Exam 7: Internal Control and Cash

At Carlson Services, the cashier collects checks and cash from customers, and the junior accountant records the transactions in the journal. The controller approves the journal entries and bank reconciliations. The treasurer signs checks and approves contracts. Which internal control procedure is exemplified in the above situation?

For good internal control over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods. This ensures that the correct amount of cash is paid.

Journal entries are required for the reconciling items on the book side because ________.

Bank errors are posting errors made by the bank that either incorrectly increase or decrease the depositor's bank balance.

Which of the following is representative of safeguarding assets?

In a lock-box system ________.

Which of the following is an attribute of the internal control component-monitoring of controls?

Internal controls must always be judged in light of their costs versus their benefits.

Debit cards offer the customer the convenience of buying something without having to pay cash immediately.

For the following situation, state whether it represents a strength or weakness in internal control and give the reason for your answer. - The movie theater has the following policy. Tickets are sold by the cashier. The ticket stubs are collected by the ticket taker. The ticket stubs are stored in a locked box, and the accounting personnel match the number of ticket stubs to the number of tickets sold.

Which one of the following items requires an adjustment on the bank side of the bank reconciliation?

A petty cash fund was established with a $200 balance. It currently has cash of $35 and petty cash tickets as follows: Office expense $130 and Entertainment Expense $50. Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?

When replenishing the petty cash fund, the company debits either the associated expense incurred or the asset purchased with the fund.

Which is the most liquid form of asset?

Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.

A petty cash fund was established with a $600 balance. It currently has cash of $17 and petty cash tickets as shown below: Travel expense \ 102 Office supplies expense 285 Equipment rental expense 80 Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Which of the following describes a firewall?

Under the gross method, when the credit card processor deposits the cash proceeds from credit and debit card sales, ________.

Collusion involves two or more people working together to circumvent internal controls and defraud a company.