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Exam 8: Cash and Internal Controls

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Question 1

Multiple Choice

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Outstanding checks refer to checks that have been:

A) Written, recorded, sent to payees, and received and paid by the bank.
B) Written and not yet recorded in the company books.
C) Held as blank checks.
D) Written, recorded on the company books, sent to the payee, but have not yet been paid by the bank.
E) Issued by the bank.

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

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Question 2

Multiple Choice

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A company made a bank deposit on September 30 that did not appear on the bank statement dated as of September 30. In preparing the September 30 bank reconciliation, the company should:

A) Deduct the deposit from the bank statement balance.
B) Send the bank a debit memorandum.
C) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance.
D) Add the deposit to the book balance of cash.
E) Add the deposit to the bank statement balance.

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

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Question 3

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Internal control in technologically advanced accounting systems depends more on the design and operation of the information system and less on the analysis of its resulting documents.

In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information: The adjusted cash balance per the books on September 30 is:

An invoice is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of sale.

A sales system with prenumbered, controlled sales slips is an example of the internal control principle of ______________________.

Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

Cash equivalents:

Cash equivalents:

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:

The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the ___________________.

The document that is an itemized statement of goods prepared by a vendor listing the customer's name, items sold, sales prices, and terms of the sale is the

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

Managers place a high priority on internal control systems because the systems assist managers in the:

The net method for recording purchases records the purchase invoice at its net amount of any cash discount.

The Discounts Lost account represents the savings earned in taking advantage of purchase discounts.

In reimbursing the petty cash fund:

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035. The proper entry to account for this excess includes a:

On June 3, a company received and recorded a $4,500 invoice for merchandise on which the terms were 2/10, n/60. The company records invoices at net amounts. On June 23, the company discovered that the invoice had been incorrectly filed and the discount lost. Prepare the June 3 general journal entry to record the purchase, the June 23 entry to record the discount lost, and the August 2 entry to record payment of the invoice.

During the month of September, Norris Industries issued a check in the amount of $845 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $854. The journal entry to correct this mistake when discovered will include: