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Exam 7: Sarbanes-Oxley, Internal Control, and Cash

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Question 1

True/False

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The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.

A) True
B) False

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True

Question 2

Multiple Choice

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Journal entries based on the bank reconciliation are required in the company's accounts for

A) outstanding checks
B) deposits in transit
C) bank errors
D) book errors

E) A) and B)
F) None of the above

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Question 3

Multiple Choice

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What entry is required in the company's accounts to record outstanding checks?

The cash account in the company's ledger is an)

Accompanying a bank statement for Marsh Land Properties is a credit memo for payment on a $15,000 1-year note receivable and $900 of interest collected by the bank. Marsh Land Properties had been notified by the bank at the time of collection, but had made no entries. Journalize the entry that should be made by Marsh Land to bring the accounting records up to date.

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as an)

Jackson Industries has collected the following information but needs assistance completing the table. The cash payments were 90% of collections. $\begin{array} { | l | l | } \hline { \text { Cash } } & \\\hline ? ? & \text { Beg. balance } \\\hline \$ 511,770 & \text { Collections } \\\hline ? ? & \text { Payments } \\\hline & \text { End balance } \\\hline\end{array}$ How much was the beginning balance of the cash account?

Match each item to a bank statement adjustment, a company books adjustment, or either. -Outstanding checks

List the objectives of internal control and give an example of how each is implemented.

All bank memos reported on the bank reconciliation require entries in the company's accounts.

The following data is from the Muffin Shoppe for the past four years. Calculate the following:

The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator.

A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account would include a

"To maintain public confidence and trust in the financial reporting of companies" is the purpose of

Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting.

Which of the following would be subtracted from the balance per bank on a bank reconciliation?

In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.

A petty cash fund is used to pay relatively large amounts.

On April 2, Granger Sales decides to establish a $125.00 petty cash fund to relieve the burden on Accounting. a) Journalize the establishment of the fund. b) On April 10, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of $29.50, meals and entertainment of $38.25, and $13.55 in cash. Journalize the replenishment of the fund. c) On April 11, Granger Sales decides to increase petty cash to $200.00. Journalize this event.

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?