Exam 8: Internal Control and Cash

The data of Franklin Brothers Corp. for two years are given below: 2014 2015 Cash and cash equivalents \ 5,400 \ 12,500 Total current liabilities 24,000 30,000 Based on the above information, which of the following statements is true?

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

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

The bank recorded a $3,000 deposit as $300. How would this information be included on the bank reconciliation?

Which of the following is used by companies to separate cash duties and establish stronger control over cash receipts?

In reconciling a bank statement, the bank balance is $1,500 and the checkbook balance is $2,105. Which of the following is the most probable reason for the checkbook balance being larger than the bank balance?

Two or more people working together to circumvent internal controls and defraud a company is known as:

The following information is available for Jade Company for the month ending June 30, 2014. • Balance as per the bank statement is $11,240. • Balance as per books is $10,200. • Check #506 for $1,200 and check #510 for $900 were not shown on the June 30, bank statement. • A deposit in transit of $3,110 had not been received by the bank when the bank statement was generated. • A bank debit memo indicated an NSF check for $85 written by Jane Smith to Jade Company on June 13. • A bank credit memo indicated a note collected by the bank of $2,100 and interest revenue of $55 on June 20. • The bank statement indicated service charges of $20. Prepare bank reconciliation for Jade Company for June 30, 2014.

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

No journal entries are required for the reconciling items on the bank side because:

Separation of duties is a part of the definition of internal control.

Refer to the following bank reconciliation: -According to the bank reconciliation above,Journalize the adjusting entry for the first reconciling item: note collected by bank.

Refer to the following bank reconciliation: -According to the bank reconciliation above,Journalize the adjusting entry for the second reconciling item: interest revenue.

Which of the following describes the internal control component "monitoring of controls?"

A petty cash fund was established with a $500 balance. It currently has cash of $20 and petty cash tickets as shown below. Travel expense \ 130 Office supplies expense 300 Equipment rental expense 50 Which of the following would be the journal entry to replenish the Petty Cash account?

Which one of the following documents is retained by the customer as proof of a deposit transaction?

Which of the following statements describes a receiving report?

For good controls over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods, to ensure that the correct amount of cash is paid.

In a bank reconciliation, a deposit in transit will be shown on the bank side of the reconciliation.

Refer to the following bank reconciliation: -According to the bank reconciliation above,Journalize the adjusting entry for the third reconciling item: NSF check.