Exam 8: Cash and Internal Control

The bonding of employees is an example of which feature of a good system of internal control?

Merchandisers usually take a physical inventory when the volume of goods is at its lowest levels.

Using bar codes to take a physical inventory is considered poor accounting practice.

Merchandisers usually end their fiscal year during the peak season.

Mandisa Sounds,Inc. ,a specialty retailer of customized audio systems for automobiles,installed a perpetual inventory system in the second quarter of 2011.The new system allowed the firm to adjust its merchandise inventories to sales patterns more effectively and to prepare monthly financial statements.Although the system led to an improvement in sales and income,the gross margin on the monthly income statements was falling below both management's expectations and the industry average.At the end of 2014,a physical inventory revealed that actual merchandise inventory was considerably lower than the perpetual inventory records indicated.The merchandise inventories of some stores were off more than others,but all had deficiencies.What probably caused these losses and what steps could be taken to prevent them in the future?

Each of the following is a feature of internal control except

An effective system of internal control requires that individuals take periodic vacations.

In a purchase system,the most appropriate department to control goods upon arrival at the company is the

On a bank reconciliation,interest income would be added to the balance per bank.

An NSF check should appear in which section of the bank reconciliation?

Good internal control dictates that one employee should oversee all related parts of a transaction.

Cash and equivalents can consist of all of the following except

Which of the following documents would not originate with the purchasing company?

All of the following are examples of internal control activities except

A remittance advice accompanies a check sent to a vendor or the vendor's bank.

The Sarbanes-Oxley Act has not stopped the occurrence of fraud,and additional guidance with regard to internal controls is expected to be issued.

As the controller of a large company,you notice that the Cash Short or Over account is consistently debited for fairly large sums of cash when the petty cash fund is replenished.You probably will want to

The document prepared by a department requesting the company to buy something is called a(n)

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

An understated ending inventory will produce an overstated cost of goods sold.