Exam 6: Reporting and Analyzing Cash and Internal Controls

Assume that the custodian of a $450 petty cash fund has $64.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

Cash-only sales policies or offering early payment discounts are not considered effective cash management policies.

Money orders, cashier's checks, and certified checks are all examples of cash.

Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $13,162. Franklin's August bank statement shows $14,237 on deposit in the bank. Determine the adjusted cash balance using the following information: The adjusted cash balance should be:

Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $60,209. Easton's June bank statement shows $58,349 on deposit in the bank. Determine the adjusted cash balance using the following information: The adjusted cash balance should be:

At the end of the day, the cash register tape shows $1,020 in cash sales but the count of cash in the register is $1,035. The proper entry to record cash sales and its overage is:

Explain the difference between cash and cash equivalents.

According to good internal control policies, a person who controls an asset also maintains that asset's accounting records.

A voucher system establishes procedures for verifying, approving, and recording cash collections.

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation. ____ 1. Bank service charges ____ 2. Outstanding checks ____ 3. Deposits in transit ____ 4. NSF check ____ 5. Interest on a checking account ____ 6. The company properly wrote a check for $95.80 that the bank incorrectly paid as $9.58. ____ 7. The bank printed checks for the depositor for a fee. ____ 8. Bank debit memorandum ____ 9. Bank credit memorandum ____10. The bank collected a $1,000 note for the depositor.

All internal control policies and procedures have limitations that usually arise from either (1) human error or human fraud, or (2) the cost-benefit principle.

The use of internal controls provides a guarantee against a company's risk of loss.

The following information is available for the Victor Company for its March 31 bank reconciliation: From the March 31 bank statement:

A ____________________ is a report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.

Which of the following events would cause a bank to debit a depositor's account?

A key factor in a voucher system includes all of the following except:

The Sarbanes-Oxley Act (SOX) requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls. What are the specific requirements for auditors set forth by SOX?

List the principles of internal control.

Quibble Company established a $300 petty cash fund by issuing a check to the petty cashier on February 1. On February 15, the petty cash fund was reimbursed and increased to $800 in total. The contents of the petty cash fund at the time of the February 15 reimbursement were: Prepare Quibble's general journal entry to record both the reimbursement and the increase of the petty fund on February 15.

Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to reimburse the petty cash fund will include: