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Exam 6: Reporting and Analyzing Cash and Internal Controls

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Question 51

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The ________________ ratio reflects the liquidity of a company's accounts receivable.

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days' sale...

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Question 52

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Describe the banking activities that promote the control of cash and identify the internal control objectives served by the banking activities.

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Banking activities can be organized into...

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Question 53

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Tabatha Turman of Integrated Finance and Accounting Solutions Tabatha Turman of Integrated Finance and Accounting Solutions (IFAS) serves clients with accounting and finance advice to build and sustain a profitable business model.An important part of the company's mission is helping clients set up systems of internal controls.Identify some of the internal controls and how they contribute to the success of the company's clients.

Money orders,cashier's checks,and certified checks are examples of cash equivalents.

Match each of the following terms with the appropriate definitions.

At the end of the current period,a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

Once a good system of internal control is in place,it rarely needs review.

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

A sales system with prenumbered,controlled sales slips is an example of the internal control principle of _______________________.

What is a voucher system?

Highlight Hotel deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on December 31, its Cash account shows a $18,393, debit balance. Highlight Hotel's June 30 bank statement shows $15,921 on deposit in the bank. Prepare the necessary adjusting journal entries using the following information: 1.Outstanding checks as of December 31 total $2,261. 2.The December 31 bank statement included a $35 debit memorandum for bank services. 3.Check No. 2519, listed with the canceled checks, was correctly drawn for $850 in payment of a utility bill on December 16. Highlight Hotel mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $805. 4.The December 31 cash receipts of $3,425 were placed in the bank’s night depository after banking hours and were not recorded on the December 31 bank statement. 5.The bank statement included a check from a customer’s payment of an account receivable that had been returned NSF in the amount of $1,228. Prepare the necessary adjusting journal entries.

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42,debit office supplies expense $27.33,debit cash over/short $2.19.If the original amount in petty cash is $320,how much is in petty cash before the reimbursement?

When evaluating the days' sales uncollected ratio,generally the less time that money is tied up in receivables often translates into increased profitability.

Proper internal control means that the responsibility for a task is clearly established and assigned to one person.

The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and multiplying this quotient by 365.

It is not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.

In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $790 but was erroneously entered in the accounting records as $970.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?

The Petty Cash account is a separate checking account used for small amounts.

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

Given the following information: What is the amount that needs to be reimbursed?