FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Cash and Internal Controls

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

In year 1 a company had net sales of $50,000 and ending accounts receivable of $2,000.In year 2 this company had net sales of $80,000 and ending accounts receivable of $4,000.Use days' sales uncollected to determine which of the following statements is true:.

A) Days' sales uncollected in year 1 is 14.6 days and in year 2 is 18.25 days. This measure indicates that the company's liquidity is declining.
B) Days' sales uncollected in year 1 is 14.6 days and in year 2 is 18.25 days. This measure indicates that the company's liquidity is improving.
C) Days' sales uncollected in year 1 is 25 days and in year 2 is 20 days. This measure indicates that the company's liquidity is declining.
D) Days' sales uncollected in year 1 is 25 days and in year 2 is 20 days. This measure indicates that the company's liquidity is improving.
E) Days' sales uncollected in year 1 is .04 days and in year 2 is .05 days. This measure indicates that the company's liquidity is improving.

F) A) and E)
G) C) and E)

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Why is it a matter of good internal control to deposit all cash receipts daily and make all payments for goods and services by check?

A) When no paper documents are required, there is increased convenience and lower cost
B) These actions control the access to cash and create an independent record of all cash activities.
C) These procedures result in a more extensive testing of a company's records.
D) The Sarbanes-Oxley Act requires these steps be taken by each publicly traded company.
E) These procedures allow management to determine if projected cash receipts and disbursements came in over or under budgeted amounts.

F) A) and D)
G) B) and C)

Correct Answer

verified

Show Answer

Question 43

Essay

Review LaterAdd Note

Match each of the following terms with the appropriate definitions.

Identify whether each of the following items would on appear on the bank side or the book side of a bank reconciliation:

On a bank statement,deposits are shown as __________________,because the depositor's account is a liability on the bank's records.

The following information is available to reconcile Sleepy Time Bedding's book balance of cash with its bank statement cash balance as of July 31: What is the appropriate journal entry to record the collection made by the bank?

Cash includes currency,coins,and the deposits in most checking accounts.

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42,debit office supplies expense $27.33,debit cash over/short $2.19.If the original amount in petty cash is $320,how much is in petty cash before the reimbursement?

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $790 but was erroneously entered in the accounting records as $970.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?

Receiving and paying for merchandise should be performed by one individual or department to streamline a voucher system and simplify the procedures for purchasing.

When two clerks share the same cash register,which internal control principle is violated?

When a petty cash fund is in use:

Technology such as cash registers,check protectors,time clocks,and personal identification scanners can increase the strength of internal controls.

Collusion is when a person embezzles money from a company and tries to hide the evidence.

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42,debit office supplies expense $27.33,credit cash over/short $2.19.If the original amount in petty cash is $320,how much was the credit to cash for the reimbursement?

Match each of the following transactions with the applicable internal control principle.

Recording a purchase is initiated by an invoice approval,not an invoice.

The impact of technology on internal controls includes which of the following?

Hasbro had $2,816 million in sales and $555 million in ending accounts receivable for the current period.For the same period,Mattel reported $4,885 million in sales and $491 million in ending accounts receivable.Calculate the days' sales uncollected for both companies as of the end of the current period.Which company is doing a better job in managing the collection of its receivables?

If the Cash Over and Short account has a debit balance at the end of the period,the amount is reported as miscellaneous revenue.