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Exam 7: Sarbanes-Oxley,internal Control,and Cash

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Question 71

True/False

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After a bank reconciliation is completed,journal entries are prepared for items in the balance per company's records as well as items in the balance per bank statement.

A) True
B) False

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Question 72

Multiple Choice

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EFT

A) means Efficient Funds Transfer
B) can process certain cash transactions at less cost than by using the mail
C) makes it easier to document purchase and sale transactions
D) means Effective Funds Transfer

E) A) and B)
F) A) and C)

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Question 73

Multiple Choice

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Accompanying the bank statement was a debit memo for bank service charges.What entry is required in the company's accounts?

A bank statement

The amount of the "adjusted balance" appearing on the bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date.

Cash equivalents

Which of the following would be subtracted from the balance per books on a bank reconciliation?

The following procedures were recently implemented at the Health Station,Inc.For each procedure,indicate whether the internal control over cash represents 1 a strength or 2 a weakness.If it is a weakness,please explain why. a- All mail is opened by the mail clerk,who forwards all cash remittances to the cashier.The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. b- The accounts payable clerk prepares a voucher for each disbursement.The voucher along with the supporting documentation is forwarded to the treasurer's office for approval. c- At the end of each day,all cash receipts are placed in the bank's night depository. d- The bank reconciliation is prepared by the cashier,who works under the supervision of the treasurer.

"To maintain public confidence and trust in the financial reporting of companies" is the purpose of

An example of good internal controls over cash payments is the taking of all cash discounts offered.

A petty cash fund is used to pay relatively large amounts.

Which one of the following is not a factor that influences a business's control environment?

Businesses who have several bank accounts,petty cash,and cash on hand,would maintain a separate ledger account for each type of cash.

Which of the following items that appeared on the bank reconciliation did not require a journal entry?

Journalize the entries to record the following: Sept.1 Established a petty cash fund of $350. 30 The amount of cash in the petty cash fund is now $130.The fund is replenished based on the following receipts: office supplies,$116; postage,$100. $\begin{array}{|c|c|r|r|r|}\hline \text { Date } & {\text { Description }} & \begin{array}{r}\text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline \\\hline \\\hline & & & & \\\hline \\\hline \\\hline \\\hline \\\hline\end{array}$

Which of the following would be deducted from the balance per books on a bank reconciliation?

A bank reconciliation should be prepared

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695.This item would be included in the bank reconciliation as an

You began your new job as the accountant at Bolivar Industries during the month of December.During your first month,you found several interesting issues. 1. While looking through the invoices,you found Invoices 213-242,245-271,and 275-290.It appears that invoices 243,244,272,273,and 274 are missing. 2. During the month,Clerk # 3 issued $250 in refunds as compared to Clerks #1,#2,and #4 who issued less than $50 each. 3. The daily cash receipts and bank deposits reconcile,except on Tuesdays during the month. 4. Business is generally brisk during the holiday season,but two weeks before Christmas there was a sudden increase in slow payments. Part A: What kind of warning signs could be associated with these issues? Part B: What control could you put in place regarding cash refunds mentioned in Part A 2?

The actual cash received during the week ended June 6 for cash sales was $8,276 and the amount indicated by the cash register total was $8,262.Journalize the entry to record the cash receipts and cash sales. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Journal }$ $\begin{array}{|r|c|c|c|r|}\hline \text { Date } &{\text { Description }} & \begin{array}{c}\text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline \\\hline &\\\hline & \\\hline\end{array}$