Exam 8: Internal Control and Cash

In the following situation, which internal control procedure needs strengthening? At Syria Services, the accounting clerk fills out unnumbered purchase order forms for purchases of supplies. An operations engineer completes the form with a detailed description of the supplies being ordered, and the operations manager approves the purchase and passes the purchase order back to the accountant for processing.

Separating the custody of assets from accounting implies that the accountants must not handle cash, and the cashier must not have access to the accounting records.

Which of the following is included in a voucher?

A basic principle of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated.

When a check is issued, the party who is paying the cash is referred to as the:

A check was written by a business for $549, but was recorded erroneously in the cash ledger as $459. How would this error be included on the bank reconciliation?

Which of the following is the first step in the purchasing and payment process?

Which is the most liquid form of assets?

Cash and cash equivalents are divided by ________ to determine the cash ratio.

The data of Franklin Brothers Corp. for two years are given below: Based on the above information, which of the following statements is true?

Violators of Sarbanes-Oxley Act may be sentenced to prison for making false sworn statements.

Refer to the following bank reconciliation: Journalize the adjusting entry for the fourth reconciling item: bank service charge.

The following information is available for Jack's Unlimited Company for the current month. What is the adjusted book balance on the bank reconciliation?

For good controls over cash payments, the person who orders goods from a supplier should always be different from the person who approves the payment.

Which of the following is representative of safeguarding assets?

Regarding controls over cash receipts by mail, the bank deposit slip should be compared to the remittance advices by the accounting department.

The difference that arises between the balance on the bank statement and the balance on the company's books because of a time lag in recording transactions is known as a permanent difference.

Which of the following statements describes an invoice from a supplier?

Which of the following describes the internal control procedure "documents?"

In reconciling a bank statement, the bank balance is $2,100 and the checkbook balance is $2,001. Which of the following is the most probable reason for the bank balance being larger than the book balance?