Exam 6: Reporting and Analyzing Cash and Internal Controls

Describe a bank reconciliation and discuss its purpose.

The internal document prepared by a department manager that informs the purchasing department of its merchandise needs and requests that the merchandise be purchased is the

The clerk who has access to the cash in the cash register should also have access to the cash register tape or file.

Internal control procedures for cash receipts require all of the following except:

Plenty Co. established a petty cash fund of $150 on October 1. On October 10, the petty cash fund was reimbursed when there was $49 remaining and there were petty cash receipts for: office supplies, $47; transportation-in on inventory purchased, $32; and postage, $22. On October 15, the petty cash fund was decreased to $125 in total. Plenty Co. uses a perpetual inventory system. Record the above transactions in general journal form.

Based on the above information, prepare a bank reconciliation for the Victor Company. 2. Prepare the necessary general journal entries to adjust cash to the reconciled balance.

The checklist of steps necessary for approving an invoice for recording and payment, also known as the check authorization, is the

________________ are checks written by the depositor, deducted on the depositor's records, and sent to the payee, but not yet recorded by the bank at the bank statement date.

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ___________________.

A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals:

After preparing a bank reconciliation, adjustments must be made for items reconciling the book balance.

The following account balances are taken from Ferguson Sports at December 31. Calculate the number of days' sales uncollected for both years. According to this analysis, is the company's collection of receivables improving? Explain.

Assigning the responsibilities of purchasing, receiving, and paying for merchandise to one department or individual is a way to streamline a voucher system.

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 increase in the fund balance on October 1 is:

A company established a petty cash fund in November of the current year and experienced the following transactions affecting the fund during November: Prepare the journal entries to establish the fund on November 1 and to reimburse the fund on November 28.

All of the following are considered effective cash management principles except:

An internal control system consists of the policies and procedures managers use to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

It is generally not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.

Canceled checks are checks the bank has paid and deducted from the customer's account during the period.

On a bank statement, deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.