Chapter 8 Quiz

T/F A petty cash fund is used to pay relatively large amounts.

False

T/F A voucher is a written authorization to make a cash payment.

True

T/F Expenditures from a petty cash fund are documented by a petty cash receipt.

True

T/F For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

True

T/F Money orders are considered cash.

True

The cash account in the company's ledger is a(n)

asset with a normal debit balance

EFT

can process certain cash transactions at less cost than using the mail would incur

"To maintain public confidence and trust in the financial reporting of companies" is the purpose of

Sarbanes-Oxley

The amount of cash to be reported on the balance sheet at June 30 is the

adjusted balance appearing in the bank reconciliation for June 30

A bank reconciliation should be prepared periodically because

any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected

A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account would include a Cash Short and Over Amount = Petty Cash Fund - Cash in Petty Cash Fund - Cash Receipts = $150 - $54 - $83 = $13 The journal entry to replenish the account would include a debit to Cash Short and Over account for $13.

debit to Cash Short and Over for $13

Entries are made to the petty cash account when

establishing the fund

Internal control does not consist of policies and procedures that

guarantee the company will earn a profit

The bank reconciliation

is part of the internal control system

Cash equivalents include

money market accounts and commercial paper

A firm's internal control environment is not influenced by

monitoring policies

The objectives of internal control are to

provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with

Sarbanes-Oxley applies to

publicly held companies

An element of internal control is

risk assessment

Which of the following would not be included with the cash and cash equivalents on the balance sheet?

short-term receivables