FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

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

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 81

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following would be added to the balance per books on a bank reconciliation?

A) service charges
B) outstanding checks
C) deposits in transit
D) notes collected by the bank

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

Correct Answer

verified

Show Answer

Question 82

True/False

Review LaterAdd Note

Review Later

When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished.

A) True
B) False

Correct Answer

verified

Show Answer

Question 83

Multiple Choice

Review LaterAdd Note

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

The Scharf Company is a retailer located in a state without sales tax. The following data was given to you to complete the transactions for the day's sales to be recorded. All cash drawers start with $100 in change. Record the journal entries for EACH cash register to determine the cashier's accuracy.

The actual cash received during the week ended October 31 for cash sales was $23,447 and the amount indicated by the cash register total was $23,457. Journalize the entry to record the cash receipts and cash sales.

On April 3, Snappy Sales decides to establish a $135.00 petty cash fund to relieve the burden on Accounting. a) Journalize the establishment of the fund. b) On April 11, the petty cash fund has receipts for mail and postage of $32.75, contributions and donations of $25.25, meals and entertainment of $68.00, and $9.75 in cash. Journalize the replenishment of the fund. c) On April 12, Snappy Sales decides to increase petty cash to $175.00. Journalize this transaction.

Match the following elements of internal control: -control procedures

For each of the following, explain whether the issue would require you to prepare a journal entry for your company, assuming any original entry is correct. If an entry is required, please include it as part of your answer. 1) The bank recorded your deposit as $91 rather than the actual amount of $191. 2) Two outstanding checks amounted to $450. 3) Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $50 instead of $59. 4) The bank paid a check for $500 after the company had issued a stop payment and voided the check. 5) An EFT deposit was made by one of the company's customers, Atlas Design, for merchandise received. The sale had previously been recorded when shipped and was equal to the payment amount of $125.

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

A $135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the account would include a

Match the following elements of internal control: -control environment

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31.

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

You began your new job as the accountant for Morton Company. You were surprised to find that the company had a $2,000 petty cash fund, which sits in the break room. The president of the company told you: "Our petty cash system here works quite smoothly. Since everyone is honest here, everyone has access to the fund for incidentals that might pop up in the course of the business day. Most of these situations don't have any receipts tied to them, so I just put the money back in the fund when my secretary tells me that we have run out of petty cash and we debit the amount to Miscellaneous Expense." a) Should you implement some controls on petty cash? Why? b) If so, what controls could be used for petty cash?

Internal control is enhanced by separating the control of a transaction from the record-keeping function.

Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end of month balance by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the statement period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley collected a $4,000 note receivable plus $240 of interest revenue. The bank charges $20 for the collection service. The bank charges a monthly account fee of $35. The end-of-month balance per company books is $11,135. Prepare a bank/account reconciliation and write any necessary journal entries for the reconciliation.

Sarbanes­Oxley's purpose is to maintain public confidence and trust in the financial reporting of companies.

Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus deter fraud and prevent misleading financial statements.

The actual cash received during the week ended June 7 for cash sales was $18,632, and the amount indicated by the cash register total was $18,628. Journalize the entry to record the cash receipts and cash sales. Journal $\begin{array} { | c | c | c | c | c | } \hline \text { Date } & \text { Description } & \begin{array} { c } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}$

You began your new job as the accountant at Bolivar Industries during the month of December. During your first month, you found several interesting issues. 1) While looking through the invoices, you found Invoices 213-242, 245-271, and 275-290. It appears that invoices 243, 244, 272, 273, and 274 are missing. 2) During the month, Clerk # 3 issued $250 in refunds as compared to Clerks #1, #2, and #4 who issued less than $50 each. 3) The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month. 4) Business is generally brisk during the holiday season, but two weeks before Christmas there was a sudden increase in slow payments. Part A: What kind of warning signs could be associated with these issues? Part B: What control could you put in place regarding cash refunds mentioned in Part A 2)?