FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Cash and Internal Controls

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Cash equivalents:

A) Are short-term, highly liquid investments
B) Include 6-month CDs
C) Include checking accounts
D) Are recorded in petty cash
E) Include money orders

F) C) and D)
G) A) and B)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Cash equivalents:

A) Include savings accounts
B) Include checking accounts
C) Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes
D) Include time deposits
E) Have no immediate value

F) A) and C)
G) A) and D)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

At the end of the day, the cash register's record shows $1,000 but the count of cash in the register is $1,035. The proper entry to record this excess includes a:

Define an internal control system and describe the purpose that it serves.

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

Cash equivalents are short-term highly liquid investment assets that are easily converted to cash and have maturities of one year.

Based on the following information, prepare the general journal entries Avisa must make at November 30. The following information is available for the Avisa Company for the month of November: a. On November 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $27,202. b. The company's bank statement shows a balance on November 30 of $29,279. c. Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459. d. A credit memo included with the bank statement indicates that the bank collected $780 on a noninterest-bearing note receivable for Avisa. The bank deducted a $10 collection fee and credited the remainder of $770 to Avisa's account. e. A debit memo included with the bank statement shows a $67 NSF check from a customer, J. Brown. f. A deposit placed in the bank's night depository on November 30 totaled $1,675 and did not appear on the bank statement. g. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540. h. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded on the company's books.

A purchase requisition is a document the purchasing department sends to the vendor to place an order.

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 petty cash fund was originally established with a check for $150. In the petty cash fund on December 31 (the period-end), you find the following: $\begin{array} { | l | l | r | } \hline \text { Petty cash receipts } & \text { Postage } & \$ 43.50 \\\hline & \text { Office supplies } & 51.85 \\\hline & \text { Office equipment repair } & 49.00 \\\hline \text { Cash } & & 4.25 \\\hline\end{array}$ Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

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

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

Receiving and paying for merchandise should be performed by one individual or department to streamline a voucher system and simplify the procedures for purchasing.

The number of days' sales uncollected:

All disbursements from petty cash should be documented by a petty cash receipt.

Explain the differences between cash and cash equivalents.

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

The principles of internal control include: establish responsibilities, maintain adequate records, insure assets, separate recordkeeping from custody of assets and perform regular and independent reviews.

_________________________ is the electronic transfer of cash from one party to another.

Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include: