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Exam 6: Reporting and Analyzing Cash and Internal Controls

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Question 1

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In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $970,but was erroneously entered in the accounting records as $790.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?

A) $180 decrease to Cash and a $180 decrease to Utility Expense
B) $180 increase to Cash and a $180 increase to Utility Expense
C) $180 decrease to Cash and a $180 increase to Utility Expense
D) $180 increase to Cash and a $120 decrease to Utility Expense
E) $970 increase to Cash and a $790 decrease to Utility Expense

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

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Question 2

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A company established a petty cash fund in May of the current year and experienced the following transactions affecting the fund during May: May 1 Establish petty cash account in the amount of $300 May 5 Paid for miscellaneous office supplies in the amount of $53.22 May 9 Reimbursed Human Resource Manager for business lunch,$45.09 May 15 Paid for minor landscaping services,$75.00 May 22 Paid $65.00 for postage May 31 Counted remaining cash and discovered that $56.34 remained Prepare the journal entry to establish the fund on May 1.

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Petty Cash...

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Question 3

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

Which of the following are risks of e-commerce?

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $790,but was erroneously entered in the accounting records as $970.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?

A company had $43 missing from petty cash which was not accounted for by petty cash receipts.The correct procedure is to:

Match each of the following transactions with the applicable internal control principle

An invoice is an itemized statement of goods prepared by the vendor listing the customer's name,items sold,sales prices and terms of sale.

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:

Cash includes currency,coins and the deposits in most checking accounts.

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:

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

Bonding does not discourage employees from stealing from the company as employees know that bonding is an insurance policy against loss from theft.

What is the purpose of the petty cash account?

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

A person who controls or has access to an asset must not keep that asset's accounting records.This refers to the internal control principle of ________________________.

A sales system with pre-numbered,controlled sales slips is an example of the internal control principle of _______________________.

Cash equivalents:

A company must have a days' sales uncollected ratio of less than 30 days to conclude that is has sufficient liquidity.

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: