Exam 8: Internal Control and Cash

Bank errors are posting errors made by the bank that either incorrectly increase or decrease the bank balance.

A cash equivalent is a highly liquid investment that can be converted into cash in three years or less.

The ________ helps to determine a company's ability to meet its short-term obligations from cash and cash equivalents.

Sarbanes-Oxley Act requires all the private companies in the U.S. to maintain an internal control system.

Which of the following is true of the bank reconciliation?

Which of the following is a requirement of the Sarbanes-Oxley Act?

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account, supported by the fund, cash plus payment tickets, totaling the same amount.

A petty cash fund was established with a $500 balance. It currently has cash of $19 and petty cash tickets as shown below. Which of the following would be the journal entry to replenish the Petty Cash account?

In a large company, the person who is responsible for comparing cash and the bank balance is the:

Which of the following statements is true of the Sarbanes-Oxley Act?

A check was written by a business for $507, but was recorded in the cash payments journal as $705. How would this error be included on the bank reconciliation?

In the following situation, which internal control procedure needs strengthening? Syria Services hired a new accountant to be responsible for the petty cash fund and the cash receipts. The newly hired employee has an accounting degree and a criminal record.

On a bank reconciliation, deposits in transit are added on the bank side of the reconciliation.

Journal entries are required for the reconciling items on the book side because:

External auditors evaluate company controls to ensure the financial statements are presented fairly in accordance with Generally Accepted Accounting Principles.

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as:

When calculating the cash ratio, the numerator includes cash equivalents.

A petty cash fund was established with a $250 balance. It currently has cash of $38 and petty cash tickets totaling $212 for travel expense. Provide the journal entry to record the replenishment of the fund.

Journal entries that are necessitated by reconciling items on the book side of the reconciliation include either a debit to Cash or a credit to Cash.

A company received a bank statement with a balance of $6,350. Reconciling items included a bookkeeper error of $300-a $300 check recorded as $600-two outstanding checks totaling $820, a service charge of $25, a deposit in transit of $280, and interest revenue of $21. What is the adjusted bank balance?