Exam 2: Internal Control and Cash

Which of the following is NOT a generally recognized internal control activity?

Which internal control activity is being followed when the work of one department inspects the work of another?

On a bank reconciliation,outstanding cheques are added to the cash balance per the bank statement.

The accounting records for Dutch Island Company shows a cash balance of $4,133 on January 31,Year 1.On the evening of January 31,company receipts of $1,250 were placed in the bank's night deposit drop box; this deposit was processed by the bank on February 1.The January 31 bank statement shows balance of $8,876,including collection of a $5,000 note receivable plus $55 of interest earned,a service charge of $40,and a $550 debit memo for the payment of the company's utility bill.All of the cheques that the company had written during January were listed on the bank statement except for cheque #731 in the amount of $1,528. Prepare a bank reconciliation to calculate the company's adjusted cash balance at January 31,Year 1.

A good system of internal control requires that the physical custody of assets be separated from the accounting for those assets.This concept is known as safeguarding of assets and records.

Which of the following is NOT considered a cash equivalent?

For establishing and maintaining a petty cash fund,which of the following procedures should NOT be followed?

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.) -bank service charge on the bank statement for new cheques

Which of the following is characteristic of internal control?

On April 1,Year 1,a company established a petty cash fund for $300.By the end of the month,the petty cash custodian requested reimbursement of $225 for the following expenditures from the fund: Office supplies \5 8 Overtime meals 61 Postage 75 Miscellaneous 31 Record the entries to a)establish the petty cash fund; and b)replenish the fund and recognize expenses at the end of April.

Match the following terms with their correct definition. -amounts on deposit with financial institutions and investments primarily held in money market accounts,with original maturities of less than 90 days

Match the following terms with their correct definition. -elapsed time between the purchase of goods for resale and the collection of cash from customers

Match the following terms with their correct definition. -the process of ensuring that the company's accounting records are consistent with the bank's accounting records

Which internal control activity is being followed when inventory storage areas are secured,with limited access?

If the bank debits its customer's chequing account,then the customer's cash balance increases.

If a company hires honest employees and its top management acts with integrity,no internal control procedures will be necessary.

Match the following terms with their correct definition. -an amount received and recorded by the business but not yet recorded by the bank

Which of the following is the only essential element of internal control?

Explain how chequing accounts,bank statements,and a bank reconciliation are used to help a company control its cash.

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.) -A mailroom employee opens the mail,counts the money received,and updates the accounting records for the amount received.