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Exam 6: Cash and Internal Controls

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Question 21

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Discuss the purpose of a bank reconciliation.

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A bank reconciliation is a report explai...

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Question 22

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The Discounts Lost account:

A) Is used with the gross method of recording purchases to highlight the value of purchase discounts taken.
B) Is used with the gross method of recording purchases to highlight the value of purchase discounts available but not taken.
C) Is used to note situations where the accounting department has lost or misplaced paperwork relating to inventory purchases.
D) Is used with the net method of recording purchases to highlight the value of purchase discounts taken.
E) Is used with the net method of recording purchases to highlight the value of purchase discounts available but not taken.

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

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Question 23

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

Fluffy Pet Grooming deposits all cash receipts on the day when they are received and all cash payments are made by check.At the close of business on June 30,its Cash account shows a $14,811 debit balance.Fluffy Pet Grooming's June 30 bank statement shows $14,472 on deposit in the bank.Prepare a bank reconciliation for Fluffy Pet Grooming using the following information: What is the adjusted bank balance?

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42,debit office supplies expense $27.33,debit cash over/short $2.19.If the original amount in petty cash is $320,how much was the credit to cash for the reimbursement?

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?

List the main principles of internal controls.

For which item does a bank NOT issue a debit memorandum?

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

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

The days' sales uncollected ratio reflects the liquidity of accounts receivable.

A remittance advice is:

Fluffy Pet Grooming deposits all cash receipts on the day when they are received and all payments are made by check.At the close of business on June 30,its Cash account shows a $14,811 debit balance.Fluffy Pet Grooming's June 30 bank statement shows $14,472 on deposit in the bank.Prepare a bank reconciliation for Fluffy Pet Grooming using the following information: What is the adjusting journal entry required as a result to record the increase in cash for the adjusted bank balance?

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

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

The entry to increase the balance in petty cash from $50 to $75 would be to credit the Petty Cash account in the amount of $25.

The number of days' sales uncollected:

A voucher is an internal file that:

The _________________ account is used to record the effects of cash overages and shortages from errors in making change.

Following are seven items (a)through (g)that would cause Xavier Company's book balance of cash to differ from its bank statement balance of cash. a.A service charge imposed by the bank. b.A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month. c.A customer's check returned by the bank is marked "Not Sufficient Funds.(NSF)" d.A deposit that was mailed to the bank on the last day of the current month and is unrecorded on this month's bank statement. e.A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at $109. f.An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company and deposited the proceeds in the company's account. g.A check was written in the current period that is not yet paid or returned by the bank. Indicate where each item (a)through (g)would appear on Xavier Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.