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Exam 6: Cash and Internal Controls

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Question 61

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The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ____________________.

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Question 62

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The entry to record reimbursement of the petty cash fund for postage expense should include:

A) A debit to Postage Expense
B) A debit to Petty Cash
C) A debit to Cash
D) A debit to Cash Short and Over
E) A debit to Supplies

F) B) and D)
G) A) and E)

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Question 63

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In reimbursing the petty cash fund:

After preparing a bank reconciliation, a company must prepare journal entries to adjust the book balance to the correct balance. Only the items reconciling the _____________ balance require adjustment.

Given the following information: $\begin{array} { l r l r } \text { Petty cash balance: } & \$ 450.00 & \text { Courier receipt: } & \$ 82.50 \\\text { Postage receipt: } & \$ 48.00 & \text { Office Supplies receipt: } & \$ 56.22 \\\text { Business Meal receipt: } & \$ 102.34 & \text { Cash on hand at the end of the month: }& \$ 76.21\end{array}$ What is the amount of cash over and short?

In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for November's rent was correctly written and drawn for $3,790, but was erroneously entered in the accounting records as $7,390. When preparing the November bank statement, the company should:

The purposes and principles of internal control are fundamentally the same across the globe. However, cultural differences sometimes suggest different emphasis on the mix of control procedures.

When two clerks share the same cash register, which internal control principle is violated?

Assume that a buyer receives a shipment of MODEL SD010 with an invoice amount of $780, although $870 worth of goods were received. The purchase order was for $870. Since the difference was in the buyer's favor, the buyer's purchasing department should authorize payment of $780.

Outstanding checks refer to checks that have been:

A voucher is an internal file that:

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

A company wrote a check on September 30 that did not appear on the bank statement dated September 30. In preparing the September 30 bank reconciliation, the company should:

The ________________ ratio reflects the liquidity of a company's accounts receivable.

The document that the purchasing department prepares and sends to the vendor to place an order is the

Based on the following information, prepare the November bank reconciliation for the Avisa Company. 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 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.

Liquidity refers to a company's ability to pay its short-term obligations.

Pre-numbered printed checks are an example of which internal control principle?

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.