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Exam 6: Cash and Internal Control

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Question 61

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If a credit memo appears on a bank reconciliation,this could be an indication that:

A) there has been a decrease the company's bank account
B) there has been a bank service charge
C) there has been a deposit of a customer's NSF check
D) there has been a note receivable for the company that was collected by the bank.

E) B) and C)
F) C) and D)

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Question 62

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A company prepares adjusting entries for debit memorandums but not for credit memorandums

A) True
B) False

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Question 63

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Checks received from customers are considered to be cash in the company's books.

While reconciling the checking account,an accountant with Sonic Corporation noticed that an error had been made in recording a check received by the company.Sonic recorded the receipt as $729 and the correct amount of the check was $279.What reconciling adjustment is required?

No special internal control procedures are necessary with a petty cash account because the amount is usually so small.

The following set of items describes activities completed by a company in collecting cash for merchandise sales.For each activity,identify whether or not the activity adheres to or violates sound internal control procedures. Monthly statements,indicating the current balance due,are mailed to customers.

The documentation with the bank statement shows a debit memo for bank service charges.Based on this,what possible entry would be made in the company's accounts?

The Dinho Corporation identified the following data when preparing their April bank reconciliation: In addition,Dinho incorrectly recorded a deposit in its books in the amount of $1,000.The correct amount was recorded by the bank as $1,200. What is the adjusted cash balance at the end of April?

A good system of internal control is important to make a company's accounting records completely foolproof.

Which one of the following statements best describes the term "outstanding check?"

Which one of the following procedures is incorrect for setting up and maintaining a petty cash fund?

Items that are included on a bank statement and decrease the bank account balance are called _________________________.

Which one of the following items is not included in cash?

Flake Company accepted a check from Ramos Company as payment for services rendered by Flake Company.Later Flake's bank statement revealed that Ramos' check was an NSF check.Recognizing the NSF check on Flake's books would act to:

How would interest earned on a checking account be dealt with in a bank reconciliation?

What are at least four important internal control procedures?

On a bank reconciliation,bank charges for the month are added to the cash balance per the books.

As part of good internal control,disbursements can be made either by check or cash.

Which one of the following items is a reconciling item on the bank side of a bank reconciliation?

Only one copy of the prelist should be prepared when an employee opens mail with customer payments to avoid complexity in the accounting system and maintain control.