Exam 4: Internal Control and Cash

A debit memo may be issued in the monthly bank statement in order for the bank to notify a company that a service charge has been assessed on the company's account.

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 -Interest earned on the checking account for May

-Refer to Dreammaker Kitchens. What is the company's adjusted cash balance on November 30th?

Cash collected and recorded by a company but not yet reflected in a bank statement are known as

If a company records a $450 receipt as $540, this type of mistake is called a(n)____________________.

While preparing the February 28th bank reconciliation, the accountant identified the following items: In the process of preparing the reconciliation, the accountant discovered an error in recording a customer's check; the amount was incorrectly recorded on the books as a cash receipt of $600, while the bank correctly recorded the amount as $650. What is the company's adjusted cash balance on February 28th?

If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement?

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. -Checks on recorded amounts

Dovetail Company is preparing its bank reconciliation for July 31, 2013. Its bank statement and general ledger T-account for its checking account are presented below:

The elapsed time between the purchase of goods for resale and the collection of cash from customers is referred to as the ____________________ cycle.

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 and paid by the bank is returned with the bank statement

The accountant preparing the January bank reconciliation identified the following items: There was also an error in the accounting records whereby a customer's check for $101 was recorded as $110. What is the company's adjusted cash balance at January 31st?

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 -The collection of environmental factors that influence the effectiveness of control procedures

Dow Electronics established a petty cash fund in the amount of $250 to pay for small, incidental expenditures incurred at the office. The fund is handled by a trustworthy custodian. At the end of the month, the fund is replenished. On September 30, the petty cash fund contained $13 in cash and the following receipts: Record journal entries to: a)establish the petty cash fund of $250; b)replenish the fund and recognize expenses at the end of September; and c)increase the fund balance to $300.

Match the following terms with their correct definition. a.Cash equivalents c.Operating cycle b.Cash over and short d.Petty cash -The elapsed time between the purchase of goods for resale and the collection of cash from customers

Match the following terms with their correct definition. a.Bank reconciliation d.Outstanding check b.Deposit in transit e.Service charges c.Non-sufficient funds check -Fees charged by the bank for checking accounting services

Which of the following is not included in Cash and Cash Equivalents on a company's balance sheet?

-Refer to Dance Town Academy. Determine the company's cash balance before adjustment.

Which of the following is a transposition error?

-Refer to Dance Town Academy. How will the customer's bounced checks be handled on a bank reconciliation?