Exam 4: Internal Control and Cash

A company's bank statement balance shows that there is $4,190 in the checking account at the end of the month. Comparing the company's records with the bank statement reveals several additional items, such as outstanding checks of $1,860, deposits in transit of $2,080, an NSF check of $209, interest earned of $21.52, a bank service charge of $40, and a check for $120 recorded twice by the company. Calculate the adjusted cash balance for this checking account.

-Refer to Delco Construction. What is net amount of the adjustments to the company's cash balance as a result of the bank reconciliation?

Checks presented for payment and paid by the bank are known as

-Refer to Designs on You. What is the company's adjusted cash balance at May 31?

Which of the following is not a generally recognized internal control activity?

The stronger the system of internal control, the higher the accuracy of the company's accounting records and financial reports.

Match the following terms with their correct definitions. a.Accounting system e.Internal control system b.Business process risks f.Safeguarding c.Control activities g.Segregation of duties d.Control environment h.Strategic risks -Action that reduces the likelihood that records could be used to conceal intentional misstatements, theft, or fraud

If the balance on the bank statement does not equal the balance per the company's records, then it can be assumed that

Which of the following statements best describes the act of collusion?

Match the following terms with their correct definitions. a.Accounting system e.Internal control system b.Business process risks f.Safeguarding c.Control activities g.Segregation of duties d.Control environment h.Strategic risks -Consists of the methods and records used to identify, measure, record, and communicate financial information about a business

-Refer to Dance Town Academy. How will the interest earned on the checking account be handled on a bank reconciliation?

A check written by a company but not yet presented to the bank for payment is called a check in transit.

MATCHING The accountant for a local manufacturing company is reconciling the company's bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.) a.Addition to bank balance b.Subtraction from bank balance c.Addition to company balance d.Subtraction from company balance e.Not included on the reconciliation -Check written on the company's account in May that does not appear on the bank statement

Match the following terms with their correct definition. a.Cash equivalents c.Operating cycle b.Cash over and short d.Petty cash -An account used to record any discrepancies between the cash records and the actual amount of cash received

The key to being classified as a cash equivalent is that the amount must be available to pay debts within a year's time or less.

If the bank credits a customer's account, then that customer's cash account balance increases.

Match the following terms with their correct definitions. a.Accounting system e.Internal control system b.Business process risks f.Safeguarding c.Control activities g.Segregation of duties d.Control environment h.Strategic risks -Providing physical protection of the company's assets

A treasurer preparing the October bank reconciliation identified the following items: What is the company's adjusted cash balance at October 31?

Which of the following is not a requirement of a company's top managers under the Sarbanes-Oxley Act?

Which of the following is an example of a debit memo?