Exam 4: Internal Control and Cash

All of the following would be considered internal control weaknesses except

Explain how checking accounts, bank statements, and a bank reconciliation are used to help a company control its cash.

When there is proper segregation of duties, the likelihood of fraud is reduced so that an employee attempting to carry out a fraudulent scheme would have to work in ____________________ with another employee.

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. -Segregation of duties

Which of the following is the correct entry to establish a petty cash fund in the amount of $300?

Which of the following procedures is not part of the preparation of a bank reconciliation for a checking account?

A Day Spa accepted a check from a customer as payment for services. Unfortunately, the customer's check bounced. The journal entry required on the company's books as a result of this bank reconciliation item will

The account which records differences between amounts of cash deposited and amounts from the cash register tapes is called

For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.) a.Adheres to sound internal controls b.Violates sound internal controls c.Neither strengthens nor violates internal control -Cash register tapes are recorded daily by an employee from the accounting department.

How are cash equivalents reported or disclosed in the financial statements?

A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?

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

For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.) a.Adheres to sound internal controls b.Violates sound internal controls c.Neither strengthens nor violates internal control -All supporting documents attached to an invoice are canceled when the check is signed.

If the bank debits its customer's checking account, then the customer's cash balance increases.

A company's bank statement balance shows that there is $4,230 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 $2,880, deposits in transit of $1,280, an NSF check of $160, and a bank service charge of $40. Calculate the adjusted cash balance for this checking account.

On a bank reconciliation, bank service charges for the month are added to the cash balance per the company records.

A check that "bounced" or was returned by the bank due to lack of funds is called a(n)____________________.

Which internal control activity is violated when the cashier at a cash register in a retail store also records the daily receipts in a journal?

The practices of delaying payments to suppliers, speeding up collection from customers, and earning the greatest possible return on any excess cash are known as ____________________ principles.

The accountant prepared the firm's bank reconciliation and noted several reconciling items as listed below. Indicate whether the firm should add or subtract each item below on its balance of cash or on its bank balance.