Exam 6: Internal Control and Accounting for Cash

List five internal control procedures that should be followed to safeguard cash and reduce the likelihood of theft. Any five of the following:

A business learns about customers' NSF checks through credit memos that are included with the bank statement.

How do accounting controls differ from administrative controls?

Assuming that the unadjusted bank balance was $600, determine the unadjusted book balance.

Janet Higgins operates a small dress shop that sells various items of apparel and accessories. She employs two clerks who make sales to customers, accept returns when a customer is dissatisfied with merchandise, and put new merchandise on display. One of the clerks, Gretchen Grant, was hired recently. Janet had always done all the accounting for the store and had made bank deposits. However, Gretchen has offered to do the accounting for the store during slow periods when there are no customers in the store; she also has begun making bank deposits as she leaves for the day. Having Gretchen take these responsibilities allows Janet more time for acquiring merchandise for the store and for personal errands. What potential risks for the success of Janet's business are present in this situation?

On November 30, 2013, Howard Company's bank statement showed an ending balance of $36,341. The following information is available about Howard's account: 1. Debit memo in bank statement for bank service charge, $39 2. Deposit in transit, $2,988 3. Outstanding checks, $3,156 4. Customer's NSF check for $723 was returned with the bank statement Required: a) Determine the true cash balance as of November 30, 2013 b) Determine the unadjusted balance of the company's Cash account as of November 30, 2013

Grimes Company established a $250 petty cash fund on January 1, 2013. On March 1, 2013 the fund contained $160 in receipts for miscellaneous expenses and $88 in cash. The entries necessary to replenish the petty cash fund will

The unadjusted cash account balance for Cali Company at December 31, 2013 is $12,342. The bank statement showed an ending balance of $18,350 at December 31, 2013. The following information is available from an examination of the bank statement and the company's accounting records: Check #433 for the purchase of inventory was written correctly and paid by the bank correctly for $234, but was recorded on the books at $432. Cali uses the perpetual inventory system. Required: 1) Prepare a bank reconciliation for December, 2013. 2) Prepare the necessary journal entries at December 31, 2013.

The most favorable audit opinion that a company can receive is a(n):

In preparing the April bank reconciliation for Oscar Company, it was discovered that on April 10 a check was written to pay delivery expense of $45 but the check was erroneously recorded as $54 in the company's books. The journal entry required to correct the error is

Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?

Before a business check is signed, the check signer should examine appropriate supporting documents.

After journal entries have been made related to a bank reconciliation, the book balance will be equal to the true cash balance.

At the time petty cash funds are disbursed, a journal entry should be made, debiting the appropriate asset or expense account.

At Chavez Company, the petty cash custodian used petty cash to pay for postage charges.

Which of the following statements concerning internal controls is true?

While performing its monthly bank reconciliation, the bookkeeper for the Maynard Company discovered that a check written for $241 for advertising expense was recorded in the firm's books as $421. Which of the following shows the effect of the correcting entry on the financial statements?

A well-designed system of internal controls will eliminate employee theft and fraud in a company.

Harp Company accepted a check from Jasper Company as payment for services rendered. Harp's bank statement revealed that the Jasper check was an NSF check. What effect will the entry to record the NSF check have on the accounting equation of Harp Company?

The owner of the King Company established a petty cash fund amounting to $425. What is the effect on the financial statements of the entry to record this transaction?