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Exam 4: Cash and Internal Controls

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Question 41

True/False

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Internal control is a company's plan to (1)improve the accuracy and reliability of accounting information and (2)safeguard the company's assets.

A) True
B) False

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Question 42

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Investing cash flows would include which of the following?

A) Payment of cash dividends to stockholders.
B) Purchase of office supplies with cash.
C) Purchase of a building with cash.
D) Cash sales to customers.

E) C) and D)
F) B) and C)

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Question 43

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Investing activities include cash transactions involving revenue and expense events during the period.

When a company pays for services received using a credit card,it should credit Accounts Payable.

The internal control component of information and communication relates to the effectiveness of accurately measuring and communicating business transactions.

What key piece of legislation was passed in response to corporate accounting scandals by Enron,WorldCom,and others?

The amount of cash reported in a company's balance sheet includes items acceptable for deposit in bank accounts,such as checks received from customers.

The Sarbanes-Oxley Act (SOX) mandates which of the following?

Checking actual outcome of individuals or processes against their expected outcome is an example of which detective control?

On May 31,Money Corporation's Cash account showed a balance of $10,000 before the bank reconciliation was prepared.After examining the May bank statement and items included with it,the company's accountant found the following items: $\begin{array}{lr}\text { Checks outstanding } & \$ 2,250 \\\text { Deposits outstanding } & 1,900 \\\text { NSF check } & 100 \\\text { Service fees } & 40\end{array}$ $\text { Error: Money Corp. wrote a check for } \$ 30 \text { but recorded it incorrectly for } \$ 300 \text {. }$ What is the amount of cash that should be reported in the company's balance sheet as of May 31?

Keeping supplies in a locked room with access allowed only to authorized personnel is an example of which preventive control?

Which employees have an impact on the operation and effectiveness of internal controls?

The amount of cash reported in a company's balance sheet includes currency,coins,and balances in savings and checking accounts,as well as items acceptable for deposit in these accounts,such as checks received from customers.

Indicate whether the firm should add or subtract each item below from its balance of cash or the bank's balance of cash in preparing a bank reconciliation.

After preparing the bank reconciliation,an NSF check would result in which of the following when recording the adjustment to the company's cash balance?

A company had the following transactions: 1.Paid $150 for office supplies using a debit card. 2.Purchased office equipment costing $700 using a credit card. 3.Paid utilities bill of $400 by issuing a check. Record each transaction.

Which of the following does not represent a major provision of the Sarbanes-Oxley Act?

Which of the following would NOT represent good controls over cash disbursements?

Issuing common stock for cash is considered a(n) :

The balance shown in the August bank statement of Colt Company was $23,200.After examining the August bank statement and items included with it,the company's accountant found: $\begin{array}{lr}\text { Checks outstanding } & \$ 4,300 \\\text { NSF check } & 140 \\\text { Note collected by bank for the Colt Company } & 1,200 \\\text { Deposits outstanding } & 1,800 \\\text { Bank service fees } & 60\end{array}$ What is the amount of cash that should be reported in the balance sheet as of August 31?