Exam 8: Internal Control and Cash

Risks involved in e-commerce include: credit card theft,computer viruses and impersonation.

The bank statement and relevant portions of Quest Company's cash records for the month ended July 31,2015 are given below. Prepare the bank reconciliation at July 31,2015.

Below,preceded by identifying letters,are seven items that would cause Xavier Sales Company's book balance of cash to differ from its bank statement balance. Indicate where each item would appear on Xavier Sales Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below. Book balance of cash Bank statement balance

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.

Omega Supply's current ratio is 2 to 1.Its acid test ratio is .75 to 1.Omega Supply is a good credit risk because the ratios reveal no liquidity problem.

Z-Mart established a petty cash fund recently and the following transactions affecting the fund occurred during February: Prepare the journal entry to reimburse the fund and to reduce its size.

Annie's Attic reported the following information for September 30. Instructions: (1)Explain the purpose of the acid-test ratio. (2)Calculate the acid-test ratio to two decimals. (3)What does the acid-test ratio reveal about Annie's Attic?

Good internal control procedures for cash receipts imply that cash receipts by mail should be opened by an accounting employee who is responsible for recording and depositing receipts.

You are a supervisor in the accounting department of Stellar Consulting.The person you just hired shows you the bank reconciliation prepared for March 31,as shown below. In comparing the bank reconciliation to the Cash account in the General Ledger,you notice a problem.You investigate further and come up with some additional information as follows: a.The Cash account in the General Ledger showed the following: Instructions 1.Prepare a corrected bank reconciliation for March 31,2015. 2.Record the journal entries resulting from the corrected bank reconciliation.

The quick assets are:

Money orders,cashier's cheques,and certified cheques are examples of cash equivalents.

J.C.Penny's total quick assets were $5,888 million.Its current assets were $11,700.Its current liabilities were $8,000.The acid-test ratio is:

A ratio used to assess a company's ability to cover its current debts with quick assets is called the _________________.

A petty cash fund was originally established with a cheque for $150.On December 31,you find the following items in the petty cash fund: Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.

A properly designed internal control system is a key part of systems design,analysis,and performance.

Cash,short-term investments and receivables,are called acid-test assets.

A petty cash fund is used for ______________________________.

The Crown Company established a $1,000 petty cash fund by issuing a cheque to the custodian on October 1.On October 15,the petty cash fund was replenished and increased to $1,500.The contents of the petty cash fund prior to the October 15 replenishment were: Prepare the general journal entry to record the reimbursement and increasing of the fund on October 15.

A(n)________________________ explains the difference between the balance of a chequing account according to the depositor's records and the balance reported on the bank statement.