Exam 6: Internal Control and Accounting for Cash

Following the February bank reconciliation,the accountant made the following entry in the journal of Kincaid Company: This journal entry may have been used to record:

After the check is signed,the third employee is the one who records the check in the ledger and examines the appropriate supporting documents.

Rainey Company's true cash balance at October 31,2016 is $5,710.The following information is available for the bank reconciliation: Outstanding checks,$600 Deposits in transit,$450 Bank service charges,$90 The bank had collected an account receivable for Rainey Company,$1,000 The bank statement included an NSF check written by one of Ramsey's customers for $600. Based on this information Rainey's unadjusted book balance at October 31 is:

What is a deposit in transit?

When preparing the monthly bank reconciliation,Mayhew Company's accountant found the following adjustments to make to either the unadjusted book balance or unadjusted bank balance: Required: Prepare journal entries for any of the above adjustments that require one.

Use the following to answer questions The bank statement for Tetra Company contained the following items: a bank service charge of $10;a credit memo for interest earned,$15;and a $50 NSF check from a customer.The company had outstanding checks of $100 and a deposit in transit of $300. -The entry to record the customer's NSF check will:

Why would a merchandising company need good internal controls related to its inventory? List three of the key elements of an internal control system that would apply to inventory,and explain how each of them does relate to inventory.

Which of the following statements concerning internal controls is true?

Use the following to answer questions Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.Enter only one letter for each element. -At June 30,2016,when Heath Company was preparing the bank reconciliation,the employee preparing the reconciliation found that the company had outstanding checks in the amount of $2,650.

Howard Corporation uses a petty cash system to pay for miscellaneous expenses.Howard established the petty cash fund with $600 on March 1,2016.On March 31,2016,the petty cash fund contained $12.98.The custodian of the fund saved the following vouchers for cash payments during March 2016: The three events related to petty cash were the following: (1)establishment of the fund, (2)cash payments for petty cash expenses,and (3)recognition of expenses and replenishment of the fund. Required: Prepare the journal entries for above events.

For which of the following bank reconciliation adjustments would an adjusting journal entry not be necessary?

All journal entries made related to bank reconciliations include an expense or revenue account.

Peterson Company's petty cash fund was established on January 1,2016 with $500.On January 31,2016 a count of the fund revealed: $105 in cash remaining and vouchers for miscellaneous payments totaling $400.What effect will the necessary entries to replenish the fund have on the company's financial statements?

Gross Company established a $250 petty cash fund on January 1,2016.On March 1,2016 the fund contained $160 in receipts for miscellaneous expenses and $85 in cash.The entries necessary to replenish the petty cash fund will

What is a fidelity bond and what is its purpose?

Use the following to answer questions Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.Enter only one letter for each element. -At Landau Company,the petty cash custodian used petty cash to pay for postage charges.

Indicate whether each of the following statements regarding internal controls is true or false. _____ a)Cash receipts should be deposited in a bank when they reach a predetermined level of materiality. _____ b)To improve operating efficiency,a company should make most of its disbursements in currency instead of checks. _____ c)Supporting documents are required when checks are presented to the check signer. _____ d)Supporting documents should not be marked "paid" until the check clears the bank. _____ e)All spoiled and voided checks should be shredded.

The usual form for a bank reconciliation begins with the ending cash balance shown on the bank statement and reconciles it to the ending cash balance on the company's books.

What are the primary roles of the independent auditor? What professional license is required of an independent auditor?

Indicate whether each of the following statements regarding internal controls is true or false. _____ a)Internal controls are used to provide reasonable assurance that the objectives of an enterprise will be accomplished. _____ b)Internal controls can be divided into accounting controls and administrative controls. _____ c)The mechanics of internal control systems do not vary from company to company. _____ d)Accounting controls are concerned with the evaluation of performance and the assessment of the degree of compliance with company policies and public laws. _____ e)Administrative controls are composed of policies and procedures that are designed to safeguard the assets and to assure that accounting records contain reliable information.