Exam 8: Internal Control and Cash

Superstore Electronics reported the following figures in its 2019 and 2018 financial statements. 2019 2018 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.

For strong controls over cash receipts,the checks to be deposited should be sent to the treasurer,and the remittance advices should be sent to the accounting department.

The bank recorded a $3,000 deposit as $300.How would this information be included on the bank reconciliation?

Companies receive cash either over the counter,through the mail,or by electronic funds transfer.

The controller at Business Services Consulting needs new computers for the accounting department.However,there are no guidelines specifying whether the controller can approve purchases of office equipment.Which internal control procedure needs strengthening?

A basic procedure of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated.

Journal entries are required if the bank reconciliation includes a book error.

A way to account for petty cash by maintaining a constant balance in the petty cash account and which at any time requires that cash plus petty cash tickets must total the amount allocated to the petty cash fund,is known as the ________.

Which of the following is TRUE of the internal control component-information system?

For good internal control,the purchasing agent should neither receive the goods nor approve the payment.

Companies obtain cash from credit and debit card transactions by using third-party processors.

Which of the following is a measure for discouraging theft for a retail store that accepts cash receipts over the counter?

Which of the following is included in the internal control procedure-documents?

The party who issues a check is the maker.

At the end of each day,the accountant proves the cash by comparing the cash in the drawer against the point-of-sale terminal record of cash sales.

Cash and cash equivalents are divided by ________ to determine the cash ratio.

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

Which of the following is NOT an appropriate internal control for cash receipts over the counter?

In a lock-box system ________.

Which of the following is the last step in the daily control over cash receipts by mail?