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Exam 6: Reporting and Analyzing Cash,fraud,and Internal Control

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Question 61

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On March 1,a company established a $75 petty cash fund.On March 12,the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25; postage,$19.50; and office supplies,$36.Give the general journal entry to reimburse the fund and to increase its amount to $150 on March 12.

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Question 62

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The voucher system of control:

A) Is a set of procedures and approvals designed to control cash receipts and the acceptance of obligations.
B) Establishes procedures for verifying,approving,and recording obligations for eventual cash disbursement.
C) Establishes procedures for receiving checks for the sale of verified,approved,and recorded activities.
D) Applies only when multiple purchases are made from the same supplier.
E) Is required in large companies but not beneficial for small to mid-sized companies.

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

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Question 63

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The document prepared by the vendor that is an itemized statement of goods listing the customer's name,items sold,sales prices,and terms of the sale is the ________.

Internal control systems are subject to limitations that usually arise from either (1)human error or human fraud,or (2)the cost-benefit principle.

Assigning purchasing,receiving,and paying for merchandise to one department or individual is a way to streamline a voucher system.

The number of days' sales uncollected is used to:

When evaluating the days' sales uncollected ratio,generally the higher the receivables balance,the better the ratio.

When a voucher system is used,an invoice approval is not needed as long as the purchase is evidenced by an invoice and purchase order.

A ________ fund is used to make cash disbursements of small amounts to avoid the time and cost of writing checks.

Which of the following is not one of the policies and procedures that make up an internal control system?

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.

Basic bank services such as bank accounts,bank deposits,and checking contribute to the control of cash.

A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.

A purchase order is a document the purchasing department sends to the vendor to place an order.

Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check.Ryan's June bank statement shows $18,361 on deposit in the bank.Ryan's comparison of the bank statement to its cash account revealed the following: Additionally,a $29 check correctly written and recorded by the company was recorded by the bank as a $92 deduction. The adjusted cash balance per the bank records should be:

The ________ account is used to record the effects of cash overages and shortages from errors in making change or managing a petty cash fund.

Since petty cash is concerned with such small amounts of cash,it is not necessary to document all transactions with a petty cash receipt.

Clayborn Company' bank reconciliation as of May 31 is shown below. One of the adjusting journal entries that Clayborn must record as a result of the bank reconciliation includes:

After preparing a bank reconciliation,adjustments must be made for items reconciling the book balance.

An ________ refers to the policies and procedures managers use to protect assets,ensure reliable accounting,promote efficient operations,and urge adherence to company policies.