Exam 6: Reporting and Analyzing Cash and Internal Controls

Clayborn Company' bank reconciliation as of May 31 is shown below The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is reimbursed. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the establishment of the fund on September 1 is:

The days' sales uncollected ratio measures the liquidity of accounts receivable.

Outstanding checks, deposits in transit, deductions for bank fees, additions for interest, and errors are all factors that can cause the bank statement balance for a checking account to be different from the company's checking account balance.

Technologically advanced accounting systems rarely need monitoring for errors because computers always process transactions correctly.

Discuss how the principles of internal control apply to cash receipts over-the-counter by giving several examples of good control measures that should be implemented.

A __________________________ is a document explaining the payment of a check.

The itemized statement of goods, prepared by a vendor and sent to the buyer, listing the customer's name, items sold, sales prices, and terms of the sale is called the

Meng Co. establishes a $250 petty cash fund on January 1. On January 8, the fund shows $68 in cash along with receipts for the following expenditures: postage, $74; transportation-in, $29; and miscellaneous expenses, $59. Meng uses the perpetual system in accounting for merchandise inventory. The journal entry to establish the fund on January 1 is:

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

Cash equivalents meet all of the following criteria except:

Internal control systems are:

The limitations of internal control policies and procedures do not include: