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Exam 8: Cash and Internal Controls

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Question 101

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Effective cash management involves applying all of the following cash management principles except:

A) Encourage collection of receivables, offer discounts for payments received early.
B) Keep only necessary levels of assets.
C) Plan expenditures.
D) Leave excess cash available for unexpected expenditures.
E) Delay payment of liabilities until the last possible day.

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

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Question 102

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An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

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Question 103

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Proper internal control means that responsibility for a task is clearly established and assigned to one person.

An invoice is a document that is used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

What is a voucher system?

A company established a petty cash fund of $100 on September 1. On September 10, the petty cash fund was replenished when there was $16 remaining and there were petty cash receipts for: office supplies, $27; transportation-in on inventory purchased, $32; and postage, $22. On September 15, the petty cash fund was increased to $125 in total. Record the above transactions in general journal form.

A remittance advice is:

Two sales clerks should not share the same cash register. This is an example of the internal control principle of ______________________.

Reasons that internal controls are crucial to companies that convert from U.S. GAAP to IFRS include all of the following except:

A key factor in a voucher system is:

An internal control system refers to the policies and procedures managers use to _________, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

Brown Company's bank statement for September 30 showed a cash balance of $1,350. The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30. a. A $125 debit memoranda is included with the bank statement and dealt with a customer's check for $100 marked NSF and returned to Brown Company by the bank. In addition, the bank charged the company's a $25 processing fee. b. The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. c. A $15 debit memorandum for checks printed by the September 30 bank was included with the canceled checks. d. Outstanding checks amounted to $1,145. e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account. f. Included with the canceled checks was a check for $275, drawn on another company, Browne Inc. 1. Prepare a bank reconciliation as of September 30. 2. Prepare any necessary adjusting journal entries necessary as a result of the bank reconciliation.

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.

A set of procedures and approvals designed to control cash disbursements and the acceptance of obligations is referred to as a(n) :

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

The _____________ of recording purchases records purchases under the assumption that the cash discount for prompt payment will be taken.