Accouting I: Chapter 7
A petty cash fund is used to pay relatively large amounts.
.F
After a bank reconciliation is completed, journal entries are prepared for items in the balance per company's records as well as items in the balance per bank statements.
F
For efficiency of operations and better control over cash, a company should maintain only one bank account.
F
If an adjustment for an NSF check is made in a company's bank reconciliation, then the company must have written a bad check during the month.
F
If the balance in Cash short and over at the end of a period is a credit, it indicated that cash shortages have exceeded cash overages for the period.
F
In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash
F
In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records.
F
In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement
F
Sarbanes Oxley requires companies to maintain strong and effective internal controls and thus deter fraud and prevent misleading financial statements.
F
Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting
F
The bank often informs the company of bank service charges by including a credit memo with the monthly bank statement
F
The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance in the petty cash account.
F
There are three internal control objectives and they are to safeguard the company's reputation, ensure accurate financial reports, and ensure compliance with applicable laws.
F
When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished.
F
A check for $342 was erroneously charged by the bank as $432. In order for the bank reconciliation to balance, you must add $90 to the bank statement balance.
T
A customer's check received in settlement of an account receivable is considered cash
T
A voucher is a form on which is recorded pertinent data about a liability and the particulars of its payment
T
A voucher system is an example of an internal control procedure over cash payments
T
An example of good internal controls over cash payment is the taking of all cash discounts offered.
T
Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash.
T
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.
T
In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.
T
Internal control is enhanced by separating the control of a transaction from the record keeping function.
T
Sarbanes - Oxley's purpose is to maintain public confidence and trust in the financial reporting of companies.
T
The Sarbanes- Oxley Act applies only to companies whose stock is traded on public exchanges.
T
The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control
T
The main reason that the bank statements cash balance and the company's cash balance do not initially balance is due to timing differences.
T
Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is
a deduction from the balance per company's records
A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is
a promissory note left for collection
A voucher is usually supported by:
a supplier's invoice, a receiving report, and a purchase order
A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)
addition to the balance per the company's records
The cash account in the company's ledger is a(n)
asset with a normal debit balance
Journal entries based on the bank reconciliation are required in the company's account for
book affairs
EFT
can process certain cash transactions at less cost than by using
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a (n)
deduction from the balance per the company's records.
Which of the following would be subtracted from the balance per books on a bank reconciliation ?
error by the company in recording a check for $732 as $723
Internal control does not consist of policies and procedures that
guarantee the company will earn a profit
A necessary element of internal control is
information and communication
The bank reconciliation
is part of the internal control system
When a firm uses internal auditors, it is adhering to which of the following internal control elements?
monitoring
Which of the following should not be considered cash by an accountant?
postage stamps
Which one of the following is not a factor that influences a business's control environment?
proofs and security measures
The objectives of internal control are to:
provide reasonable assurance that assets are safeguarded and used for business purposes, business information is accurate, and laws and regulations are complied with
The portion of an invoice that is returned with payment is a
remittance advice