Exam 8: Internal Control and Cash

A bank reconciliation should be prepared periodically because

During the year,Tempo Inc.has monthly cash expenses of $115,000.On December 31,its cash balance is $1,437,500.The ratio of cash to monthly cash expenses is

The type of account and normal balance of Petty Cash is a (n)

Depositing all cash,checks,etc.,in a bank and paying with checks is an internal control procedure over cash.

Garden Gate,Inc.reported the following data in its August 31 annual report.Required (a)What is the company's "cash burn" per month? (b)What is the company's ratio of cash to monthly cash expenses? (c)Interpret the ratio you computed in part b. What are the implications for Garden Gate, Inc.?

Sarbanes-Oxley requires sole proprietorships to maintain strong and effective internal controls and thus deter fraud and prevent misleading financial statements.

Which of the following should not be considered cash by an accountant?

You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or decrease your company's bank account balance.Complete the following table to help your new staff understand.

A bank reconciliation should be prepared

A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement.An example of a credit memo is

Journalize the entries to record the following:​​ Journal

When the voucher system is used,the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.

Accompanying the bank statement was a debit memo for bank service charges.What entry is required in the company's accounts?

Journalize the entries to record the following:​​ Journal

In preparing a bank reconciliation,the amount of deposits in transit is deducted from the balance per bank statement.

The actual cash received during the week ended June 7 for cash sales was $18,632,and the amount indicated by the cash register total was $18,628.Journalize the entry to record the cash receipts and cash sales.​Journal

Money orders are considered cash.

A necessary element of internal control is

Match each item to a bank statement adjustment, a company books adjustment, or either. -Deposit in transit

Match the following elements of internal control: -Monitoring