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Exam 8: Internal Control and Cash

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Question 51

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

A) management's philosophy and operating style
B) organizational structure
C) proofs and security measures
D) personnel policies

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

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Question 52

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A backlog in recording transactions is an example of a warning sign from the accounting system.

A) True
B) False

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Question 53

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Groceries R Us, Inc. reported the following data in its annual report.​Cash and cash equivalents $2,280,000Cash flow from operations (240,000)​Required (a) What is the company's "cash burn" per month? (b) What is the company's ratio of cash to monthly cash expenses? (c) Interpret the ratio you computed in part b. What are the implications for Groceries R Us, Inc.?

When the voucher system is used, the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.

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

The following items may appear on a bank statement: 1.NSF check 2.EFT deposit 3.Service charge 4.Bank correction of an error from recording a $300 check as $30? Indicate whether the item would appear as debit or credit memo on the bank statement and whether the item would increase or decrease the balance of your account. Use the following format: $\begin{array}{ccc}&\text { App ears on the } \\&\text { Bank Statement as a } & \text { Increases (Decreases) the } \\&\text { a Debit or Credit } & \text { Balance of the Company's } \\\text { Item No. } &\text { Memo } & \text { Bank Account } \\\hline\end{array}$

Match each item to a bank statement adjustment, a company books adjustment, or either. -EFT deposit from a customer

A voucher is usually supported by

Consider the following journal entry made by Jones Company for one day's sales of a single cashier. What might have happened to create this amount of Cash Short and Over difference? Give three possible reasons for this difference.Cash2,235Cash Short and Over100Sales2,135

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

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

Match each item to a bank statement adjustment, a company books adjustment, or either. -A $1,000 note from one of your customers was collected by the bank

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

Match each item to a bank statement adjustment, a company books adjustment, or either. -Bank service charge

A customer's check received in settlement of an account receivable is considered cash.

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

A necessary element of internal control is

Thompson Company gathered the following reconciling information in preparing its October bank reconciliation:? $\begin{array} { | l | l | r | } \hline & \text { Cash balance per bank, October } 31 & \$ 17,000 \\\hline & \text { Note receivable collected by bank } & 4,800 \\\hline & \text { Outstanding checks } & 6,500 \\\hline & \text { Deposits in transit } & 3,000 \\\hline & \text { Bank service charge } & 50 \\\hline & \text { NSF check } & 2,300 \\\hline\end{array}$ Using the above information, determine the cash balance per books (before adjustments) for Thompson Company.

Internal control is enhanced by separating the control of a transaction from the record-keeping function.

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