Exam 8: Internal Control and Cash

Which of the following items will not appear as deductions on a bank statement?

For the following situation, state whether it represents a strength or weakness in internal control and give the reason for your answer. The mailroom employee opens all incoming mail. Customers' checks are sent to the treasurer, and remittance advices are sent to the accounting department. The controller compares the daily bank deposit amount from the treasurer and the daily debit to cash from the accounting department.

In a bank reconciliation, a NSF check will be shown on the book side of the reconciliation.

A petty cash fund was established with a $380 balance. It currently has cash of $41 and petty cash tickets totaling $339. Which of the following would be included in the entry to replenish the fund?

Which one of the following is true of the bank reconciliation?

In a large company, the person who is responsible for comparing cash and the bank balance is the ________.

Cash is a highly liquid asset, but cash equivalents are not highly liquid assets.

No journal entries are required for the reconciling items on the bank side because ________.

Separating the custody of assets from accounting implies that the accountants must not handle cash and the cashier must not have access to the accounting records.

Which of the following is the first step in the purchasing and payment process?

Reducing expenses to increase operating profit is representative of ________.

Two or more people working together to circumvent internal controls and defraud a company is known as ________.

Evaluated Receipts Settlement is ________.

For the following situation, state whether it represents a strength or weakness in internal control and give the reason for your answer. The movie theater has the following policy. Tickets are sold by the cashier. The ticket stubs are collected by the ticket taker. The ticket stubs are stored in a locked box, and the accounting personnel match the number of ticket stubs to the number of tickets sold.

The following information is needed to reconcile the cash balance for Baker's Dry Cleaning, Inc. * A deposit of $5,600 is in transit. * Outstanding checks total $1,200. * The book balance is $6,400 at February 28, 2017. * The bookkeeper recorded a $1,800 check as $17,300 in payment of the current month's rent. * The bank balance at February 28, 2017 was $16,130. * A deposit of $200 was credited by the bank for $2,000. * A customer's check for $3,100 was returned for nonsufficient funds. * The bank service charge is $70. What was the adjusted book balance?

The Sarbanes-Oxley Act requires all private companies in the United States to maintain an internal control system.

Jupiter Service Company decides to increase the amount of the petty cash fund from $200 to $700. A journal entry must be made to debit the Cash account and credit the Petty Cash account for $500.

If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue.

The bank statement reports the activity in the customer's account and issued on an annual basis.

Refer to the following bank reconciliation. Journalize the adjusting entry for the fourth reconciling item: Bank service charge.