Chapter 7 Quick Check
Sahara Company's Cash account shows an ending balance of $650. The bank statement shows a $29 service charge and an NSF check for $150. A $240 deposit is in transit and outstanding checks total $420. What is Sahara's adjusted cash balance? $291 $829 $471 $470
Adjusted Cash Balance = Ending Cash Balance - Service Charge - NSF check = $650 - $29 - $150 = $471
Espinoza Air Conditioning & Heating had the following select financial data as of June 30, 2018. Cash $10,000 Cash Eq. $8850 Acc. Rec. $3,700 Total Current Liabilities $29,000 What's the formula for cash ratio? What is Espinoza's cash ratio? 0.34 0.65 0.78 1.54
Cash Ratio = Cash + Cash Eq. / Total Current Liabilities 10k+8.85k /29k = .65
Which of the following is not part of the definition of internal control? a.Separation of duties b. Safeguard assets c. Encourage employees to follow company policies d. Promote operational efficiency
a.Separation of duties
When recording credit card or debit card sales using the net method, a. cash received equals sales. b. cash received equals sales minus the fee assessed by the card processing company. c. cash received equals sales plus the fee assessed by the card processing company. d. cash isn't received by the seller until the customer pays his or her credit card statement.
b. cash received equals sales minus the fee assessed by the card processing company
Payment by check is an important internal control over cash payments because a. the check must be signed by an authorized official. b. before signing the check, the official reviews the invoice supporting the payment. c. Both a and b d. None of the above
c. Both a and b
The petty cash fund had an initial imprest balance of $100. It currently has $20 and petty cash tickets totaling $75 for office supplies. The entry to replenish the fund would contain a. credit to Cash Short & Over for $5. b. credit to Petty Cash for $80. c. debit to Cash Short & Over for $5. d. debit to Petty Cash for $80.
c. debit to Cash Short & Over for $5
Separation of duties is important for internal control of a. cash receipts. b. cash payments. c. Neither of the above d. Both a and b
d. Both a and b
The document that explains all the differences between the company's cash records and the bank's figures is called a(n) a. bank collection. b. electronic fund transfer. c. bank statement. d. bank reconciliation.
d. bank reconciliation.
Encryption a. avoids the need for separation of duties. b. creates firewalls to protect data. c. cannot be broken by hackers. d. rearranges messages by a special process.
d. rearranges messages by a special process.
The Sarbanes-Oxley Act a. created the Private Company Accounting Board. b. allows accountants to audit and to perform any type of consulting work for a public company. c. stipulates that violators of the act may serve 20 years in prison for securities fraud. d. requires that an outside auditor must evaluate a public company's internal controls.
d. requires that an outside auditor must evaluate a public company's internal controls.
Michelle Darby receives cash from customers. Her other assigned job is to post the collections to customer accounts receivable. Her company has weak a. assignment of responsibilities. b. ethics. c. computer controls. d. separation of duties.
d. separation of duties.