Ch 5 ACCT

Good internal control for cash receipts would include having the ___ compare the record of cash sales per the register with the count sheets and bank deposit slip returned by the bank.

accounting department

An EFT cash receipt from a customer is ___

added to the cash balance

An example of EFT is

direct deposit of employee paychecks

Cash ____ are short term; highly ____ investments purchased within ____ of maturity.

equivalents; liquid; 3 months

A check is cleared when...

funds have been withdrawn from your bank account

A cash register does not ...

reconcile accrual accounting with cash accounting

What reconciling items need to be recorded to adjust its cash balance?

- Interest revenue - Customers check rejected by the bank as NSF - EFT received from customers discovered on the bank statement

SOX encourages honesty by...

- Requiring a code of ethics - providing legal protection to whistle blowers - requiring tip lines

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

- The company made an error in recording deposit - The bank made an error in recording a deposit - deposits outstanding that have been recorded on the company's records but not the banks - The bank paid interest that the company has not recorded

The ___ is used to document at the amount of cash collected and available for deposit at the bank.

Cash count sheet

When a check is presented to a bank for payment & the amount is deducted from the payer's account the check is said to have ________ the bank.

Cleared

A ___ ____ is initiated by and EFT instructing a bank to transfer pay due employees into the employees bank account.

Direct Deposit

The ___ ___ system consists of actions taken to promote efficient and effective operations, protect assets, enhance accounting information and adhere to laws and regulations

Internal Control

What are cash equivalents?

Money market funds and Investments within 3 months to maturity

What is subtracted from bank balance on bank reconciliation?

Outstanding checks

On a bank reconciliation, what are typical reconciling items the bank would not know about because of time lags?

Outstanding checks Deposits in transit

A ___ system involves the processing of purchases and payments made on account.

Voucher

The company needs to record the reconciling items on the ___ side of the bank reconciliation

book

If the cash collected is less than the amount per the cash register then

cash shortage is debited

An outstanding check is...

deducted from bank balance

NSF is ..

deducted from book balance

Deposits in ____ are added to the ___ side of the bank reconciliation

transit; bank