their correct definition. -A fund used to pay for small amounts to avoid the time and expense of paying by check

Diamond Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement for October 2019 indicated the following: The correct amount of check # 627 is $980, but it was recorded as a cash disbursement of $890. 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 October 31, 2019. B)What amount would Diamond report its cash balance on its October 31, 2019, balance sheet?

Whenever feasible, cash handling activities and cash record-keeping activities should be assigned to different employees, according to the internal control activity called ____________________.

A company's records indicate the balance in its checking account at the end of the month is $5,671. Comparing the company's records with the monthly bank statement reveals several additional cash transactions, such as a bank service charge of $75, a $4,000 note receivable collected by the bank plus interest earned of $100, and an NSF check for $350. Determine the company's adjusted cash balance and prepare the journal entries necessary to adjust the account balance.

If the bank debits its customer's checking account, then the customer's cash balance increases.

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

Match the following terms with their correct definition. -The elapsed time between the purchase of goods for resale and the collection of cash from customers

The following information relates to the company's May bank reconciliation: In addition, a check was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000. -Refer to Designs on You. What is the company's adjusted cash balance at May 31?

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.) -An employee from the accounting department compares the cash register tapes with the bank deposits.

A petty cash custodian maintains a $250 petty cash fund. At the end of each month, the custodian tallies the records of the petty cash transactions and presents them for reimbursement. Which of the following entries is necessary for recording the replenishment of the fund?

If a company erroneously records a $50 check received from a customer as $500 in its records, which of the following must occur when reconciling its bank statement?

Dovetail Company is preparing its bank reconciliation for July 31, 2019. Its bank statement and general ledger T-account for its checking account are presented below: ​ ​ A)Prepare a bank reconciliation in proper form for July. Note that the beginning balance was correctly reconciled at the end of the previous month, and that all outstanding checks (numbered 744, 745, and 746) and deposits in transit from last month cleared the bank this month. B)How much cash would the company report on its July 31 balance sheet? C)What adjusting entries will the company record as a result of this bank reconciliation process? Assume that the bank correctly reported all transactions, and that any errors noted in the reconciliation process involve transactions on credit.

Which of the following is the correct entry to establish a petty cash fund in the amount of $300?

A petty cash fund for $300 was established on May 1. By the end of the month, the petty cash custodian requested reimbursement of $222 for the following expenditures from the fund: Record the entries to a) establish the petty cash fund; b) replenish the fund as of the end of May and c) increase the fund balance to $500.