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Exam 6: Reporting and Analyzing Cash,fraud,and Internal Control

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Question 51

Multiple Choice

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In the process of reconciling its bank statement for April,Donahue Enterprises' accountant compiles the following information: The adjusted cash balance per the books on April 30 is:

A) $6,900
B) $8,160
C) $4,600
D) $6,520
E) $5,840

F) B) and C)
G) A) and E)

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Question 52

Multiple Choice

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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) :

A) Internal cash system.
B) Petty cash system.
C) Cash disbursement system.
D) Voucher system.
E) Cash control system.

F) A) and D)
G) All of the above

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Question 53

Multiple Choice

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

Havermill Co.establishes a $250 petty cash fund on September 1.On September 30,the fund is replenished.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 establishment of the fund on September 1 is:

Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

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

Pelcher Co.maintains a $400 petty cash fund.On January 31,the fund is replenished.The accumulated receipts on that date represent $110 for office supplies,$140 for merchandise inventory,and $70 for miscellaneous expenses.There is a cash overage of $4.Based on this information,the amount of cash in the fund before the replenishment is:

A bank does not issue a debit memorandum to notify the depositor of which of the following?

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227,how should this error be treated on the bank reconciliation?

List the principles of internal control.

Norman Co.had $5,925 million in sales and $1,155 million in ending accounts receivable for the current period.For the same period,Opal Co.reported $5,885 million in sales and $790 million in ending accounts receivable.Calculate the days' sales uncollected for both companies as of the end of the current period and indicate which company is doing a better job in managing the collection of its receivables.

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

Basic bank services do not include:

Cash equivalents:

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

Easton Co.deposits all cash receipts on the day they are received and makes all cash payments by check.At the close of business on June 30,its Cash account shows a debit balance of $60,209.Easton's June bank statement shows $58,349 on deposit in the bank.Determine the adjusted cash balance using the following information: The adjusted cash balance should be:

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount,and are close enough to their due date so that their market value will not greatly change.

Describe a bank reconciliation and discuss its purpose.

The three parties involved with a check are:

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