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

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Question 51

Multiple Choice

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Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -bank service charge

A) added to the company's books
B) subtracted from the company's books
C) added to the bank statement balance
D) subtracted from the bank statement balance

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

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verified

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Question 52

True/False

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A check for $342 was erroneously charged by the bank as $432. In order for the bank reconciliation to balance, you must add $90 to the bank statement balance.

A) True
B) False

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Question 53

True/False

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

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.

For efficiency of operations and better control over cash, a company should maintain only one bank account.

A voucher is a written authorization to make a cash payment.

A voucher system is an example of an internal control procedure over cash payments.

The portion of an invoice that is returned with payment is a

Using the following information, prepare a bank reconciliation for Miller Co. for August 31: a) The bank statement balance is $4,690 b) The cash account balance is $5,080. c) Outstanding checks amounted to $715. d) Deposits in transit are $1,020. e) The bank service charge is $40. f) A check for $72 for supplies was recorded as $27 in the ledger.

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

Roper Electronics received its bank statement for the month of August with an ending balance of $11,740. Roper determined that check #613 for $155 and check #601 for $420 were both outstanding. Also, a $6,900 deposit for August 30 was in transit as of the end of the month. Northern Regional Bank also collected a $5,000 notes receivable on August 1 that was issued March 1. Accrued interest is $250. Northern Regional Bank charged a $35 fee for the collection service. The bank statement reveals a bank service charge of $20. A customer check for $68 was returned with the bank statement marked "NSF." The ending balance of the Roper cash account is $12,938. Prepare a bank/account reconciliation and any necessary journal entries for the reconciliation.

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)

The following data is from the Autumn Company for the past four years. Calculate the following:

Cash equivalents include

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -NSF check

Gunnar Company gathered the following reconciling information in preparing its September bank reconciliation. Calculate the adjusted cash balance per books on September 30. $\begin{array} { | l | l | } \hline \text { Cash balance per books, } 9 / 30 & \\\hline \text { Deposits in transit } & \\\hline \text { Notes receivable and interest collected by bank } & \\\hline \text { Bank charge for check printing } & \\\hline \text { Outstanding checks } & \\\hline \text { NSF check } & \\\hline\end{array}$

A firm's internal control environment is not influenced by

In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the balance per company's records.

The bank reconciliation

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