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Exam 6: Internal Control and Accounting for Cash

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Question 21

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Which internal control procedure is a deterrent to corruption?

A) Segregation of duties
B) Physical controls
C) Fidelity bonding
D) Use of prenumbered documents

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

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Question 22

Multiple Choice

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Which of the following entries would be required to establish a $500 petty cash fund?

A)
B)
C)
D)

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

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Question 23

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All journal entries made related to bank reconciliations include an expense or revenue account.

While performing the monthly bank reconciliation,the bookkeeper for Avon Company made the journal entry for a bank service charge of $20.Which of the following correctly shows the effect of the entry on the financial statements?

A well-designed system of internal controls will eliminate all fraud.

Which of the following is not a common internal control procedure over cash payments?

Which of the following statements about the materiality concept is not true?

The April 30 bank statement for Trimble Corporation shows an ending balance of $34,351.The unadjusted cash account balance was $28,250.The accountant for Trimble gathered the following information: There was a deposit in transit for $4,240. The bank statement reports a service charge of $39. A credit memo included in the bank statement shows interest earned of $95. Outstanding checks totaled $10,935. The bank statement included a $650 NSF check deposited in April. What is the true cash balance as of April 30?

Typical adjustments to the unadjusted bank balance on a bank reconciliation include deposits in transit and outstanding checks.

What account is used to record the amount of cash shortages or overages relative to a petty cash system?

Which of the following adjustments reflected on a bank reconciliation would not require an adjusting journal entry?

In preparing the April bank reconciliation for Oscar Company,it was discovered that on April 10 a check was written to pay delivery expense of $45 but the check was erroneously recorded as $54 in the company's books.Which of the following journal entries would correct this error?

The owner of Barnes Company established a petty cash fund amounting to $400.What is the effect on the financial statements of the entry to record this transaction?

How is a customer's NSF check reflected on a bank reconciliation?

The primary focus of financial statement audits is the discovery of fraud.

Owen Company's unadjusted book balance at June 30 is $9,700.The company's bank statement reveals bank service charges of $45.Two credit memos are included in the bank statement: one for $900,which represents a collection that the bank made for Owen,and one for $50,which represents the amount of interest that Owen had earned on its interest-bearing account in June.What is the true cash balance?

While performing its monthly bank reconciliation,the bookkeeper for Mosaic Company discovered that a check written for $421 for advertising expense was recorded in the firm's books as $241.Which of the following shows the effect of the correcting entry on the financial statements?

Which of the following describes an activity that reduces a company's bank account balance?

Blake Company established a petty cash fund in the amount of $400.At the end of the accounting period,the petty cash box contained receipts for expenditures amounting to $180 and $215 in cash.If the entries to record the disbursements and to replenish the fund are combined,what effect will the entries to replenish the fund have on total assets and expenses?

A review of the bank statement and accounting records of Blake Company revealed the following items: -Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?