accounting chap 9 smartbook

Identify when the Petty Cash fund is debited or credited by selecting the correct answer below.

-When the account is increased -When the account is created -When the account is reduced

All of the following describe blockchain:

-blockchain is continuously and simultaneously updated and verified -blockchain makes it more difficult for the ledger to be modified without a detailed record of changes

Describe the internal control principle of separating recordkeeping from custody of assets by completing the following sentence. A person who ____ (identifies/controls/recommends) or has access to an asset must (always/not/) ____ keep that asset's accounting records.

-controls -not

Review the following statements and select the ones which accurately describe a Petty Cash fund. Select all answers which apply.

-It is established to pay for small payments like low-cost supplies and shipping fees, etc. -It is an asset reported on the balance sheet.

Identify which of the items below are goals of good cash management. (Check all that apply.)

-Keep a minimum level of cash necessary to operate. -Plan cash receipts to meet cash payments when due.

Which of the statements below describe the goals and principles of cash management?

-Keep a minimum level of cash necessary to operate. -Plan cash receipts to meet cash payments when due. -Money should be spent only when it is available. -Encourage quick collection of receivables.

Each of the following are types of technological impacts related to internal control: (Check all that apply.)

-new evidence of processing -separation of duties -more extensive testing of records -reduced processing errors

Each of the following are types of technological impacts related to internal control:

-separation of duties -reduced processing errors -new evidence of processing -more extensive testing of records

At the end of the month, Brown Co.'s petty cash fund contains $4 in cash and receipts for postage of $50 and delivery expenses of $46. It started out with $100 in the fund at the beginning of the month. Brown Co.'s journal entry to replenish the fund would include which of the following?

Cash is credited for $96.

Which of the statements below describes the internal control principle of applying technological controls?

Technological controls, such as time clocks and cash registers, improve the effectiveness of controls.

What is the purpose of internal controls?

To help managers know if the business is receiving the assets and services it has paid for.

An owner of a small business usually knows if the business is receiving the assets and services the company paid for.

True

Regular and independent reviews should be done by Blank______.

auditors not directly involved in the activities

A good internal control to protect cash is to make cash payments using

checks

Choose the list below that contains only cash or cash equivalents.

customer checks, money orders, certified checks

Brown Co. decides to increase the amount in its petty cash fund from 100 to $150. To show this increase in the petty cash account, you would:

debit Petty Cash for $50.

Auditors focus more on testing the Blank______ of a company's blockchain processes and technology than on verifying the Blank______ of its output.

effectiveness/accuracy

Good recordkeeping helps protect assets and helps managers:

monitor company activities

A person who has access to an asset must Blank______ access to that asset's accounting records.

not have

Responsibility for a task should be clearly established and assigned to:

one person

The triple threat of fraud involves:

opportunity, pressure, rationalization

Bonding employees who handle cash is important because it:

reduces risk of theft

The internal control of ____ of duties means that the responsibility for a transaction should be divided between two or more individuals.

segregation

Describe what a petty cash fund is by completing the following sentence. A petty cash fund is used for ____ (large/small) payments.

small

An ID scanner is a type of ____ control.

technological

Cash equivalents include short term investments within

three months of their due date

Which of the answers below correctly describe the Cash Over and Short account? (Check all that apply.)

-A debit balance reflects an expense. -It is an income statement account. -It records the effects of cash overages and cash shortages.

Jackson Co. needs to replenish its petty cash fund. Currently, it contains $5 in cash and receipts for supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate the journal entry to replenish the account and recognize the cash shortage by choosing the correct actions from those given below. (Check all that apply.)

-Cash Over and Short is debited for $6. -Delivery Expense is debited for $49. -Supplies Expense is debited for $40. -Cash is credited for $95.

Jackson Co. needs to replenish its petty cash fund. Currently, it contains $11 in cash and receipts for supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate the journal entry to replenish the account by choosing the correct actions from those below.

-Cash is credited for $89. -Supplies Expense is debited for $40. -Delivery Expense is debited for $49.

