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Exam 8: Internal Control and Cash

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Question 21

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Money orders are considered cash.

A) True
B) False

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Question 22

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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 $120 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.

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Question 23

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A petty cash fund is used to pay relatively large amounts.

Bank reconciliation information for Kaden Co. for May 31 is as follows:? (a)The bank statement balance is $2,936. (b)The cash account balance is $3,194. (c)Outstanding checks amounted to $465. (d)Deposits in transit are $655. (e)The bank service charge is $50. (f)A check for $97 for supplies was recorded as $79 in the ledger.?Record the appropriate journal entry for Kaden Co.

Match each item to a bank statement adjustment, a company books adjustment, or either. -NSF check

A voucher is a written authorization to make a cash payment.

The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator.

In the normal operation of business, you receive a check from a customer and deposit it into your checking account. With your bank statement, you are advised that this check for $775 is "NSF." The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will

In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.

The following data were gathered to use in reconciling the bank account of Savannah Company:? $\begin{array} { | l | r | } \hline \text { Balance per bank } & \$ 16,750 \\\hline \text { Balance per company records } & 16,125 \\\hline \text { Bank service charges } & 80 \\\hline \text { Deposit in transit } & 2,195 \\\hline \text { NSF check } & 950 \\\hline \text { Outstanding checks } & 3,850 \\\hline\end{array}$ What is the adjusted balance on the bank reconciliation?

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

The debit balance in Cash Short and Over at the end of an accounting period is reported as

Match each item to a bank statement adjustment, a company books adjustment, or either. -Error in recording a check

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

In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.

Credit memos from the bank

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

For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

During a bank reconciliation process,

Cash equivalents