Exam 6: Reporting and Analyzing Cash and Internal Controls

A seller (or provider) of goods or services to a business organization, usually a manufacturer or wholesaler, is known as a:

Establishing responsibilities and assigning both the recordkeeping and custody of assets to one person are important principles of internal control.

Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $18,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following: Additionally, a $29 check written and recorded by the company correctly was recorded by the bank as a $92 deduction. The adjusted cash balance per the bank records should be:

After the petty cash fund is established, the Petty Cash account is not debited or credited again unless the amount of the fund is changed.

Childers Company has an established petty cash fund in the amount of $400. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts: If, in addition to these receipts, the petty cash fund contains $201 of cash, the journal entry to reimburse the fund on December 31 will include:

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

A person who controls or has access to an asset must not keep that asset's accounting records. This describes the internal control principle of ________________________.

Outstanding checks refer to checks that have been:

The payee is the party to a check who signs the check, authorizing its payment.

The following information is available to reconcile Hinckley Company's book balance of cash with its bank statement cash balance as of June 30. The June 30 cash balance according to the accounting records is $57,542, and the bank statement cash balance for that date is $67,047. a. The bank erroneously cleared a $295 check against the account in June that was not issued by Hinckley. The check documentation included with the bank statement indicates the check was actually issued by Dancer Co. b. On June 30, the bank issued a credit memorandum for $35 interest earned on Hinckley's account. c. When the June checks are compared with entries in the accounting records, it is found that Check No. 1727 had been correctly drawn for $1,450 to pay for advertising but was erroneously entered in the accounting records as $1,540. d. A credit memorandum indicates that the bank collected $9,000 cash on a note receivable for Hinckley, deducted a $30 collection fee, and credited the balance to the company's Cash account. Hinckley did not record this transaction before receiving the statement. e. A debit memorandum of $865 is enclosed with the bank statement for an NSF check for $840 received from a customer. The bank assessed a $25 fee for processing it. f. Hinckley's June 30 daily cash receipts of $6,425 were placed in the bank's night depository on that date, but do not appear on the June 30 bank statement. g. Hinckley's June 30 cash disbursements journal indicates that Check No. 1737 for $4,830 and Check No. 1740 for $3,280 were both written and entered in the accounting records, but are not among the canceled checks. h. A debit memorandum for $115.00 indicates the bank deducted the annual lock box fee for the company. Required: 1. Prepare the bank reconciliation for this company as of June 30. 2. Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of June 30.

Approved vouchers are recorded in a journal called the voucher register.

A voucher system's control over cash disbursements begins when a company incurs an obligation that will result in eventual payment of cash.

The days' sales uncollected ratio measures a company's ability to manage its debt.

At the end of the day, the cash register's record shows $1,050, but the count of cash in the cash register is $1,055. The correct entry to record the cash sales and its overage is

Because employees know that bonding is an insurance policy against loss from theft, bonding does not generally discourage loss from theft.

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

A check involves 3 parties: a maker who signs the check, a payee who is the recipient, and a bank on which the check is drawn.

Ferguson Co. decides to establish a petty cash fund with a beginning balance of $200. The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system. The journal entry to record establishing the account is:

Two clerks sharing the same cash register is a violation of which internal control principle?