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Exam 6: Internal Control and Accounting for Cash

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Question 51

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For internal control purposes,what is meant by "separation of duties?"

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The functions of authorization...

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Question 52

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Which of the following is not a typical form associated with a bank checking account?

A) Signature card
B) Bank statement
C) Debit memo
D) Deposit ticket

E) B) and C)
F) A) and D)

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Question 53

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List three of the five primary roles of the independent auditor (CPA).

Use the following to answer questions The bank statement for Tetra Company contained the following items: a bank service charge of $10;a credit memo for interest earned,$15;and a $50 NSF check from a customer.The company had outstanding checks of $100 and a deposit in transit of $300. -Keatts Company's bank statement included an NSF check written by one of its customers.What effect will the entry to recognize the NSF check have on the company's financial statements?

Which of the following is not one of the purposes of an internal control system?

What are the three types of audit opinion,and what is the meaning of each? Which type of opinion is considered the best?

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

Effective internal controls for cash include

A savings account or certificate of deposit that imposes a substantial penalty for early withdrawals should not be classified as Cash on the balance sheet.

In a bank reconciliation,a customer's NSF check included with the bank statement is:

Indicate whether each of the following items regarding internal control is true or false. _____ a)Accounting controls are composed of procedures designed to safeguard assets and ensure accounting records contain reliable information. _____ b)Administrative controls concern the reliability of the financial statements and the accuracy of the general ledger. _____ c)Whenever possible,the functions of authorization,recording and custody should be exercised by the same dependable employee. _____ d)Cash is most susceptible to embezzlement at the points of receipt and disbursement. _____ e)Even a well-designed internal control system cannot prevent collusion by employees.

On May 1,2016,Campbell Company established a petty cash fund in the amount of $400. a)Is the establishment of the fund an asset source,asset use,or asset exchange transaction? b)Record the establishment of the petty cash fund in the horizontal financial statements model,below.Show dollar amounts of increases and decreases;for accounts that are not affected,indicate NA.If the event affects cash flow,classify the cash flow as operating,investing,or financing.

At March 31,Cummins Co.had a balance in its cash account of $10,400.At the end of March the company determined that it had outstanding checks of $900,deposits in transit of $600,a bank service charge of $20,and an NSF check from a customer for $200.The true cash balance at March 31 is:

What account is used to record the amount of cash shortages or overages relative to a petty cash system?

Chester Company has established internal control policies and procedures in order to achieve the following objectives: 1) Effective evaluation of management performance. 2) Assure that the accounting records contain reliable information. 3) Safeguard the company's assets. 4) Assure that employees comply with company policy. Which of these objectives are achieved by accounting controls?

The following information pertains to the bank reconciliation of January 31,2016 for the Greis Company: In addition,the reconciliation revealed one error: Check #2146 for $152,written to pay utilities expense,was incorrectly recorded in the books for $125. Required: Using the above information,compute the unadjusted book balance for cash.

Use the following to answer questions Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.Enter only one letter for each element. -During the process of preparing the bank reconciliation,an employee for Heath Company discovered that Check #4261 for $65,used to pay an account payable,was recorded in the company books as $56.

Indicate whether each of the following items regarding petty cash is true or false. _____ a)The establishment of a petty cash fund is an asset use transaction. _____ b)The replenishment of a petty cash fund is an asset source transaction. _____ c)At any time,the total of the petty cash vouchers plus the remaining coins and currency should equal the balance of the Petty Cash ledger account. _____ d)If a shortage occurs,a credit is entered to the Cash Short and Over account. _____ e)There is no journal entry made in the accounting records at the time when petty cash funds are disbursed.

Which of the following statements accurately describes a fidelity bond?

Which of the following is not a generally recognized internal control procedure?