Accounting Chapter 4

A company's own cash records show a balance of $3,200. After examining the bank statement, the following information is revealed: Bank's balance for cash$4,000 Deposits outstanding$2,300 NSF check$600 Checks outstanding$1,800 Note collected by the bank$2,000 Service fee charged by the bank$100

$4,500

At the end of the previous year, a company's balance sheet reports cash of $30,000. For the current year, the company's statement of cash flows reports operating cash inflows of $90,000; investing outflows of $110,000; and financing inflows of $40,000. What amount of cash will be reported in the current year's balance sheet?

$50,000.

When employee expenditures with company-issued credit cards are recorded:

Accounts Payable is credited.

A company's petty cash refers to:

Cash on hand to pay for minor purchases.

Operating cash flows include which of the following?

Cash paid for supplies. Payment for prepaid insurance. Payment for employee salaries.

Financing cash flows include which of the following?

Cash received from the issuance of common stock. Repayment of long-term borrowing to the bank.

Investing cash flows include which of the following?

Cash received from the sale of a used company truck. Payment for land.

Which of the following is considered cash for financial reporting purposes?

Coins and currency. Debit card sales. Checks received from customers. Amounts held in checking accounts. Balances in savings accounts

Which of the following adjusts the bank's balance of cash in a bank reconciliation?

Deposits outstanding. Interest on bank deposit.

Section 404 of the Sarbanes-Oxley Act requires companies to:

Document and assess internal controls.

What is the concept behind separation of duties in establishing internal control?

Employee fraud is less likely to occur when access to assets and access to accounting records are separated.

Which of the following generally would be considered a good internal control over cash payments?

Ensure checks are serially numbered and signed only by authorized employees.

The Sarbanes-Oxley Act (SOX) mandates which of the following?

Increased regulations related to auditor-client relations. Increased regulations related to internal control. Increased regulations related to corporate executive accountability.

A company's ratio of cash to noncash assets provides some indication of the company's ability to:

Maintain normal operations. Respond quickly to new opportunities. Prevent bankruptcy.

Who is ultimately responsible for the establishment and success of a company's internal control system?

The company's top executives.

At any given time, the amount of cash in the petty cash fund should equal:

The established balance of the fund less all vouchers written during the accounting period.

Effective internal control over cash includes the requirement that:

The person who makes deposits should NOT record the deposits.

The primary reason the balance of cash in the company's records will differ from the balance of cash in the bank's records includes:

Timing differences of recording cash transactions by the company and by the bank.

What is a direct purpose of internal controls?

To improve the accuracy and reliability of accounting information.