Exam 5: Internal Control and Cash

Certain highly liquid, short-term investments of 90 days maturity or less are often combined with Cash and presented as a single amount called Cash and Cash Equivalents on the balance sheet.

A compensating balance refers to:

Which of the following is a poor internal accounting control feature?

Discuss and differentiate between prevention control and detection control. Provide an example of each.

At the end of an accounting period, the "cash balance per bank statement" on that date is usually the proper cash amount to show on the balance sheet.

Which of the following features should not be included in a good system of internal accounting control over cash?

The following information pertains to Rodriguez Company: Rodriguez should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

In reconciling the July bank statement, the vice president discovered that the bookkeeper had recorded a check written for $353 as $533 in the cash disbursements journal. For the bank reconciliation, the $180 error should be:

Good internal accounting control over cash includes depositing all cash receipts in the bank each day.

Which of the following is not an element of the fraud triangle?

Outstanding checks are checks a company has written and recorded as cash disbursements that have not yet been presented to the bank for payment.

Requiring employees to take vacations is an example of a good internal accounting control feature.

Identify the principle of internal control that is violated in the following situation: Marvin Company is a very small business. Sam Jones, one of the two office clerks, opens the mail each day and removes the cash receipts that come in the mail. Sam then records the receipts in the cash records and the customer's account and deposits the cash in the bank.

In establishing an effective internal control structure, management should:

Journal entries are required for all adjustments to the "cash balance per bank statement" in a bank reconciliation,

The Cash amount properly shown on the year-end balance sheet is the

Use the following information to prepare a bank reconciliation for Forrester Company at April 30, 2019: (1) Cash account balance, April 30, $9,786.40. (2) Bank statement balance, April 30, $10,758.20. (3) Service charge on bank statement not recorded in books, $70.00. (4) Deposits in transit, $1,438.60. (5) Outstanding checks, April 30, $946.80. (6) The bank statement included a charge of $466.40 for N. Ryan's NSF check. The check, returned with the bank statement, had been received by Forrester in payment on account. (7) The bank collected a $2,000.00 note in April for Forrester. This amount was included in the bank statement, but Forrester had not yet recorded the collection. The bank's $70.00 service charge for April [see (3) above] included collection charge for the note.

The Sarbanes-Oxley Act (SOX) mandates that all publicly traded US corporations must:

Internal auditing is a company function that:

The COSO framework is designed to help companies structure and evaluate their internal controls. Which of the following is not an internal control component under COSO?