Exam 2: Internal Control and Cash

Match the following terms with their correct definition. -the fees charged by the bank for chequing accounting services

The foundation of the internal control system is the control _____________ - the collection of environmental factors that influence the effectiveness of control procedures.

The accountant must make journal entries for all items in the bank section of the bank reconciliation.

Match the following terms with their correct definitions. -action that reduces the likelihood that records could be used to conceal intentional misstatements,theft,or fraud

Who are responsible for monitoring activities within the internal control system?

A cost-cutting measure used in many business organizations is the use of a(n)____________________ fund,whereby a custodian handles disbursements and documentation for small expenditures.

Dow Electronics established a petty cash fund to pay for small,incidental expenditures incurred at the office.The fund is handled by a trustworthy custodian.At the end of the month,the fund is replenished.On September 30,the petty cash fund contained $13 in cash and the following receipts: Office supplies \ 87 Delivery fees 35 Repairs 67 Postage 48 Record journal entries to: a)establish the petty cash fund; b)replenish the fund and recognize expenses at the end of September; and c)increase the fund balance to $300.

Which of the following items would be added to the company's cash balance on a bank reconciliation?

On a bank reconciliation,bank service charges for the month are added to the cash balance per the company records.

Designs on You The following information relates to the company's May bank reconciliation: Bank statement balance \5 ,000 Unadjusted cash balance according to company records ? Deposit in transit 1,000 Outstanding cheques 500 Bank service charges 50 Interest earned on the bank account 10 Customer's NSF cheque returned by the bank 25 In addition, a cheque was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000. -Refer to the figure Designs on You.What is the company's adjusted cash balance at May 31?

Collections of accounts receivable are considered to be cash equivalents.

The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. (Choices may be used more than once.) -An employee from the accounting department compares the cash register tapes with the bank deposits.

The establishment of a petty cash fund has no effect on the company's total cash balance.

MATCHING The accountant for a local manufacturing company is reconciling the company's bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be used more than once.) -cheque written on the company's account in May that does not appear on the bank statement

The practices of delaying payments to suppliers,speeding up collection from customers,and earning the greatest possible return on any excess cash are known as ____________________ principles.

A(n)____________________ is the process used by an accountant to ensure consistency between the balance shown on the bank statement for a particular account and the balance shown on the accounting records.

Which of the following is characteristic of a credit memo and its relationship to a company's bank reconciliation procedures?

What is the name of the account that records differences between amounts of cash deposited and amounts from the cash register tapes?

A credit memo appears on the September bank statement.How should this amount be treated on the September bank reconciliation?

Business process risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as resource allocations.