Accounting Ch.10

The store had cash sales on January 13, 2017 of $9,450.78, but as per cash count it shows cash is only $9,450.75. Which of the following account is included to record sales?

A cash shortage of $0.03 ($9,450.78 - $9,450.75) is recorded using a debit to the Cash Over and Short account. The correct answer is: Debit Cash Over and Short, $0.03

Upon preparing the bank reconciliation statement, an adjusting entry was made that debited cash and credited interest revenue. Therefore, the bank reconciliation must have included an item that was:

A debit to cash and credit to revenue is used to record revenue; therefore, the interest revenue must be added to the balance per book. The correct answer is: Added to the cash balance per company books

Cash genrally includes all of the following except:

Account Recieveable

Which of the following is not one of the components of internal control according to COSO?

All are components of internal control according to COSO except communication processes for external stakeholders. The correct answer is: Communication processes for external stakeholders

What is an outstanding deposit?

An outstanding deposit is one that has been recored in the company general ledger but is not shown on the bank statement.

petty cash custodian

ensures that petty cash is properly safeguarded and disbursed for legitamete reasons

When does the cash over and short account behave like an expense account?

when there is a shortage?

Internal controls

Procedures and methods used to provide reasonalble assurance about the effectiveness and efficiency of operations

A short term and highly liquid investment acquired three months before maturity is known as

Cash Equivalent

A predetermined amount of cash used by a cash-register clerk to make change for customers normally consists of a range of bills and coins is known as a:

Cash Float

What are the titles of the two column headers?

Cash balance per bank statement, cash balance per company books

When the bank deposit is made, a stamped deposit slip is returned to the company's accounting department where a staff member compares the details on the deposit slip to the amount of cash register receipts. At this point, which of the following might be detected? .

Cash shortages can be detected when a deposit slip is compared to the amount recorded in the cash register receipts The correct answer is: Cash shortage

A convinient, secure, inexpensive and fast method of paying bills online from a customer's bank account directly to a supplier the bank account is known as:

Eletric Fund Transfer

What is an imprest system for petty cash?

Ensures that spending is limited to the amount avaible in the petty cash fund

During a bank reconciliation, which of the following is not a reason for additional cash deductions from the bank account?

Explanation: Customers have the option of transferring payments directly to the company's bank account resulting in the cash balance in the account increasing. When payments are transferred directly to lenders and suppliers, the cash balance in the bank account decreases. The correct answer is: Automatic cash receipts into the accounts

How are outstanding checks recored on bank reconciliation

Subtracted from the bank balance

Which of the following items must be added to the cash balance per company books when preparing a bank reconciliation?

Explanation: Notes receivable collected by the bank is added to the cash per company books when preparing a bank reconciliation. It is an amount not yet recorded by the company. The correct answer is: Notes receivable collected by bank

Which of the following is not a purpose of internal control?

Explanation: The purpose of internal controls is to provide reasonable assurance about the effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations The correct answer is: Increase exposure to risks

T/F in order for an employee to be reimbursed from the petty cash, they will need to present a verbal listing of all expenses for they were paid.

False

Internal controls are not intended to:

Increase Sales

What are two typical reasons for a bank making additional depositis to a company cash account?

Interest Earned on the depositors account, Payment from a customer deposited directly into an account

Internal control reports issued by public companies must identify the framework used to evaluate the effectiveness of internal control. Which of the following is the most common framework in the U.S.?

Internal Controler - integrated framework COSO

Which of the following is petty cash not used to pay for?

Inventory

List three typical reasons for a bank making additional deductions from a company's cash account?

Loan Interest Charges, Repayment of a note payable, Bank Charges

what are non-sufficient funds checks?

NSF checks are payment made to the company by a customer that does have sufficient funds in a bank account to cover the amount of the check

What is the entry to record outstanding checks in the ledger accounts?

No entry is required.

Which of the following must be deducted from the bank statement balance when preparing a bank reconciliation?

Outstanding Checks

What is bank reconiliation?

Part of internal control process where the differences between a company's bank statement and its own cash accounting records are compared, reconciled, and explained?

Petty Cash is operated on an imprest system, which means that:

Petty cash is usually operated on an imprest system, meaning that the petty cash spent is limited to the amount available in the petty cash fund. The correct answer is: The cash spent is limited to the amount available in the petty cash fund

A company purchased supplies with payment by check. The bookkeeper recorded the payment as $1,340.56. The bank recorded the check at its correct amount of $3,140.56. In preparing the bank reconciliation,

The $1,800 book error is deducted from the company's cash balance per book because the payment was originally understated. To correct the error, more cash needs to be removed from the company's cash balance. The correct answer is: $1,800 is deducted from the cash balance per company books

T/F The petty cash custodian needs to determine the amount of the petty cash fund, as well as the frequency with which it is replenished.

True

When is a journal entry required during a bank reconciliation?

if an adjustment is made in the ledger balance in the bank reconciliation

Intended controls are intended to

safegaurd assets, prevent and detect fraud and error, envcourage good management.

Cash equivalents

short-term and highly liquid investments acquired up to three months before maturity.