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Exam 6: Cash and Internal Controls

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Question 1

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The internal document that is prepared by a department manager to inform the purchasing department of its needs is called the ________________________.

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Purchase r...

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Question 2

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A seller of goods or services, which is usually a manufacturer or wholesaler is known as a:

A) Vendor
B) Payee
C) Vendee
D) Creditor
E) Debtor

F) All of the above
G) B) and D)

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Question 3

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A __________________________ is a document explaining the payment of a check.

It is not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.

Good internal control dictates that a person who controls an asset should also maintain the accounting records for that asset.

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 a. Outstanding checks as of June 30 total $2,261. b. The June 30 bank statement included a $75 debit memorandum for bank services. c. Check No. 919, listed with the canceled checks, was correctly drawn for $789 in payment of a utility bill on June 15. Fluffy Pet Grooming mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $798. d. The June 30 cash receipts of $2,534 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement. What is the adjusting journal entry required to record the increase in cash for the adjusted bank balance?

Maintaining adequate business records is an important internal control principle.

The journal entry for petty cash reimbursement involves a debit to the appropriate expenses and a credit to Petty Cash.

Two sales clerks should not share the same cash register. This refers to the internal control principle of _______________________.

Controls of cash disbursements are important for companies as most large thefts occur from payment of fictitious invoices.

The following information is available to reconcile Sleepy Time Bedding's book balance of cash with its bank statement cash balance as of July 31: What is the appropriate journal entry to record the collection made by the bank?

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 $7,390, but was erroneously entered in the accounting records as $3,790. When preparing the November bank statement, the company should:

A company made a bank deposit 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 impact of technology on internal controls includes which of the following:

The voucher register is a journal that is used to record all approved vouchers within the company.

What is the purpose of the petty cash account?

The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and multiplying this quotient by 365.

When a petty cash fund is in use:

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

Describe the banking activities that promote the control of cash and identify the internal control objectives served by the banking activities.