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Exam 6: Cash and Internal Controls

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Question 41

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Proper internal control would require that a department manager inform the purchasing department of its needs for additional merchandise by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

A) True
B) False

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Question 42

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The following account balances are taken from Everest Events at December 31. $\begin{array} { | l | r | r | } \hline & 2016 & 2015 \\\hline \text { Accounts receivable } & 170,230 & 260,450 \\\hline \text { Net sales } & 1,500,750 & 1,450,600 \\\hline\end{array}$ Calculate the number of days' sales uncollected for both years. According to this analysis, is the company's collection of receivables improving? Explain.

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Days' Sales Uncollected Ratio = Ending A...

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Question 43

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When a voucher system is used, an invoice approval is not needed as long as the purchase is evidenced by an invoice and purchase order.

Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.

A person who controls or has access to an asset must not keep that asset's accounting records. This describes the internal control principle of ________________________.

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

____________________ are short-term, highly liquid investment assets that are readily convertible to a known amount of cash.

An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n) :

A receiving report is a document used within a company to notify the appropriate persons that ordered goods have been received and to describe the quantities and condition of the goods.

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. Record the above transactions in general journal form.

A ____________________ is a report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

The use of electronic communication to transfer cash from one party to another is called __________________________________.

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.

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Ferguson Co. has a $200 petty cash fund. At the end of the first month the accumulated receipts represent $43 for delivery expenses, $127 for merchandise inventory, and $12 for miscellaneous expenses. The fund has a balance of $18. The journal entry to record the reimbursement of the account includes a:

The days' sales uncollected ratio measures the liquidity of accounts receivable.

A sales system with pre-numbered, controlled sales slips is an example of the internal control principle of _______________________.

Principles of internal control include all of the following except: