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Exam 8: Cash and Internal Controls

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Question 71

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It is generally not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.

A) True
B) False

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Question 72

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Assigning purchasing, receiving, and paying for merchandise to one department or individual is a way to streamline a voucher system.

A) True
B) False

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Question 73

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Two limitations of internal control systems are ________and________.

Pelcher Co. maintains a $400 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $110 for office supplies, $140 for merchandise inventory, and $70 for miscellaneous expenses. There is a cash overage of $4. - The journal entry to replenish the fund on January 31 is:

The number of days' sales uncollected:

A petty cash fund was originally established with a check for $100. On August 31, which is the period end, the petty cash fund included the following: $\begin{array} { | l | r | } \hline \text { Petty cash receipts: } & \\\hline \text { Postage } & \$ 43.50 \\\hline \text { Office supplies } & 11.85 \\\hline \text { Office equipment repair } & 39.00 \\\hline \text { Cash } & 4.25 \\\hline\end{array}$ Prepare the general journal entry to record the replenishment of the petty cash fund on August 31.

When a company purchases an insurance policy against losses from theft by an employee, that employee___________

Internal controls are crucial to companies that convert from U.S. GAAP to IFRS because of all of the following risks except:

On June 1, a company established a $75 petty cash fund. On June 27, the petty cash fund contains $5.25 in cash and the following paid petty cash receipts: postage, $19.50; office supplies, $36.25; and miscellaneous expense $14.00. Give the general journal entry to reimburse the fund on June 27.

Since petty cash is concerned with such small amounts of cash, it is not necessary to document all transactions with a petty cash receipt.

On a bank statement, deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.

Electronic funds transfers (EFTs) are decreasingly used by companies due to the inconvenience and high cost.

The Cash Over and Short account:

The document that the purchasing department prepares and sends to the vendor to place an order is called the:

The document the purchasing department sends to the vendor that is used to place an order is the__________ .

A company established a petty cash fund in April of the current year and experienced the following transactions affecting the fund during April. Prepare journal entries to establish the fund on April 1, to replenish it on April 25, and to record the increase in the fund on April 25. $\begin{array} { | l | l | } \hline \text { April } 1 & \text { Prepared a company check for } \$ 300.00 \text { to establith the petty cash fund } \\\hline 25 & \begin{array} { l } \text { Prepared a company check to replenith the fund for the following } \\\text { expenditures made since April } 1 .\end{array} \\\hline & \text { Paid \$84.50 for cleaning services. } \\\hline & \text { Paid \$84.00 for postage expense. } \\\hline & \text { Paid \$103.15 for offee supplies. } \\\hline & \text { Counted \$23.35 remaining in the petty cath box. } \\\hline 25& \text { The company decides to increase the fund by \$100. }\\\hline \end{array}$

A bank statement provided by the bank includes:

Cash, not including cash equivalents, includes:

When using a voucher system, what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is partof the internal control principle of ________ .