acct

Munchkin Inc. pays for promotional expenses by charging the company's credit card. Munchkin should debit an expense and credit

accounts payabe

In a bank reconciliation, an outstanding check is ______.

deducted from the bank balance

Which of the following are provisions included in the Sarbanes-Oxley Act?

Require that audit firms are hired by the audit committee of the board of directors. Require auditors to retain work papers for 7 years.

When adjusting the company's cash account balance in a bank reconciliation, which items reduce the company's cash account balance?

Service charges Charges for NSF checks

Which of the following are errors in accounting for cash?

The bank processing a check for $210 as $120. Recording a check for $168 for $186 in the cash account. Recording a cash collection of $4,000 but depositing $3,000 into the bank.

In a bank reconciliation, which of the following will require a journal entry by the company?

Adjustments to the balance per books for items discovered on the bank reconciliation that were not yet recorded on the books

Which of the following are internal controls for checks?

Checks should be sequentially prenumbered. Checks for large amounts should require two signatures.

Control Environment

Formal policies related to management's philosophy, assignment of responsibilities, and organizational structureFormal policies related to management's philosophy, assignment of responsibilities, and organizational structure

risk assessment

Identifies and analyzes factors that could prevent objectives from being achievedIdentifies and analyzes factors that could prevent objectives from being achieved Control environment

Monitoring

Includes formal procedures for reporting control deficienciesIncludes formal procedures for reporting control deficiencies

Which of the following items will require a journal entry following a bank reconciliation?

NSF checks Notes collected by the bank

Effective internal control over cash requires segregation of duties. Which of the following duties should be segregated?

Opening the mail and deposit of checks in the bank Depositing checks into the bank and recording receipts in the accounting records

Control activities

Policies and procedures that help ensure management's directives are being carried outPolicies and procedures that help ensure management's directives are being carried out

What would cause a bank statement not to agree with the cash balance in the accounting records?

The company made an error in recording a deposit. Deposits outstanding that have been recorded on the company's records, but not on the bank's. The bank paid interest that the company has not recorded. The bank made an error in recording a deposit made by the company.

Components of Internal Control

based on the ethical tone set by management.

A check that is NSF (nonsufficient funds) is a check that

cannot be paid because the account does not contain enough funds.

abby Fashions sells a suit to a customer for $600 on account. The day after the sale, the customer discovers that the jacket has a small stain on the back. Abby Fashions grants the customer a $60 credit. Abby Fashions will record:

credit to accounts receivable $60 debit to Sales Allowances $60

Adrian Corp. sells goods on account for $100,000 on May 1. The customer paid for the goods on May 10. On May 15, the customer returns $40,000 of the merchandise. The entry Adrian makes on May 15 will include the following: (Select all that apply.)

debit to Sales Returns credit to Cash

The key provisions of the Sarbanes-Oxley Act include

requiring that corporate executives certify financial statements. restricting activities of auditors to prevent conflicts of interest. requiring documentation and assessing effectiveness of internal controls.