FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Cash and Internal Controls

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

If a check correctly written and paid by the bank for $794 is incorrectly recorded in the company's books for $749, how should this error be treated on the bank reconciliation?

A) Subtract $45 from the bank's balance.
B) Add $45 to the bank's balance.
C) Subtract $45 from the book balance.
D) Add $45 to the book balance.
E) Subtract $45 from the bank's balance and add $45 to the book's balancE.$794 - 749 = $45

F) C) and D)
G) A) and E)

Correct Answer

verified

Show Answer

Question 72

Essay

Review LaterAdd Note

Review Later

Describe the net method of accounting for purchases. Why do companies use the net method?

Correct Answer

verified

The net method assumes that a firm will ...

View Answer

Show Answer

Question 73

Short Answer

Review LaterAdd Note

Prepare the necessary general journal entries to adjust cash to the reconciled balance.

When a voucher system is used, recording a purchase is initiated by an invoice approval and a voucher, not an invoice.

An internal control system consists of the policies and procedures companies use to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

The internal document prepared by a department manager that informs the purchasing department of its needs that lists the merchandise needed and requests that it be purchased is the

The voucher register is a journal that is used to record approved vouchers.

A voucher system's control over cash disbursements begins when a company incurs an obligation that will result in eventual payment of cash.

The document, also known as the check authorization, that is a checklist of steps necessary for approving an invoice for recording and payment is the

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period. As a result, in preparing this period's reconciliation, the amount of this check should be:

_________________________ is the use of electronic communication to transfer cash from one party to another.

A voucher system establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.

The following information is available to reconcile Litner Co.'s book balance of cash with its bank statement cash balance as of April 30. The April 30 cash balance according to the accounting records is $78,356, and the bank statement cash balance for that date is $83,525. a. The bank erroneously cleared a $480 check against the account in April that was not issued by Litner. The check documentation included with the bank statement indicates the check was actually issued by Lightning Co. b. On April 30, the bank issued a credit memorandum for $53 interest earned on Litner's account. c. When the April checks are compared with entries in the accounting records, it is found that Check No. 1828 had been correctly drawn for $1,530 to pay for advertising but was erroneously entered in the accounting records as $1,350. d. A credit memorandum indicates that the bank collected $10,000 cash on a note receivable for Litner, deducted a $30 collection fee, and credited the balance to the company's Cash account. Litner did not record this transaction before receiving the statement. e. A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870 received from a customer. The bank assessed a $25 fee for processing it. f. Litner's April 30 daily cash receipts of $5,102 were placed in the bank's night depository on that date, but do not appear on the April 30 bank statement. g. Litner's April 30 cash disbursements journal indicates that Check No. 1837 for $584 and Check No. 1840 for $1,219 were both written and entered in the accounting records, but are not among the canceled checks. 1. Prepare the bank reconciliation for this company as of April 30. 2. Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of April 30.

A company had net sales of $31,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals:

The gross method of recording purchases refers to the method of recording:

Cancelled checks are checks the bank has paid and deducted from the customer's account during the period.

A company had the following transactions during January: Using the net method of recording purchases, prepare the journal entries to record these January transactions.

A voucher system is a series of prescribed control procedures:

A company records invoices at net amounts. On March 5, the company recorded merchandise purchased, invoice price $17,000, terms 2/15, n/60. On March 24, this company discovered that the invoice had been incorrectly filed and the discount had been lost. The invoice was paid on April 1. Prepare journal entries to record these events.

A company's internal control system: