Read & Interact: wild Chapter 6

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below. (Check all that apply.)

Cash payments are made by check. Handling cash is separate from recordkeeping of cash. Cash receipts are promptly deposited in a bank.

The cash in a cash register equaled $100, but the record of cash receipts/sales equaled $102. Determine which of the following entries is correct to record cash sales and the shortage.

Debit Cash $100; debit Cash Over and Short $2; and credit Sales $102.

Match the banking term on the left with its definition on the right. Instructions Deposit ticket Deposit ticket drop zone empty. Check Check drop zone empty. Bank account Bank account drop zone empty. Remittance advice Remittance advice drop zone empty. Electronic funds transfer

Deposit ticket matches Choice Lists currency, coins and checks deposited into an account Check matches Choice A document signed by the depositor instructing the bank to pay a specified amount of money Bank account matches Choice Used to deposit money for safekeeping and help control withdrawals. Remittance advice matches Choice Explains the reason for payment Electronic funds transfer matches Choice Electronic transfer of cash from one party to another

Determine which of the items below would show up on a monthly bank statement. (Check all that apply.)

Deposits and other increases to the account during the period End-of-period balance in the account Withdrawals and other decreases to the account during the period Beginning-of-period balance in the account

Determine which of the statements below accurately describe services provided by a bank. (Check all that apply.)

Each bank deposit is supported by a deposit ticket. A bank account is a record set up by a bank for a customer. To withdraw money from an account, the depositor can use a check.

Which of the statements below describe the goals and principles of cash management? (Check all that apply.)

Encourage quick collection of receivables. Money should be spent only when it is available. Keep a minimum level of cash necessary to operate. Plan cash receipts to meet cash payments when due.

Internal control policies and procedures have limitations that arise from many elements. Match the limitation on the left with its definition on the right.

Human error matches Choice Can occur from carelessness, misjudgment or confusion Human fraud matches Choice Involves intent by people to defeat internal controls for personal gain Cost-benefit principle matches Choice Dictates that the costs of internal controls must not exceed their benefits Internal control environment matches Choice Management must convey commitment to internal control policies and procedures

Review the following statements and select the ones which accurately describe a Petty Cash fund. Select all answers which apply.

It is established to pay for small payments like low-cost supplies and shipping fees, etc. It is an asset reported on the balance sheet

Identify the statement below that describes what the Days' sales uncollected ratio assesses.

It measures how quickly a company can convert its accounts receivables into cash.

Which of the answers below correctly describe the Cash Over and Short account? (Check all that apply.)

It records the effects of cash overages and cash shortages. A debit balance reflects an expense. It is an income statement account.

Identify which of the items below are goals of good cash management. (Check all that apply.)

Keep a minimum level of cash necessary to operate. Plan cash receipts to meet cash payments when due.

Which statement below explains why liquid assets are needed in a business?

Liquid assets must be available to pay current liabilities.

Which of the following are principles of internal control? (Check all that apply.)

Maintain adequate records. Divide responsibility for related transactions. Perform regular and independent reviews. Establish responsibilities.

Describe the purpose of a purchase requisition by selecting the correct answer below. (Check all that apply.)

Purchase requisitions are used to inform the purchasing department of its needs. Purchase requisitions are used for control purposes. Managers are not allowed to place orders directly with vendors; instead, they fill out a purchase requisition.

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.)

Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry. Technology has reduced the number of processing errors. Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft.

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.)

Technology has reduced the number of processing errors. Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry. Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft.

Determine which of the statements below is correct regarding information reflected on a monthly bank statement.

The information on the bank statement reflects the bank's records of the depositor's account.

Determine the statements below that are true regarding why a bank reconciliation is used. (Check all that apply.)

Timing differences between the bank statement and the depositor's records are reflected in the bank reconciliation. We must reconcile the balance of the bank's records and the Cash account in the general ledger and explain or account for any differences in the two. The bank reconciliation is useful in proving the accuracy of the Cash account in the general ledger.

Click and drag on elements in order Summarize the document flow, or steps, in a voucher system by placing the following actions in their correct order of occurrence.

a purchase requisition a purchase order a receiving the account the cashier

All of the following describe blockchain:

blockchain is continuously and simultaneously updated and verified blockchain makes it more difficult for the ledger to be modified without a detailed record of changes

A good internal control to protect cash is to make cash payments using

checks

Auditors focus more on testing the ____ of a company's blockchain processes and technology than on verifying the ___ of its output.

effectiveness/accuracy

Which of the following are correct regarding why management uses internal controls? (Check all that apply.)

ensure reliable accounting. protect assets. promote efficient operations. uphold company policies.

Which of the following are correct regarding why management uses internal controls? (Check all that apply.)

promote efficient operations. ensure reliable accounting. uphold company policies. protect assets.

The triple threat of fraud involves:

rationalization opportunity pressure

Each of the following are types of technological impacts related to internal control:

reduced processing errors new evidence of processing separation of duties more extensive testing of records

What is the purpose of internal controls

to protect assets and ensure reliable accounting

The following annual account balances are taken from ABC Co at year end. Current Year 1 Year Ago Accounts Receivable $49,500 $48,000 Net Sales $580,000 $535,000 Days Sales Uncollected 31.15 days 32.74 days Select the statements below that are correct regarding ABC Co.'s ability to collect its receivables from customers.

ABC Co. has shortened the amount of time it takes to collect receivables from customers. ABC Co. took approximately 31 days to collect cash from its credit customers in the current year. ABC Co. is shortening the amount of time that money is tied up in receivables.

Identify the principles of internal control by selecting the correct answers below. (Check all that apply.)

Apply technological controls. Separate recordkeeping from custody of assets. Perform regular and independent reviews. Establish responsibilities. Maintain adequate records. Insure assets.

Define what liquidity means by completing the following sentence. Liquidity refers to a company's ability to pay for its liabilities.

Blank 1: current

Show your understanding of what a bank reconciliation is by completing the following sentence. A bank reconciliation is a(n) (entry/charge/report) explaining any differences between the (checking/subsidiary/sales) account balance according to the depositor's records and the balance reported on the (income/financial/bank) statement.

Blank 1: report Blank 2: checking Blank 3: bank

Describe what a petty cash fund is by completing the following sentence. A petty cash fund is used for (large/small) payments.

Blank 1: small