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Exam 6: Internal Control and Accounting for Cash

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Question 41

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Which of the following is not a common feature of an internal control system?

A) Segregating duties
B) Performance evaluation
C) Bonding employees
D) Implementing the most effective marketing plan

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

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Question 42

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Establishment of a petty cash fund is an asset exchange transaction.

A) True
B) False

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Question 43

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Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter dollar amounts. Increase = I Decrease = D Not Affected = NA During the process of preparing the bank reconciliation, an employee for Heath Company discovered that Check #4261 for $65, used to pay an account payable, was recorded in the company books as $56.

Which of the following is not a common internal control procedure over cash payments?

Which of the following is not a common internal control procedure that would be implemented with regards to cash receipts?

What is a deposit in transit? How does a deposit in transit affect a bank reconciliation?

Which of the following is an internal control procedure used to safeguard a company's assets?

Which of the following statements about the materiality concept is not true?

Which of the following is not one of the nine features of an internal control system?

Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter dollar amounts. Increase = I Decrease = D Not Affected = NA In preparing the bank reconciliation for Heath Company, an employee discovered that the bank had collected one of the company's accounts receivable in the amount of $20,000.

Which of the following occurs when a company replenishes its petty cash fund?

What is a bank statement debit memo? What effect does a debit memo have on the customer's account balance?

Owen Company's unadjusted book balance at June 30 is $9,700. The company's bank statement reveals bank service charges of $45. Two credit memos are included in the bank statement: one for $900, which represents a collection that the bank made for Owen, and one for $50, which represents the amount of interest that Owen had earned on its interest-bearing account in June. What is the true cash balance?

If the financial statements cannot be relied upon because they contain one or more material departures from GAAP, what type of opinion will the auditor issue?

The purpose of a petty cash fund is to eliminate the need for control over a business's small cash disbursements.

Most audits result in unqualified audit opinions.

Which of the following statements is true with regards to financial statement audits?

Requiring segregation of duties in a business eliminates the need for the work of one employee to serve as a check on the work of other employees.

Rexrode Company's bank statement at January 31 showed an ending balance of $24,712.80. The unadjusted cash account balance for Rexrode is $21,245.75. The following data were gathered by Rexrode's accountant: Outstanding checks as of January 31: $4,895.44NSF check from customer: $183.62Debit memo for bank service charge: $20.00Credit memo for interest earned: $12.00Deposits in transit: $1,236.77 Required:a)Determine the true cash balance by preparing a bank reconciliation as of January 31.

A review of the bank statement and accounting records of Blake Company revealed the following items: Which of the item(s) would be subtracted from the company's unadjusted book balance to determine the true cash balance?