Exam 8: Internal Control and Cash

For the following situation, state whether it represents a strength or weakness in internal control and give the reason for your answer. Baker Auto Supply purchases merchandise inventory from A & B Company. The accountant places the order, verifies receipt of the merchandise, and records the transaction in the general journal.

Which of the following items are reconciling items on the book side of the reconciliation?

Refer to the following bank reconciliation: Journalize the adjusting entry for the third reconciling item: NSF check.

When a check is issued, the party who is paying the cash is referred to as the ________.

Journal entries are required if the bank reconciliation includes outstanding checks.

Which of the following is an issue that must be addressed in the internal controls for e-commerce?

Which of the following statements is true of the Sarbanes-Oxley Act?

If the bank reconciliation includes a deposit in transit, a journal entry is required that includes a debit to cash.

As a part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department.

The cash ratios of four companies are listed below. Which company has the maximum ability to repay its current liabilities?

Violators of the Sarbanes-Oxley Act may be sentenced to prison for making false sworn statements.

Which of the following is a requirement of the Sarbanes-Oxley Act?

A pharmaceutical company testing drugs to determine possible side effects is a part of ________.

When a check is issued, the party being paid the cash is referred to as the ________.

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?

A company has a cash ratio of 2.3. What does this imply?

A company received a bank statement with a balance of $6,000. Reconciling items included a bookkeeper error of $300-a $300 check recorded as $800-two outstanding checks totaling $840, a service charge of $21, a deposit in transit of $250, and interest revenue of $19. What is the adjusted bank balance?

Which one of the following is true of a signature card?

For good controls over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods, to ensure that the correct amount of cash is paid.

Which of the following is a measure for discouraging theft for a retail store that accepts cash receipts over the counter?