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Exam 8: Cash and Internal Controls

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Question 101

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A set of procedures and approvals for verifying, approving, and recording obligations for eventual cash disbursement, and for issuing checks for payment only of verified, approved, and recorded obligations is referred to as a(n) :

A) Cash disbursement system.
B) Cash control system.
C) Internal cash system.
D) Petty cash system.
E) Voucher system.

F) None of the above
G) A) and E)

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Question 102

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

A) True
B) False

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Question 103

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In the process of reconciling its bank statement for April, Donahue Enterprises' accountant compiles the following information: $\begin{array} { | l | r | } \hline \text { Cash balance per company books on April 30 } & \$ 6,275 \\\hline \text { Deposits in transit at month-end } & \$ 1,300 \\\hline \text { Outstanding checks at month-end } & \$ 620 \\\hline \text { Bank charge for printing new checks } & \$ 45 \\\hline \text { Note receivable and interest collected by bank on Donahue's behalf } & \$ 770 \\\hline \text { A check paid to Donahue during the month by a eustomer is returned by the } & \$ 480 \\\text { bank as NSF } & \\\hline\end{array}$ The adjusted cash balance per the books on April 30 is:

The document the purchasing department sends to the vendor that is used to place an order is the ^________.

Meng Co. maintains a $300 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $80 for office supplies, $160 for merchandise inventory, and $20 for miscellaneous expenses. There is a cash shortage of $8. - Based on this information, the amount of cash in the fund before the replenishment is:

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

Because employees know that bonding is an insurance policy against loss from theft, bonding does not generally discourage loss from theft.

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

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.

A sales system with pre-numbered, controlled sales slips is an example of the internal control ^{principle of ________}.

A company had $43 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:

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 voucher system establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.

Cash registers, time clocks, and personal identification scanners are examples of technologies that can improve internal control.

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

On a bank statement, deposits are shown as ________because the depositor's account is a liability on the bank's records

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

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

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.

A check involves 3 parties: a maker who signs the check, a payee who is the recipient, and a bank on which the check is drawn.