A201 Chapter 4

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 detective controls?

Audits Reconciliations Performance reviews

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

Charges for NSF checks Service charges

Which of the following are internal controls for checks?

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

When adjusting the company's cash account balance in a bank reconciliation, which item must be added to the cash account balance?

Collections of funds by the bank

The framework for designing an internal control system is provided by the

Committee of Sponsoring Organizations (COSO) of the Treadway Commission

Joyce Inc. sells $5,000 of goods to a customer. The customer pays with a VISA credit card. VISA charges a 3% fee on the sale. Recording the sale would include which of the following

Debit Service Fee Expense $150 Debit Cash $4,850 Credit Sales $5,000

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

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

Which of the following is an internal control procedure for cash disbursements?

Disbursements should be made by check, debit, or credit card

Which of the following is true regarding acceptance of credit cards by retailers?

It improves internal control because employees do not handle cash

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

The bank made an error in recording a deposit made by the company. 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.

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

accounts payable

Paying by check helps a business to control cash when the

check is signed by an authorized manager checks are prenumbered and written sequentially

cash disbursements that have been recorded in the company's accounting records but are not yet recorded by the bank are called

checks outstanding

The Sarbanes-Oxley Act applies to

companies that are required to file with the SEC

Cash receipts that have been recorded in the company's accounting records but are not yet recorded by the bank are

deposits outstanding

A key factor in helping safeguard cash is a well functioning _____ _______ system

internal control

Who has final responsibility for internal controls?

management

Which of the following are common controls over cash receipts?

opening mail daily and making a detailed list of checks received having two different employees take custody of the checks and make the deposit

Separation of duties and E-commerce controls are examples of ______ controls.

preventive

A good internal control system for cash would require that those who handle cash should not be involved with

reconciliation of bank balances. the accounting records.

Who is responsible for providing an opinion on management's assessment of internal control?

the company's auditors