AC Ch.5 Learnsmart

A company has a $8,000 cash balance per its books. The bank statement has a balance of $8,450. The bank reconciliation included $800 of deposits-in transits, $500 of checks outstanding, EFTs of $1,000 were received from customers, a $200 NSF check from a customer, and a $50 bank service change. Given the following reconciling items, the up-to-date cash balance equals ______.

$8,750 = $8,000 + $500 + $200 + $50

Which parts of the Sarbanes-Oxley (SOX) Act may encourage employees to be honest?

1. Code of ethics 2. Anonymous tip lines 3. Whistle-blower protection

The Sarbanes-Oxley (SOX) Act provides increased regulations for _____.

1. Corporate executives 2. Auditors 3. Internal Controls

Bank reconciliations are needed to reconcile for _______.

1. Deposits in transit 2. Outstanding checks

The benefits of internal control procedures are that they ______.

1. Improve the efficiency and effectiveness of operations 2. Enhance the reliability of accounting information 3. Protect against theft of assets

Deposits in _____ are added to the _____ (bank/book) side of the bank reconciliation

Transit, Bank

True or False: Committing financial fraud can result in stiff penalties, including fines and jail sentences.

True

NSF checks from customers should be a _____ on a bank reconciliation

book

When a check is presented to a bank for payment & the amount is deducted from the payer's account the check is said to have ________ the bank.

cleared

Which of the following is subtracted from the bank balance on a bank reconciliation?

outstanding checks

A bank ______ is an internal report used to compare the bank statement with the company's cash records and should be prepared by an employee whose duties are separate from recording and handling of cash.

reconciliation

Comparing two sets of records is called _____.

reconciling

In a bank reconciliation, an outstanding check is _____.

deducted from the bank balance

To segregate duties involving cash receipts, specific responsibilities are assigned to various employees. Put the following steps in the correct chronological order.

1. Cashiers are responsible for collecting cash and issuing a receipt at the point of sale. 2. A supervisor is responsible for collecting the cash at the end of each cashier's shift. 3. Members of the accounting department are responsible for ensuring that cash sales are properly recorded

A goal of the Sarbanes-Oxley Act is improving corporations' internal controls. Which of these may accomplish this goal?

1. External auditors must test the effectiveness of the company's internal controls 2. Marketing managers must determine whether the marketing team is submitting accurate sales and expense reports 3. An audit committee of independent directors oversees financial matters of the company

Place the order of the steps in documenting and controlling purchases in a voucher system with the first step listed on the top and final step at the bottom.

1. Request goods or services by submitting a purchase requisition 2. Prepare a purchase order after suppliers and prices have been approved 3. Prepare a receiving report 4. Prepare a supplier invoice and prepare the journal entry

The Sarbanes-Oxley (SOX) Act provides increased regulations for _____.

1. auditors 2. Internal controls 3. Corporate executives

Match the principles of Internal control with the accounting department's internal control responsibility described.

Independent verification - The accounting department compares the cashier's count sheet to the cash register and to the bank deposit slip. Document procedures - The accounting department records a journal entry for the cash receipts. Segregation of duties - The accounting does not have access to the cash.

Match the principle of internal control with the supervisor's internal control responsibility described

Independent verification - The supervisor reconciles the cashier's count sheet to the cash collected. Restrict access - The supervisor is responsible is responsible for keeping the cash safe and getting the cash to the bank. Document procedures - The supervisor prepares a deposit slip Segregation of duties - The supervisor forwards the verified deposit slip to the accounting record to record the cash receipts.

This month's bank statement shows interest earned of $45. How would this item be treated on the bank reconciliation?

It would be added to the book balance.

An internal control system consists of actions taken to achieve objectives. Match the appropriate description with each objective of an internal control system

Operations - Objective is to ensure efficient and effective completion of work and the protection of assets Reporting - Objective to produce reliable and timely accounting information Compliance - Objective is to focus on adhering to laws and regulations