Exam 8: Internal Control and Cash

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

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

The cash ratios of four companies are listed below. COMPANY CASH RATIO Juan Corp. 0.26 Rose Inc. 0.15 Freelance Inc. 0.18 Pioneer Corp. 0.27 Which company has the maximum ability to repay its short-term debts?

A ________ is a document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

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

An information system is one of the five components by which a company can achieve its internal control objectives.

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?

Which of the following would be included in the journal to record an NSF check?

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

The following information is available for Jack's Unlimited Company for the current month. Book balance end of the month \ 6,875 Outstanding checks 655 Deposits in transit 3,500 Service charges 85 Interest revenue 35 What is the adjusted book balance on the bank reconciliation?

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

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.

In a bank reconciliation, a book error will be shown on the bank side of the reconciliation.

Having a cash ratio below 1 is a good thing.

Which of the following items require an adjustment on the bank side of 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.

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

In the following situation, which internal control procedure needs strengthening? Syria Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment.

Which of the following is included in a voucher?

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