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Exam 4: Cash and Internal Controls

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Question 31

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A company's general ledger shows a cash balance of $2,380.Comparing the company's cash records with the monthly bank statement reveals several additional cash transactions such as deposits outstanding of $1,760,note collected by the bank on the company's behalf of $1,000,and interest earned of $20.The company also finds an error by the bank of an additional deposit of $100.Calculate the correct balance of cash.

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Question 32

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Risk assessment procedures include periodic reviews of internal controls,assessing management's oversight of the internal control,developing solutions to known cases of internal control failures,and determining whether each division or operation within a company is meeting its objectives.

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B) False

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Question 33

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A framework for designing an internal control system is provided by the Financial Accounting Standards Board (FASB).

Under the provisions of the Sarbanes-Oxley Act,corporate executives:

A deposit outstanding will cause the bank's cash balance to be higher than the company's cash balance.

Listed below are six terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Fees imposed by the bank to the company for providing routine services.

A company establishes a petty cash fund for $400.By the end of the month,employees had made the following expenditures from the fund: supplies,$150;fuel for deliveries,$120;postage,$75;miscellaneous,$35.Record the entry to recognize expenditures from the petty cash fund.

Common examples of cash equivalents are money market funds,Treasury bills,and certificates of deposit.

Having management periodically determine whether the amount of physical assets of the company match the accounting records is an example of which detective control?

Managers of the company act as stewards or caretakers of the company's assets.

Cash receipts of the company that have not been added to the bank's record of the company's balance are referred to as checks outstanding.

Having an independent party assess each year the adequacy of the company's internal control procedures is an example of which detective control?

A customer purchased a $2,000 item at ApplianceWorld,paying with a credit card.ApplianceWorld is charged a 2% fee by the credit card company.When recording this sale,ApplianceWorld would:

Listed below are six terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Money earned on the average daily balance of the checking account.

Cash flows from financing activities include:

After preparing a bank reconciliation,the collection of a note by the bank on a company's behalf would be recorded with a:

An example of a bank error that causes the company's balance and bank's balance of cash to differ is the purchase of supplies with a check.

Allowing only certain individuals to have passwords to conduct online purchases is an example of which preventive control?

The act of collusion refers to:

What is the concept behind separation of duties in establishing internal controls?