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Exam 8: Cash and Internal Controls

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Question 21

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Describe the net method of accounting for purchases. Why might companies use the net method?

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The net method of accounting for purchas...

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Question 22

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Electronic funds transfers (EFTs)are decreasingly used by companies due to the inconvenience and high cost.

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Question 23

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The entry to record reimbursement of the petty cash fund for postage expense should include:

The number of days' sales uncollected:

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) :

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

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

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation. _____ 1. Bank service charges _____ 2. Outstanding checks _____ 3. Deposits in transit _____ 4. NSF check _____ 5. Interest on a checking account _____ 6. The company properly wrote a check for $95.80 that the bank incorrectly paid as $9.58. 7. The bank printed checks for the depositor for a fee. _____ 8. Bank debit memorandum _____ 9. Bank credit memorandum _____ 10. The bank collected a $1,000 note for the depositor.

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 $1,010. The proper entry to account for this excess is:

Explain the difference between cash and cash equivalents.

The Petty Cash account is a separate bank account used for small amounts.

All of the following are true of the number of days' sales uncollected ratio except:

The following information is available for Fenton Manufacturing Company at June 30: $\begin{array}{|l|r|}\hline\text { Cash in bank account } & \$ 11,455 \\\hline \text { Inventory of postage stamps } & \$ 74 \\\hline \text { Money market fund balance } & \$ 10,400 \\\hline \text { Petty cash balance } & \$ 350 \\\hline \text { NSF checks from customers returned by bank } & \$ 867 \\\hline \text { Postdated checks received from customers } & \$ 791 \\\hline \text { Money orders } & \$ 290 \\\hline \text { A nine-month certificate of deposit maturing on December 31 of } & \$ 6,000 \\\text { current year }\\\hline\end{array}$ Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

Internal control policies and procedures have limitations not including:

Basic bank services do not include:

Money orders, cashier's checks, and certified checks are all examples of cash.

On March 1, a company established a $75 petty cash fund. On March 12, the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25; postage, $19.50; and office supplies, $36. Give the general journal entry to reimburse the fund and to increase its amount to $150 on March 12.

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

After preparing a bank reconciliation, adjustments must be made for items reconciling the book balance.