Exam 4: Internal Control and Cash

In a bank reconciliation, an EFT cash payment is:

Which of the following items will not cause a difference between the book balance and the bank balance?

All cash receipts should be deposited for safekeeping in the bank.

The Canadian Securities Commission developed a strategy incorporating some of the SOX rules for Canadian public companies. Discuss what requirements were incorporated into the Certification of Discloser in Issuers' Annual and Interim filings.

Pup Collar Corporation is in the process of preparing its cash budget for 2014. The beginning Cash balance is estimated to be $40,700. Sales on account during 2014 are estimated to be $500,000. Cash sales during 2014 are estimated to be $225,000. In July 2014, equipment will be purchased for cash; the cost of the equipment is estimated to be $145,000. Purchases of inventory on account during 2014 are estimated to be $265,000. Total operating expenses for 2014 are estimated to be $300,000. Ten percent of this amount represents Amortization Expense. All cash operating expenses are paid as incurred. The January 1, 2014, balance in Accounts Receivable is estimated to be $15,000; the January 1, 2014, balance in Accounts Payable is estimated to be $12,000. Accounts Receivable on December 31, 2014, is estimated to be 60% of the January 1, 2014, balance. Accounts Payable on December 31, 2014, is estimated to be 75% of the January 1, 2014, balance. Prepare a cash budget for Pup Collar Corporation for 2014.

If a bank reconciliation included deposits in transit amounting to $1,500, the journal entry to record this reconciling item would include:

List and describe at least five characteristics of an effective system of internal control. What is one inherent limitation/weakness of any system of internal control?

The cheques that have been paid by the bank on behalf of the depositor and included with the bank statement are called:

Outstanding cheques are added to the ending bank balance on the bank statement when preparing the bank reconciliation.

In a bank reconciliation, there might be items which have been recorded by the company that have not yet been recorded by the bank. Examples of such items would include: