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Exam 7: Internal Control and Cash

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Question 51

Multiple Choice

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

A) remittance advice
B) voucher
C) debit memo
D) credit memo

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

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Question 52

True/False

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Separating the responsibilities for purchasing,receiving,and paying for equipment is an example of the control procedure: separating operations,custody of assets,and accounting.

A) True
B) False

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Question 53

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

The Sarbanes-Oxley Act requires that financial statements of all public companies report on management's conclusions about the effectiveness of the company's internal control procedures.

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:

You began your new job as the accountant for Morton Company.You were surprised to find that the company had a $2,000 petty cash fund,which sits in the break room.The president of the company told you: "Our petty cash system here works quite smoothly.Since everyone is honest here,everyone has access to the fund for incidentals that might pop up in the course of the business day.Most of these situations don't have any receipts tied to them,so I just put the money back in the fund when my secretary tells me that we have run out of petty cash and we debit the amount to Miscellaneous Expense." ​ ​ ​(a)Should you implement some controls on petty cash? Why? (b)If so,what controls could be used for petty cash?

Create an outstanding checks list for Madison at the end of May. 2.What is the total amount of checks that cleared the bank (written in May)?

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation.Calculate the adjusted cash balance per books on May 31. ​

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

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

The cash account in the company's ledger is a(n)

Which of the following would not be included with the cash and cash equivalents on the balance sheet?

A voucher is a form on which is recorded pertinent data about a liability and the particulars of its payment.

The following data were gathered to use in reconciling the bank statement of Build-A-Lot: ​ (1)What is the adjusted balance on the bank reconciliation? (2)Journalize any necessary entries for Build-A-Lot based on the bank 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 a(n)

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer.What entry is required in the company's accounts?

When a firm uses internal auditors,it is adhering to which of the following internal control elements?

A firm's internal control environment is not influenced by

The bank statement for Farmer Co.indicates a balance of $7,735.00 on June 30.After the journal entries for June had been posted,the cash account had a balance of $4,098.00.Prepare a bank reconciliation on the basis of the following reconciling items: ​

A voucher is usually supported by