Exam 6: Reporting and Analyzing Cash and Internal Controls

A set of procedures and approvals for verifying, approving and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n):

What is the purpose of the days' sales uncollected ratio?

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

Cash registers, check protectors, time clocks and personal identification scanners are examples of devices that can improve internal control.

The three parties involved with a check are:

The Cash Over and Short account:

The document prepared by the vendor that is an itemized statement of goods listing the customer's name, items sold, sales prices, and terms of the sale is the _________________.

When reimbursing the petty cash fund:

Vouchers should be used for purchases of inventory and all other expenditures made within a company.

Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments.

Internal control in technologically advanced accounting systems depends less on the design and operation of the information system and more on the analysis of its resulting documents.

Ferguson Co. has a $200 petty cash fund. At the end of the first month the accumulated receipts represent $43 for delivery expenses, $127 for merchandise inventory, and $12 for miscellaneous expenses. The fund has a balance of $18. The journal entry to record the reimbursement of the account includes a:

One of the specific requirements of the Sarbanes-Oxley Act (SOX) is that:

A voucher is an internal document or file:

Identify each of the following items 1 through 10 as either (A) cash or (B) cash equivalent. _____ 1. Coins _____ 2. Petty cash _____ 3. Three-month certificate of deposit _____ 4. Commercial paper _____ 5. Currency _____ 6. Certified check _____ 7. Cashier's check _____ 8. Money market accounts _____ 9. Money orders _____ 10. U.S. treasury bills

When evaluating the days' sales uncollected ratio, generally the higher the receivables balance, the better the ratio.

Internal control of cash ensures that cash received is properly recorded and deposited.

A debit balance in the Cash Over and Short account reflects an expense and is reported on the income statement as part of general and administrative expenses.

A company wants to decrease its $200 petty cash fund to $175. The entry to reduce the fund is:

If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794, how should this error be treated on the bank reconciliation?