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

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Question 41

Multiple Choice

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

A) risk assessment
B) monitoring
C) information and communication
D) cost-benefit considerations

E) A) and B)
F) All of the above

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Question 42

Multiple Choice

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

A) debit balances
B) expenses
C) an asset
D) a liability

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

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Question 43

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The following data is from the Miser Company for years ended 2008-2011. Calculate the following:

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 doomsday ratio includes both cash and cash equivalents in the numerator.

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)

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.

Money market accounts,commercial paper,and United States Treasury Notes are examples of cash equivalents.

For each of the following,explain whether the issue would require you to prepare a journal entry for your company,assuming any original entry is correct.If an entry is required,please include it as part of your answer. (1)The bank recorded your deposit as $91 rather than the actual amount of $191. (2)Two outstanding checks amounted to $450. (3)Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $50 instead of $59. (4)The bank paid a check for $500 after the company had issued a stop payment and voided the check. (5)An EFT deposit was made by one of the company's customers,Atlas Design,for merchandise received.The sale had previously been recorded when shipped and was equal to the payment amount of $125.

If an adjustment for an NSF check is made in a company's bank reconciliation,then the company must have written a bad check during the month.

The type of account and normal balance of Petty Cash is a(n)

The Scharf Company is a retailer located in a state without sales tax.The following data was given to you to complete the transactions for the day's sales to be recorded.All cash drawers start with $100 in change. Record the Journal Entries for EACH cash register to determine the cashier's accuracy.

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

A voucher is usually supported by

Depositing all cash,checks,etc.in a bank and paying with checks is an internal control procedure over cash.

In preparing a bank reconciliation,the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.

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

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

Peaches,Inc.reported the following data in it's December 31,2011 annual report: Required: (1)What is the company's "cash burn" per month? (2)What is the company's ratio of cash to monthly cash expenses?

A firm's internal control environment is not influenced by