Exam 2: Internal Control and Cash

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.) -customer's cheque deposited on May 31 but not included on the bank statement

While preparing the April 30 bank reconciliation,the accountant identifies the following items: company's balance according to the general ledger,$15,000; outstanding cheques,$2,500; bank service charge,$15; a customer's NSF cheque returned by the bank,$100.What is the company's adjusted cash balance at April 30?

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.) -customer's NSF cheque returned with the bank statement

When a bank collects a note on behalf of a company,the bank is likely to issue a debit memo.

When reconciling a bank account,the company must prepare an adjusting entry for deposits in transit.

When there is proper segregation of duties,the likelihood of fraud is reduced so that an employee attempting to carry out a fraudulent scheme would have to work in ____________________ with another employee.

A company's bank statement balance shows that there is $4,230 in the chequing account at the end of the month.Comparing the company's records with the bank statement reveals several additional items,such as outstanding cheques of $2,880,deposits in transit of $1,280,an NSF cheque of $160,and a bank service charge of $40.Calculate the adjusted cash balance for this chequing account.

The accountant prepared the firm's bank reconciliation and noted several reconciling items as listed below.Indicate whether the firm should add or subtract each item below on its balance of cash or on its bank balance. Bank Company 1. Deposits in Transit 2. NSF cheques 3. Cheque recorded twice by the company 4. Interest earned 5. Outstanding cheques 6. Bank service charges 7. Bank debit memos 8. Bank credit memos

For which of the following is the control activity "segregation of duties" most effective?

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.) -The receiving department compares the quantity of merchandise received with the quantity ordered.

An internal control activity that separates responsibilities so that no one person handles all the tasks for a particular activity is referred to as ____________________.

The best response to an employee caught stealing from the company is to say,"Don't ever let me catch you doing that again!"

A cheque written by a company but NOT yet presented to the bank for payment is called a(n)____________________.

The accounting records for Dusek Dentistry,Inc.show the following information for February 28,Year 1: Additional information pertaining to this chequing account was obtained by comparing the monthly bank statement with the company's records.The following was revealed: 1. The ending cash balance per the bank statement was $\$ 7,960$ . 2. Deposits of $2,100 from February 26-28 are in transit. 3. Cheques #347 and #349 are autstanding. 4. A 100 NSF cheque fram a customer did not clear the bank. This NSF cheque was included in the February 25th deposit. 5. Cheque #343 was prepared correctly as a $1,400 payment an account. This cheque was properly recorded by the bank but was erraneausly included an the company's records in the amount of $4,100. 6. A debit meno for $2,000 was shown on the bank statement as notice that the company's rent was autonatically paid from the chequing account an February lst. 7. A credit memo for $\$ 15$ was shown an the bank statement as notice that the company had earned interest an its average daily balance in this chequing account. 8. The bank's fees for the month totalled $\$ 65$ . A)Prepare a bank reconciliation to calculate the company's adjusted cash balance at February 28,Year 1. B)Prepare the journal entries that must be recorded to adjust the cash records as a result of these bank reconciliation procedures.

Choose the proper category of internal control activities that best matches the following actions. Each action should be matched with a different numbered item within the internal controls list. -segregation of duties

On a bank reconciliation,interest earned for the month is added to the cash balance per the company records.

When a bank reconciliation is being prepared,which of the following items is added to the bank statement balance?

Explain some internal control procedures that a fast food restaurant like McDonald's may use to control cash receipts.

As part of a sound system of internal controls,all disbursements (with the exception of petty cash)should be made by cheque.

What are the collective procedures implemented by management to ensure that business activities are properly recorded in the accounting system?