Exam 4: Internal Control and Cash

As a result of the bank reconciliation process,a company will prepare an adjusting entry for a debit memo but not for a credit memo.

Which of the following is not a generally recognized internal control activity?

Allowing only certain employees to order goods and services on behalf of the company is an example of what internal control activity?

The accountant must make journal entries for all items in the book section of the bank reconciliation.

What adjustments are often necessary after the reconciliation of a bank account?

What is meant by the term "cash equivalents"?

An effective system of internal control is critical to protecting a company's investment in cash.Identify the five control activities and provide one example that relates to each control as it would be applied to cash.

On a bank reconciliation,bank service charges for the month are added to the cash balance per the company records.

The stronger the system of internal control,the higher the accuracy of the company's accounting records and financial reports.

Strategic risk assessment is primarily concerned with:

Designs on You The following information relates to the company's May bank reconciliation: Bank statement balance \ 5,000 Unadjusted cash balance from the company records ? Deposit in trensit 1,000 Outstanding checks 500 Bank service charges 50 Interest earned on the bank account 10 Customen's NSF check returned by the bank 25 In addition,a check was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000. -Refer to Designs on You.What is the company's adjusted cash balance at May 31?

When a bank collects a note on behalf of a company,the bank is likely to issue a debit memo.

"You Decide" Essay You are an entrepreneur about to open a coffee and internet cafe near your college campus.You have decided to accept cash and credit and will use college student employees.While you plan to be at the shop during most hours that the business will be open,you have made one of the student employees your assistant manager to manage in your absence. Describe at least five procedures that you might use to provide adequate internal control over cash and credit sales and bank deposits.

A Day Spa accepted a check from a customer as payment for services.Unfortunately,the customer's check bounced.The journal entry required on the company's books as a result of this bank reconciliation item will:

It is important that the petty cash custodian

Business process risk assessment is designed to identify,analyze,and manage possible threats to the organization's success concerning ____________________ forces such as resource allocations.

The following information is provided for a company that manufactures bicycles.The factory foreman determines when orders for materials are necessary.The orders are sent to the purchasing department that places orders with the vendors recommended by the factory foreman.When the materials are received,they are immediately delivered to a central storeroom.When invoices are received for the items purchased,they are sent to the accounting department for payment.The accounting department compares the invoices with purchase orders.If the two documents are in agreement,the invoice is approved for payment.The accounting department prepares checks that are signed by the company treasurer.

Which of the following is not a requirement of a company's top managers under the Sarbanes-Oxley Act?

A company's control environment is primarily influenced by the tone at the top.This refers to each of the following except:

As part of a sound system of internal controls,all disbursements (with the exception of petty cash)should be made by check.