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Exam 8: Sarbanes-Oxley, Internal Control, and Cash

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Question 1

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A minimum cash balance required by a bank is called

A) cash in bank
B) cash equivalent
C) compensating balance
D) EFT

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

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Question 2

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Consider the following journal entry made by Jones Company. Upon investigation, what might you find happened to create this amount of Cash Over/Short account difference? Give three possible reasons for this difference.

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There are many POSSIBILITIES, but the mo...

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Question 3

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The bank reconciliation is an important part of the system of internal controls.

Using the following information, prepare a bank reconciliation for Young Co. for August 31, 2014:

Bank customers are considered creditors of the bank so the bank shows their accounts with credit balances on the bank's records.

All bank memos reported on the bank reconciliation require entries in the company's accounts.

On April 2nd, Granger Sales decides to establish a $125.00 Petty Cash Account to relieve the burden on Accounting. (a) Journalize this event. (b) On April 10th, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of $29.50, meals and entertainment of $38.25 and $13.55 in cash. Journalize the replenishment of the fund. (c) On April 11th, Granger Sales decides to increase petty cash to $200.00. Journalize this event.

Describe the features of a voucher system and list typical supporting documents for a voucher.

The bank reconciliation

A $140 petty cash fund has cash of $20 and receipts of $117. The journal entry to replenish the account would include a credit to

List the objectives of internal control and give an example of how each is implemented. Internal control provides reasonable assurance that

Following the completion of the bank reconciliation, an adjusting entry was made that debited cash and credited Interest Revenue. Therefore the bank reconciliation must have included an item that was

Which one of the following below is not an element of internal control?

On the bank's accounting records, customers' accounts are normally shown as

The debit recorded in the journal to reimburse the petty cash fund is to

Which one of the following would not cause a bank to debit a company's account?

A $100 petty cash fund contains $91 in petty cash receipts, and $4.75 in currency and coins. The journal entry to record the replenishment of the fund would include a

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

A voucher is usually supported by

There are two internal control objectives and they are to ensure accurate financial reports, and ensure compliance with applicable laws.