Exam 7: Internal Control and Cash

The bank made an EFT payment of a telephone bill of $5,000. How would this information be included on the bank reconciliation?

In reconciling a bank statement, the bank balance is $1,500, and the checkbook balance is $2,105. Which of the following is the most probable reason for the checkbook balance being larger than the bank balance?

Superstore Electronics reported the following figures in its 2019 and 2018 financial statements. Cash \ 38,500 \ 25,000 Cash Equivalents 3,000 2,000 Total Current Liabilities 33,200 30,000 Compute the cash ratio for 2019 and 2018. What does the cash ratio measure? Use this information to discuss the business performance of Superstore Electronics.

The cash ratio helps to determine a company's ability to meet its short-term obligations.

The bank statement reveals an EFT received from a customer that has not yet been recorded in the journal. How would this information be included on the bank reconciliation?

A point-of-sale terminal provides control for over the counter cash receipts.

Fashion Barn, Inc., a retailer, accepts payment through credit cards. During August, credit card sales amounted to $12,000. The processor charges a 3% fee. Assume that the processor deposits the net amount. Prepare the journal entry for credit card sales. (Ignore cost of goods sold.) Omit explanation.

The petty cash fund has a current balance of $350, which is the established fund balance. Based on activity in the fund, it is determined that the balance needs to be changed to $400. Which journal entry is needed to make this change?

Which of the following would be included in the journal to record an NSF check?

A petty cash fund was established with a $525 balance. It currently has cash of $45 and petty cash tickets as shown below: Travel expense \ 105 Office supplies expense 250 Equipment rental expense 110 Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Cash in the bank is more liquid than a petty cash fund.

The following information is needed to reconcile the cash balance for Gourmet Catering Services. • A deposit of $5,600 is in transit. • Outstanding checks total $1,000. • The book balance is $6,400 at February 28, 2019. • The bookkeeper recorded a $1,800 check as $17,200 in payment of the current month's rent. • The bank balance at February 28, 2019 was $17,410. • A deposit of $400 was credited by the bank for $4,000. • A customer's check for $3,300 was returned for nonsufficient funds. • The bank service charge is $90. What was the adjusted book balance?

If competent, reliable, and ethical employees are hired, there is no need to adequately supervise their work.

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the proper expense account(s).

The bank statement reports the activity in the customer's account and is issued on an annual basis.

Lane Outfitters, Inc., a retailer, accepts payment through credit cards. During August, credit card sales amounted to $12,000. The processor charges a 3% fee. Assuming that the credit card processor uses the gross method, prepare the journal entries, on the books of Lane Outfitters, for the credit card sales and the payment of fees. (Ignore cost of goods sold.) Omit explanation.

List the four steps, the proper order, of the purchasing and payment process.

The following information is needed to reconcile the cash balance for Discount Dry Cleaning, Inc. • A deposit of $5,600 is in transit. • Outstanding checks total $1,300. • The book balance is $6,300 at February 28, 2019. • The bookkeeper recorded a $1,600 check as $17,400 in payment of the current month's rent. • The bank balance at February 28, 2019 was $17,930. • A deposit of $400 was credited by the bank for $4,000. • A customer's check for $3,400 was returned for nonsufficient funds. • The bank service charge is $70. What was the adjusted book balance?

A company has a petty cash fund amount of $200. When replenished, it has petty cash tickets of $33 for gas expense, $31 for postage expense, $16 for supplies expense, and $12 for miscellaneous expenses. Assume the cash balance is not over or short. In the journal entry, Cash would be credited for ________.

For each petty cash payment, the custodian prepares a petty cash ticket.