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

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Question 61

Multiple Choice

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Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -a $1,000 note from one of your customers was collected by the bank

A) added to the company's books
B) subtracted from the company's books
C) added to the bank statement balance
D) subtracted from the bank statement balance

E) All of the above
F) A) and B)

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Question 62

True/False

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The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance in the petty cash account.

A) True
B) False

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Question 63

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The last custodian of the petty cash fund was hospitalized and you have been asked to take stock of the fund and replenish it. When you receive the fund, it has $299 in cash and receipts as follows: Office supplies$295 Advertising120 Transportation by Taxi75 The petty cash fund was established to have $800 in it. Based on what you have found, what journal entry should be recorded to replenish the fund?

Match each item to a bank statement adjustment, a company books adjustment, or either. -Deposit in transit

Internal control does not consist of policies and procedures that

There are three internal control objectives and they are to safeguard the company's reputation, ensure accurate financial reports, and ensure compliance with applicable laws.

When the voucher system is used, the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.

The amount of deposits in transit is included on the bank reconciliation as an)

In preparing a bank reconciliation, the amount of an error indicating the recording of a check in the journal for an amount larger than the amount of the check is added to the balance per company's records.

The bank reconciles its statement to the company's records.

The following data were gathered to use in reconciling the bank account of Savannah Company: What is the adjusted balance on the bank reconciliation?

Sarbanes­Oxley applies to

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is an)

A business that requires all cash payments be made by check can not use a petty cash system.

The objectives of internal control are to

A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.

Which of the following items that appeared on the bank reconciliation did not require a journal entry?

A bank reconciliation should be prepared periodically because

A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is

The following data were gathered to use in reconciling the bank statement of Build-A-Lot: $\begin{array} { | l | l | } \hline \text { alance per bank } & \$ 14,355 \\\hline \text { Balance per company records } & 14,010 \\\hline \text { Bank service charges } & 80 \\\hline \text { Deposits in transit } & 4,100 \\\hline \text { NSF checks } & 775 \\\hline \text { Outstanding checks } & 5,300 \\\hline\end{array}$ 1) What is the adjusted balance on the bank reconciliation? 2) Journalize any necessary entries for Build-A-Lot based on the bank reconciliation.