Exam 8: Internal Control and Cash

As a part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department.

As long as the same person deposits customer checks and records the deposits into the journal, there will be good internal control over cash receipts.

Which of the following describes the internal control procedure "separation of duties?"

Rearranging plain-text messages by a mathematical process is known as:

The following information is needed to reconcile the cash balance for Fire Steel Inc. • A deposit of $5,800 is in transit. • Outstanding checks total $1,500. • The book balance is $6,800 at February 28, 2013. • The bookkeeper recorded a $1,740 check as $17,400 in payment of the current month's rent. • The bank balance at February 28, 2013 was $18,000. • A deposit of $400 was credited by the bank for $4,000. • A customer's check for $3,700 was returned for nonsufficient funds. • The bank service charge is $60. What was the adjusted bank balance?

A(n)________ is a security procedure designed for e-commerce.

In the following situation, which internal control procedure needs strengthening? Santhom Inc. does not have a separate accounting department. Its operating departments are also responsible for recording transactions in the books of accounts of the company apart from their main operations.

Which one of the following documents must be signed by the person authorized to write checks drawn on a checking account at a bank?

The environment is the culture of a business, and it starts with the owner and the top managers.

All items on the book side of the bank reconciliation require journal entries.

Burglar alarms, fire alarms, and security cameras improve internal control.

A demand deposit at a bank is the most liquid of all company assets.

Before any internal control procedure is initiated, which of the following questions must be primarily addressed by a company?

Reducing expenses to increase operating profit is representative of:

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

A company has the cash ratio of 2.3. What does this imply?

If the bank reconciliation includes a bank service charge, a journal entry is required, which debits Bank Expense and credits Cash.

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

If the bank reconciliation includes a deposit in transit, a journal entry is required which includes a debit to cash.

Cash in the bank is more liquid than a petty cash fund.