Exam 7: Internal Control and Cash

NSF check

Journalize the entries to record the following: ​ ​ Journal ​

bank service charge

The main reason that the bank statement cash balance and the company's cash balance do not initially balance is due to timing differences.

Most companies who have several bank accounts, petty cash, and cash on hand, would list each separately on the balance sheet.

All bank memos reported on the bank reconciliation require entries in the company's accounts.

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.

"To maintain public confidence and trust in the financial reporting of companies" is the purpose of

Which of the following would be deducted from the balance per books on a bank reconciliation?

You began your new job as the accountant for Morton Company. You were surprised to find that the company had a $2,000 petty cash fund, which sits in the break room. The president of the company told you: "Our petty cash system here works quite smoothly. Since everyone is honest here, everyone has access to the fund for incidentals that might pop up in the course of the business day. Most of these situations don't have any receipts tied to them, so I just put the money back in the fund when my secretary tells me that we have run out of petty cash and we debit the amount to Miscellaneous Expense." ​ ​ (a) Should you implement some controls on petty cash? Why? (b) If so, what controls could be used for petty cash?

Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus deter fraud and prevent misleading financial statements.

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n)

Match the following elements of internal control: -information and communication

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Which one of the following is not a factor that influences a business's control environment?

Match each item to a bank statement adjustment, a company books adjustment, or either. -Deposit in transit

Describe the features of a voucher system and list typical supporting documents for a voucher.

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?