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Exam 7: Internal Control and Cash

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Question 71

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List the principal advantages of electronic funds transfers.

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EFTs cost less than receiving cash payme...

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Question 72

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Which one of the following reflects a weak internal control system?

A) all employees are well supervised
B) a single employee is responsible for comparing a receiving report to an invoice
C) all employees must take their vacations
D) a single employee is responsible for collecting and recording of cash

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

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Question 73

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The main reason that the bank statement cash balance and the company's cash balance do not initially balance is due to timing differences.

Accompanying the bank statement was a debit memo for bank service charges.On the bank reconciliation,the item is

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Consider the following information taken from the cash account.Assume cash payments were 80% of collections. How much was the beginning balance of the cash account?

For efficiency of operations and better control over cash,a company should maintain only one bank account.

Bank reconciliation information for Kaden Co.for May 31 is as follows: ​ ​ Record the appropriate journal entry for Kaden Co.

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430.This item would be included on the bank reconciliation as a(n)

Which one of the following is not a factor that influences a business's control environment?

If the balance in Cash Short and Over at the end of a period is a credit,it should be reported as an "other income" item on the income statement.

You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or decrease your company's bank account balance.Complete the following table to help your new staff understand.

The petty cash fund eliminates the need for a bank checking account.

Two features of internal control are presented in the following sections.Each is followed by a list of four irregularities that occurred in processing data.Identify the one irregularity from each list that would be discovered or prevented by the feature of internal control described.

Journalize the entries to record the following: Sept.1 Established a petty cash fund of $350. 30 The amount of cash in the petty cash fund is now $130.The fund is replenished based on the following receipts: office supplies,$116; postage,$100. Journal

Cash equivalents

In preparing a bank reconciliation,the amount of deposits in transit is deducted from the balance per bank statement.

A bank reconciliation should be prepared

List the objectives of internal control and give an example of how each is implemented.

A business that requires all cash payments be made by check can not use a petty cash system.