Chapter 7 Review

Which of the following is always added to the bank balance in a bank reconciliation?

Deposit in transit

Which of the following is NOT a part of the definition of internal control?

Encourage employees to change the company policies.

Which of the following is always added to the book balance in a bank reconciliation?

Interest Revenue

Abbot Company completed the bank reconciliation and needs to record the $30 service charge from the bank. The journal entry to record this transaction would be:

Debit to Bank Expense for $30 and credit to Cash for $30.

Abbott Company completed the bank reconciliation and needs to record the $10 earned in interest from the bank balance.

To record the interest received from our bank balance, we would debit Cash and credit Interest Revenue.

What is the cash ratio?

(Cash + Cash Equivalents)/ Total Current Liabilities

The _________ uses the remittance advices to record the journal entries to Cash and customer accounts.

Accounting Department (or bookkeeper)

which of the following is NOT a component of internal control?

Assignment of duties

After approving all documents from a shipment received, the purchaser sends a _______ to the vendor.

Check

The Sarbanes-Oxley Act requires companies to ________.

Conduct a review of internal controls and take responsibility for the accuracy and completeness of their financial reports.

The _________ compares the bank deposit to the journal entry for cash receipts to.....

Controller

The following was paid out of the Petty Cash account: $200 for Office Supplies $100 for Delivery Expense After counting the cash that is left in Petty Cash, $320 is needed to replenish the Petty Cash back to the original balance.

Debit Office Supplies for $200, Delivery Expense for $100, and Cash Short & Over for 20. Then credit Cash for 320.

The following was paid out of the Petty Cash account: $200 for Office Supplies $100 for Delivery Expense $300 is needed to replenish the Petty Cash back to the original balance. The journal entry to record the replenishing of Petty Cash would be:

Debit to Office Supplies for $200 and Delivery Expense for $100. Then credit Cash for $300.

To increase the amount in the current Petty Cash fund from $1000 to $1200, the journal entry would be:

Debit to Petty Cash for $200 and credit to Cash for $200.

The journal entry to set up a Petty Cash Fund for $500 to pay incoming delivery expenses would be:

Debit to Petty Cash for $500 and credit Cash for $500.

The following was paid out of the Petty Cash account: $4oo for Store Supplies $200 for Postage Expense After counting the cash that is left in Petty Cash, $560 is needed to replenish the Petty Cash back to the original balance. The journal entry to record the replenishing of the Petty Cash would be:

Debit to Store Supplies for $400 and Postage Expense for $200. Then credit Cash Short & Over for $40 and Cash for $560.

For each Petty Cash payment, the custodian of the account prepares an __________

Petty Cash Ticket

When an order is placed for merchandise, the purchaser sends an _________ to the vendor.

Purchase order

Shady Mills Company Cash account shows an ending balance of $1200. The bank statement shows an ending balance of $770. Additional information includes: $30 Service Charge $300 Deposit in transit $50 Outstanding Checks What is the adjusted bank balance?

The adjusted bank balance takes the ending bank statement balance of 770 + deposit in transit of 300 - outstanding checks of $30= $1020.

Shady Mills Company Cash account shows an ending balance of $1000. The bank statement shows an ending balance of $680. Additional information includes: $30 Service Charge $300 Deposit in transit $10 Interest earned on bank balance What is the adjusted book balance?

The adjusted book balance takes the ending Cash balance of $1000 + Interest Receivable of $10 - Service Charge of $30 =$980.