FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Internal Control and Accounting for Cash

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following procedures are typically used when a petty cash fund is established?

A) Assigning a petty cash custodian
B) Use of petty cash vouchers
C) Physical control over the petty cash fund
D) All of these procedures are used when a petty cash fund is established

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

Correct Answer

verified

Show Answer

Question 22

Essay

Review LaterAdd Note

Review Later

How are petty cash funds typically maintained?

Correct Answer

verified

A petty cash fund is usually maintained ...

View Answer

Show Answer

Question 23

Essay

Review LaterAdd Note

Merrifield Lawn Care's bank statement at August 31 showed an ending balance of $23,716.87. The unadjusted cash account balance for Merrifield is $20,237.98. The following data were gathered by Merrifield's accountant: Check number 2143 was correctly written for $427. It was recorded in the company's books as $472 for utilities.Outstanding checks as of August 31: $7,128.71NSF check from customer: $71.82Debit memo for bank service charge: $8.00Credit memo related to interest earned: $10.00Deposits in transit: $3,625.00 Required:a)Determine the true cash balance by preparing a bank reconciliation as of August 31.

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

Is the establishment of a petty cash fund an asset source, asset use, asset exchange, or claims exchange transaction?

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

How are cash overages reported on the financial statements?

What is a fidelity bond and what is its purpose?

A bank statement debit memo describes a transaction that increases a customer's account balance.

What is the most favorable audit opinion that a company can receive on its financial statements?

Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter dollar amounts. Increase = I Decrease = D Not Affected = NA During the process of preparing the bank reconciliation, an employee for Heath Company discovered that a check written by Barrington Company had been charged to Heath Company's account.

What are non-sufficient funds (NSF)checks? How does a NSF check affect a bank reconciliation?

On April 30, Midwest Company established a petty cash fund of $1,000. On May 1, a disbursement of $355 was made from the fund for payment of delivery expense. The petty cash account has not been replenished. How would the disbursement affect the financial statements on May 1?

On November 30, Hernandez Company's bank statement showed an ending balance of $37,341. The following information is available about Hernandez's account: Debit memo in bank statement for bank service charge, $39Deposit in transit, $2,988Outstanding checks, $3,156Customer's NSF check for $723 was returned with the bank statement Required:a)Determine the true cash balance as of November 30.b)Determine the unadjusted balance of the company's Cash account as of November 30.

Even a good system of internal controls can be circumvented by collusion among employees.

Fern's Flowers established a $400 petty cash fund. The following expenditures were made from the fund: A count of the cash in the fund revealed a balance of $89.00. Required:a)Enter the event relating to establishing the fund into the horizontal financial statements model. Indicate dollar amounts of increases and decreases; for accounts that are not affected, indicate NA. For cash flows, show whether they are operating activities (OA), investing activities (IA), or financing activities (FA).

While preparing its bank reconciliation, Maynard Company determined that its bank had collected a $650 account receivable for the company and deducted a $25 collection fee. Which of the following shows the effect of this transaction on the financial statements?

How are outstanding checks shown on a bank reconciliation?

Preparing a bank reconciliation is a control activity.

The unadjusted cash account balance for Carson Company at December 31 is $12,615. The bank statement showed an ending balance of $18,250 at December 31. The following information is available from an examination of the bank statement and the company's accounting records: Check #433 for the purchase of inventory was written correctly and paid by the bank correctly for $432, but was recorded on the books at $234. Carson uses the perpetual inventory system. Required:a)Determine the true cash balance by preparing a bank reconciliation as of December 31.