Exam 7: Internal Control and Cash

There are three parties to a check: the depositor, the maker, and the bank.

The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board.

City Advertising Services hired a new accounting manager. He signed a contract for a new accounting information system, but his position did not specify whether he was authorized to do so or not. Which internal control procedure needs strengthening?

Electronic funds transfers move cash by electronic communications.

All petty cash fund payments should be supported with sequentially numbered petty cash tickets.

The following information is needed to reconcile the cash balance for Natural Landscaping Services. • A deposit of $5,800 is in transit. • Outstanding checks total $1,500. • The book balance is $6,800 at February 28, 2019. • The bookkeeper recorded a $1,740 check as $17,400 in payment of the current month's rent. • The bank balance at February 28, 2019 was $18,000. • A deposit of $400 was credited by the bank for $4,000. • A customer's check for $3,700 was returned for nonsufficient funds. • The bank service charge is $60. Based on this information, prepare a bank reconciliation for Natural Landscaping Services as of February 28, 2019.

The only time the Petty Cash account is used in a journal entry is when the account is established, increased, or decreased.

Evaluated receipts settlement (ERS) compresses the payment approval process into a single step.

When a check is issued, the party being paid the cash is referred to as the ________.

Which of the following describes the environment in internal control?

The environment is the culture of a business, and it starts with the CEO or CFO and the top managers.

Prepare the journal entries for the following petty cash transactions of Williamson Dental Supplies. Omit explanations. Aug. 1 Established a petty cash fund with a \ 200 balance. The petty cash fund has \ 43 in cash and \ 154 in petty cash tickets there were issued to pay for Office Expense (\ 75) and Repair Expense ( \ 79) . Replenished the fund Aug. 31 and recorded the expenditures. Oct. 15 Increased the balance of the petty cash fund to \ 250.

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account.

Which of the following would be included in the entry to record the replenishment of a petty cash fund?

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

John's Food Market had the following financial data at December 31, 2018: Cash \ 54,000 Cash Equivalents 24,000 Accounts Receivable 40,000 Total current liabilities 130,000 Cash and cash equivalents \ 78,000 Total current liabilities 130,000 a. What is the cash ratio as of December 31, 2018? Show the formula and your computations. b. Comment on the cash ratio for Metro Construction Company.

A company has a cash ratio of 2.3. What does this imply?

The use of computer firewalls is an essential element of good internal controls for e-commerce.

An electronic funds transfers system ________.

For the following situation, state whether it represents a strength or weakness in internal control and give the reason for your answer. - The mailroom employee opens all incoming mail. Customers' checks are sent to the treasurer, and remittance advices are sent to the accounting department. The controller compares the daily bank deposit amount from the treasurer and the daily debit to cash from the accounting department.