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Exam 6: Reporting and Analyzing Cash and Internal Controls

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Question 91

Multiple Choice

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The internal document that is prepared to notify the appropriate persons that ordered goods have been received and describes the quantities and condition of the goods is the

A) Purchase requisition
B) Purchase order
C) Invoice
D) Receiving report
E) Invoice approval

F) All of the above
G) C) and E)

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Question 92

Multiple Choice

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Mattel had net sales of $4,235 million and ending accounts receivable of $775 million its days' sales uncollected is equal to:

A) 298 days
B) 66.8 days
C) 19.4 days
D) 81.8 days
E) 65.2 days

F) A) and E)
G) B) and D)

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Question 93

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________________________ refers to a company's ability to pay for its short-term obligations.

An internal control system refers to the policies and procedures managers use to __________,ensure reliable accounting,promote efficient operations and urge adherence to company policies.

A company established a petty cash fund in May of the current year and experienced the following transactions affecting the fund during May: May 1 Establish petty cash account in the amount of $300 May 5 Paid for miscellaneous office supplies in the amount of $53.22 May 9 Reimbursed Human Resource Manager for business lunch,$45.09 May 15 Paid for minor landscaping services,$75.00 May 22 Paid $65.00 for postage May 31 Counted remaining cash and discovered that $56.34 remained Prepare the journal entry to reimburse the fund on May 31.

A company established a petty cash fund in February of the current year and experienced the following transactions affecting the fund during February: $\begin{array}{|c|c|l|}\hline \text { Feb. } & 1 & \text { Established a } \$ 250 \text { petty cash fund. } \\\hline & 5 & \text { Paid } \$ 55 \text { to acquire office supplies. } \\\hline & 8 & \text { Reimbursed the company controller for } \$ 30 \text { spent on beverages for recruits. } \\\hline & 18 & \text { Paid } \$ 45 \text { for postage. } \\\hline & 20 & \text { Paid } \$ 65 \text { for C.O.D. charges on merchandise inventory. } \\\hline & 25 & \text { Paid } \$ 50 \text { for janitorial services. } \\\hline & 28 & \begin{array}{l}\text { When sorting the petty cash receipts to replenish the fund, the custodian noted } \\\text { that there was } \$ 245 \text { in receipts and } \$ 10 \text { cash remaining. Also, a decision was } \\\text { made to reduce the fund to } \$ 200 \text { in total. }\end{array} \\\hline\end{array}$ Prepare the journal entry to reimburse the fund and to reduce its amount on February 28.

Basic bank services such as bank accounts,bank deposits and checking contribute to the control and safeguarding of cash.

The use of internal controls provides guaranteed protection against losses due to operating activities.

All disbursements from petty cash should be documented by a petty cash receipt.

Two sales clerks should not share the same cash register.This refers to the internal control principle of _______________________.

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

Assume that a buyer receives a shipment of MODEL SD010 with an invoice amount of $780,although $870 worth of goods were received.The purchase order was for $870.Since the difference was in the buyer's favor,the buyer's purchasing department should authorize payment of $780.

In order to streamline the purchasing process,department managers should place orders directly with suppliers.

Kim Jordan of New Belgium Brewing Company maintains a system of internal controls and managing cash.Identify some of these internal controls and explain how they contribute to the success of the company.

The internal controls of cash receipts aims to ensure that all cash received is properly recorded and deposited.

Define an internal control system and describe the purpose that it serves.

An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

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

Proper internal control means that the responsibility for a task is clearly established and assigned to one person.

A check that was outstanding on last period's bank reconciliation was not included with the cancelled checks returned by the bank this period.As a result,in preparing this period's reconciliation,the amount of this check should be: