Exam 8: Internal Control and Cash

Which of the following illustrates the internal control procedure-separation of duties?

A check was written by a business for $507 but was recorded in the journal as $705.How would this error be included on the bank reconciliation?

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

The petty cash fund had an initial imprest balance of $220.It currently has $18 in cash,$5 in miscellaneous petty cash tickets,and an additional $191 in specific petty cash tickets.The debit to Cash Short & Over would be ________.

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

Sales through credit cards and debit cards are journalized in the same way as sales on account.

Which of the following statements is correct?

Having a cash ratio above 1.0 implies that a company has enough cash and cash equivalents to pay current liabilities.

Which of the following is the basic internal control procedure with respect to cash receipts?

A check of $300,000,deposited by a company,was returned to the bank for nonsufficient funds.How would this information be included on the bank reconciliation?

When replenishing the petty cash fund,the company debits the Petty Cash account and credits the Cash account.

In a large company,the person in charge of signing checks is the controller.

A system cannot be overcome or broken into if its internal controls are properly designed and structured.

When a check is issued,the party who is paying the cash is referred to as the ________.

Separating the custody of assets from accounting implies that the accountants must not handle cash and the cashier must not have access to the accounting records.

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

Evaluated Receipts Settlement is ________.

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.

A very low cash ratio does not send a strong message to investors and creditors that the company has the ability to repay its short-term debt.

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.