Exam 4: Internal Control and Cash

-Refer to Dance Town Academy. Determine the amount of the company's adjusted cash balance.

Which of the following is not a requirement of the Sarbanes-Oxley Act?

Discount Muffler Company is preparing its bank reconciliation for June 30, 2013. Its bank statement and general ledger T-account for its checking account are presented below:

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. a.One employee or department should verify the work of another.b.Specific approval is given by management for the performance of activities.c.Accounting and cash collections should be properly separated.d.Blank checks should be stored in a locked location.e.Initial entry into the accounting system should be from a consistent source with complete information. -Safeguards over assets and records

Which of the following statements is true regarding a credit memo and its relationship to a company's bank reconciliation procedures?

The practice of monitoring activities within the internal control system is likely to be carried out by each of the following groups except

The establishment of a petty cash fund has no effect on the company's total cash balance.

Which of the following documents is used in the control of cash receipts?

The accounting records for Delta Driving School shows a cash balance of $14,134 on February 28, 2013. On the evening of February 28, company receipts of $1,250 were placed in the bank's night deposit drop box; this deposit was processed by the bank on March 1. The February 28 bank statement shows balance of $18,877, including collection of a $6,000 note receivable plus $55 of interest earned, a service charge of $40, and a $1,550 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 #1908 in the amount of $1,528. A)Prepare a bank reconciliation to calculate the company's adjusted cash balance at February 28, 2013. B)Prepare the journal entries needed to adjust the cash records as a result of the bank reconciliation procedures.

If a company hires honest employees and its top management acts with integrity, no internal control procedures will be necessary.

According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and maintaining a system of internal control over the company's financial reporting?

The sole purpose for creating an internal control system is to deter embezzlement.

A company's records indicate the balance in its checking account at the end of the month is $3,918. Comparing the company's records with the monthly bank statement reveals several additional cash transactions, such as deposits in transit of $4,022, three outstanding checks totaling $497, a $30 bank service charge, a $1,000 note receivable collected by the bank plus interest earned of $35, and an NSF check for $150. Determine the company's adjusted cash balance and prepare the journal entries necessary to adjust the account balance.

Items that are included on a bank statement and decrease the bank account balance are called ____________________.

On April 1, 2013, a company established a petty cash fund for $300. By the end of the month, the petty cash custodian requested reimbursement of $225 for the following expenditures from the fund: Record the entries to a)establish the petty cash fund; and b)replenish the fund and recognize expenses at the end of April.

In the reconciliation of a bank statement, deposits in transit should be

Cash equivalents typically appear in the long-term investments section of a balance sheet.

A company's control environment is primarily influenced by the tone at the top. This refers to each of the following except

-Refer to the information provided for Delco Construction. What is the company's adjusted cash balance at March 31st?

Internal control systems provide assurance in each of the following areas except