Exam 8: Internal Control and Cash

On a bank reconciliation,deposits in transit are subtracted on the book side of the reconciliation.

Which of the following statements describes the decision guidelines for an ethical decision?

Which of the following must be signed by the person authorised to write cheques drawn on a bank account?

A cheque of $75 deposited by a company was returned from the bank as a dishonoured cheque.How would this information be included on the bank reconciliation?

A company has a petty cash fund amount of $300.When replenished,it has petty cash slips of $30 for petrol expense,$30 for postage expense,$13 for supplies expense and $10 for miscellaneous expenses.Assume the cash balance is not over or short.In the journal entry,Cash would be credited with:

Internal control is the organisational plan and all the related measures adopted by an entity to safeguard assets,encourage employees to follow company policy,promote operational efficiency and ensure accurate and reliable accounting records.

A company makes a legitimate,properly authorised payment to a supplier.The accountant changes the date of the transaction to shift it to a later time period.Because the transaction is legitimate,this action would not be considered unethical.

A system where customers send their cheques directly to the company's bank account is described as which of the following?

In the following situation,which internal control procedure needs strengthening? The controller's duties include approving bank reconciliations,approving general journal entries,hiring administrative staff,and approving various types of administrative expenses.She needs new computer equipment for the accounting office,but there are no guidelines specifying whether she can approve purchases of office equipment.

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

Which of the following statements describes a purchase order?

A company's cash ledger shows an ending balance of $4600.Reconciling items included a bookkeeper error of $80 (a $550 cheque recorded as $630),two outstanding cheques totalling $810,a service charge of $20,a deposit in transit of $260 and interest revenue of $31.What is the adjusted book balance?

A company received a bank statement showing a balance of $77,000.Reconciling items included outstanding cheques of $2300 and a deposit in transit of $9000.What is the company's adjusted bank balance?

If a system of internal controls is too strict or complex,it may harm efficiency and not be cost-effective.

Internal auditors evaluate company controls to ensure the accuracy of financial statements.

A company urgently needs to repair its fire alarm system,which will cost $6 000.The two senior managers who are authorised to approve payments over $5 000 are both on holiday and cannot be reached.The office manager is only authorised to approve payments up to $5 000 but is concerned about the risks and safety factors involved and wants to have the repair work done immediately.She asks if the contractor could split up the repair bill into two separate invoices,one for parts and one for labour,so that she could approve both of them separately and get the work done right away.This action would not be considered unethical,as long as the office manager does not violate specific company rules or deliberately misrepresent the facts of the situation

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

As long as the same person deposits customer cheques and records the deposits into the ledger,there will be good internal control over cash receipts.

Before signing a cheque,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.

Internal and external auditors are part of which of the following components of internal control?