Exam 8: Internal Control and Cash

Petty cash is accounted for by maintaining a constant balance in the petty cash account, supported by the fund (cash plus payment slips)totalling the same amount. What is this system called?

A _ is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its ledger.

A cheque was written by a business for $329, but was recorded erroneously in the cash ledger as $239. How would this error be included on the bank reconciliation?

External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.

Which of the following items will NOT appear on the book side of the reconciliation?

Which of the following conditions must exist for internal controls to be effective?

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

A petty cash fund was established with a $250 balance. It currently has cash of $31 and petty cash slips totalling $219. Which of the following would be included in the entry to replenish the fund?

The use of electronic data interchange (EDI)bypasses the need for people and documents in cash payment procedures.

Cheque Number 367 for $33.52 was incorrectly entered as $33.25. Which adjustment needs to be made?

Which of the following statements is FALSE?

A company's cash ledger shows an ending balance of $5 000. Reconciling items included a bookkeeper error of $200 (a $300 cheque recorded as $500), two outstanding cheques totalling $720, a service charge of $15, a deposit in transit of $180, and interest revenue of $21. What is the adjusted book balance?

The voucher system helps the business to streamline its internal controls over cash receipts.

If a system of internal controls is properly designed and structured, it cannot be overcome or broken into.

A company received a bank statement with a balance of $5 350. Reconciling items included a bookkeeper error of $200 (a $300 cheque recorded as $500), two outstanding cheques totalling $720, a service charge of $15, a deposit in transit of $180, and interest revenue of $21. What is the adjusted bank balance?

In the following situation, which internal control procedure needs strengthening? Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. That employee has not yet been adequately trained on the maintenance needs of the equipment.

Which of the following is NOT an advantage of evaluated receipts settlement (ERS)?

A cheque was written by a business for $205, but was recorded in the cash payments journal as $502. How would this error be included on the bank reconciliation?

A petty cash fund was established with a $400 balance. It currently has cash of $15 and petty cash slips as shown below. The journal entry to replenish the account would be which of the following?

A cheque of $75 deposited by a company was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?