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below

-Cash payments are made by check. -Handling cash is separate from recordkeeping of cash. -Cash receipts are promptly deposited in a bank.

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below.

-Cash receipts are promptly deposited in a bank. -Handling cash is separate from recordkeeping of cash. -Cash payments are made by check.

Which of the following are principles of internal control?

-Divide responsibility for related transactions. -Establish responsibilities. -Perform regular and independent reviews. -Maintain adequate records.

Which of the statements below describe the goals and principles of cash management? (Check all that apply.)

-Encourage quick collection of receivables. -Plan cash receipts to meet cash payments when due. -Money should be spent only when it is available. -Keep a minimum level of cash necessary to operate.

Identify the principles of internal control by selecting the correct answers below. (Check all that apply.)

-Insure assets. -Maintain adequate records. -Apply technological controls. -Separate recordkeeping from custody of assets. -Perform regular and independent reviews. -Establish responsibilities.

Summarize the internal control procedure of maintaining adequate records by selecting the correct answers below.

-Reliable records are a source of information that managers use to monitor activities. -Keeping detailed records makes it unlikely that assets are lost or stolen without detection.

Which of the statements below explains how technology has impacted internal control systems?

-Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft. -Technology has reduced the number of processing errors. -Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry.

A cash register tape reflected total sales equaling $100, but the cash in the cash register drawer equaled $105. Review the statements below and determine which is correct regarding this discrepancy.

-The Sales account will be credited for $100. -The Cash Over and Short account will be credited for $5. -The extra $5 collected will be treated as a miscellaneous revenue. -The Cash account will be debited for $105.

Determine which of the statement(s) are correct if a Petty Cash account is not replenished at the end of the accounting period.

-The balance sheet would show an overstated cash asset. -Expenses would not be recorded in the period in which they were incurred. -The income statement would reflect a net income amount that was too high.

Determine which of the statements below describes a petty cash receipt. (Check all that apply.)

-The petty cashier must present all paid receipts to the company cashier in order to replenish the fund. -Any person wishing to withdraw funds from a petty cash fund must complete a petty cash receipt. -A petty cash receipt is sometimes called a petty cash ticket. -A petty cash receipt will have a signature line for the person receiving a payment from the fund.

Determine which of the statements below are accurate regarding how a petty cash fund is created and used in a business.

-The sum of all petty cash receipts plus the remaining cash should equal the total of the fund amount at any given time. -The petty cashier is responsible for making payments from the petty cash fund. -A check is drawn by the company cashier to establish the petty cash fund. -The petty cashier is responsible for keeping the cash in the fund safe.

Describe the internal control principle of dividing responsibility for related transactions by selecting the correct statements below.

-This principle is often called separation of duties. -This principle helps to make sure that the work of one individual acts as a check on another individual's work on a related transaction. -Examples of transactions with divided responsibility are placing inventory orders and paying vendors.

Summarize the internal control principle of establishing responsibility by completing the following sentence. Proper internal control means that responsibility for a ____ (task/shortage/sale) is clearly ____ (posted/established/compensated) and assigned to one person.

-task -established

Jackson Brothers established a petty cash fund of $200 at the beginning of the year, but it decides to reduce the amount in the fund to $130. Demonstrate the correct journal entry to reduce the amount in the account by choosing the correct action from those given below.

Cash is debited for $70 and Petty Cash is credited for $70.

The cash in a cash register equaled $100, but the record of cash receipts/sales equaled $102. Determine which of the following entries is correct to record cash sales and the shortage.

Debit Cash $100; debit Cash Over and Short $2; and credit Sales $102.

Which statement below describes the internal control procedure of insuring assets and bonding key employees?

Insuring assets against casualty and bonding employees who handle cash, reduces risk of loss.

Jackson Brothers decided to create a petty cash fund. They estimated that $200 would be needed in the fund. Demonstrate the correct journal entry to create the account by choosing the correct action from those below.

Petty Cash is debited for $200; Cash is credited for $200.

Which of the statements below explains the internal control principle of performing regular and independent reviews?

Regular reviews of internal control systems are needed to ensure that procedures are followed.