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Exam 6: Cash,fraud,and Internal Controls

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Question 81

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A bank reconciliation explains any differences between the checking account balance on the depositor's records and the balance reported on the bank statement.

A) True
B) False

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Question 82

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On May 1,a company established a $125 petty cash fund.On May 22,the petty cash fund contains $6 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $25; postage,$21; and office supplies,$66.Record the general journal entry to reimburse the fund.

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Question 83

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What is a voucher system and what are the two areas for which it establishes control procedures?

The following information is available for Fenton Manufacturing Company at June 30: Based on this information,Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Internal control systems are:

At the end of the day on March 15,the cash register's record shows $1,957,but the count of cash in the register is $1,965.Prepare the general journal entry to record the day's cash sales.

Approved vouchers are recorded in a journal called the voucher register.

Identify each of the following items 1 through 10 as either (A)cash or (B)cash equivalent. _____ 1.Coins _____ 2.Petty cash _____ 3.Three-month certificate of deposit _____ 4.Short-term investment in commercial paper _____ 5.Currency _____ 6.Certified check _____ 7.Cashier's check _____ 8.Sixty-day certificate of deposit _____ 9.Money orders _____ 10.U.S.treasury bills

Since petty cash is concerned with such small amounts of cash,it is not necessary to document all transactions with a petty cash receipt.

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ________.

During the month of July,Clanton Industries issued a check in the amount of $845 to a supplier on account.The check did not clear the bank during July.In preparing the July 31 bank reconciliation,the company should:

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

A bank does not reduce the account of the depositor of which of the following?

Technologically advanced accounting systems rarely need monitoring for errors because computers always process transactions correctly.

Plenty Co.established a petty cash fund of $150 on October 1.On October 10,the petty cash fund was replenished when there was $49 remaining and there were petty cash receipts for: office supplies,$47; transportation-in on inventory purchased,$32; and postage,$22.On October 15,the petty cash fund was decreased to $125 in total.Plenty Co.uses the perpetual inventory system.Record the above transactions in general journal form.

A company's internal control system:

Managers place a high priority on internal control systems because the systems assist managers in all of the following except:

The document that the purchasing department prepares and sends to the vendor to place an order is called the:

A key factor in a voucher system includes all of the following except:

Vouchers should be used for purchases of inventory and all other expenditures made within a company.