Exam 4: Internal Control And Cash

The foundation of the internal control system is the control _____________ - the collection of environmental factors that influence the effectiveness of control procedures.

The accounting records for Dutch Island Company shows a cash balance of $4,133 on January 31, 2019. On the evening of January 31, company receipts of $1,250 were placed in the bank's night deposit drop box; this deposit was processed by the bank on February 1. The January 31 bank statement shows balance of $8,876, including collection of a $5,000 note receivable plus $55 of interest earned, a service charge of $40, and a $550 debit memo for the payment of the company's utility bill. All of the checks that the company had written during January were listed on the bank statement except for check #731 in the amount of $1,528. ​ Prepare a bank reconciliation to calculate the company's adjusted cash balance at January 31, 2019.

The accountant must make journal entries for all items in the book section of the bank reconciliation.

If the bank credits a customer's account, then that customer's cash account balance increases.

The account used to record the discrepancies that will occasionally occur between the amounts deposited and amounts shown on cash register tapes is called ____________________.

If a company has an internal audit function, it does not need to have external auditors.

Which of the following items would be added to the company's cash balance on a bank reconciliation?

The items listed below were identified while preparing a bank reconciliation for the company's checking account as of March 31.Cash balance according to the general ledger -Refer to Dance Town Academy. How will the customer's bounced checks be handled on a bank reconciliation?

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

Which of the following procedures is not part of the preparation of a bank reconciliation for a checking account?

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 receiving department compares the quantity of merchandise received with the quantity ordered.

A check written by a company but not yet presented to the bank for payment is called a(n) ____________________.

____________________ are those investments and deposits with financial institutions that are readily convertible into known amounts of cash and that have original maturities of three months or less.

A good system of internal control requires that the physical custody of assets be separated from the accounting for those assets. This concept is known as safeguarding of assets and records.

The only essential element of internal control from the following is

Petty Cash is NOT considered to be a cash equivalent.

No special internal control procedures are necessary with a petty cash fund because the amount is so small.

The accountant for a local manufacturing company is reconciling the company’s bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.) -Check written on the company's account in May and paid by the bank is returned with the bank statement

Having one employee prepare company checks and sign those checks relates to which internal control activity?

Discount Muffler Company is preparing its bank reconciliation for June 30, 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 June. Note that the beginning balance was correctly reconciled at the end of the previous month, and that all outstanding checks (numbered 1983, 1984, and 1985) and deposits in transit from the previous month cleared the bank during May. B)How much cash will the company report on its June 30 balance sheet? C)What adjusting entries will the company record as a result of this bank reconciliation process? Assume that the bank correctly recorded all transactions, and that any errors noted in the reconciliation process involve transactions on credit.