Exam 6: Reporting and Analyzing Cash and Internal Controls

A company established a $400 petty cash fund by issuing a check to the custodian on October 1.On October 15,the petty cash fund was replenished and increased to $1,000 in total.The contents of the petty cash fund at the time of the October 15 replenishment were: The company uses a perpetual inventory system.Prepare the general journal entry to record both the reimbursement and the increase of the petty cash fund on October 15.

In year 1,a company had net sales of $50,000 and ending accounts receivable of $2,000.In year 2,this company had net sales of $80,000 and ending accounts receivable of $4,000.Use days' sales uncollected to determine which of the following statements is true:

Two important limitations of internal control systems are (1) human error or human fraud and (2) cost-benefit.

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

Internal control policies and procedures are the same for all companies.

On a bank statement,deposits are listed as debits because the bank increases its cash account when the deposit is made.

When a petty cash fund is in use:

Maintaining adequate business records is an important internal control principle.

The internal document that is prepared to notify the appropriate persons that ordered goods have been received and describes the quantities and condition of the goods is the

The steps to reconcile the balance of the bank statement to the adjusted balance include adding outstanding checks,deposits,and bank service charges.

The document that is an itemized statement of goods prepared by the vendor listing the customer's name,items sold,sales prices,and terms of the sale is the __________________________.

List the main principles of internal controls.

The document that is an itemized statement of goods prepared by a vendor listing the customer's name,items sold,sales prices,and terms of the sale is the:

A properly designed internal control system is a key part of accounting information systems' design,analysis,and performance.

Cash receipts by mail require only two people: one to open the mail and a second person to deposit the cash in the bank and record the cash receipt in the accounting records.

In order to streamline the purchasing process,department managers should place orders directly with suppliers.

Following are seven items (a) through (g) that would cause Xavier Company's book balance of cash to differ from its bank statement balance of cash. a.A service charge imposed by the bank. b.A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month. c.A customer's check returned by the bank is marked "Not Sufficient Funds.(NSF)" d.A deposit was mailed to the bank on the last day of the current month and is unrecorded on this month's bank statement. e.A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at $109. f.An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company and deposited the proceeds in the company's account. g.A check was written in the current period that is not yet paid or returned by the bank. Indicate where each item (a) through (g) would appear on Xavier Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

A company purchases merchandise on November 2 at a $2,400 invoice price (terms 3/10,n/30) and then pays all amounts owed on December 2.Using periodic inventory and net purchases methods,what are the proper entries to record these two transactions?

The entry necessary to establish a petty cash fund should include: