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Exam 8: Sarbanes-Oxley, Internal Control, and Cash

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Question 61

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The objectives of internal control are to

A) control the internal organization of the accounting department personnel and equipment
B) provide reasonable assurance that operations are managed to achieve goals, financial reports are accurate, and laws and regulations are complied with
C) prevent fraud, and promote the social interest of the company
D) provide control over "internal-use only" reports and employee internal conduct

E) All of the above
F) A) and B)

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Question 62

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Journalize the entries to record the following: Jun 1 Established a petty cash fund of $200 Jun 30 The amount of cash in the petty cash fund is now $57. The fund is replenished based on the following receipts: postage, $25; entertainment $100; miscellaneous $20. Record any discrepancy in the cash short and over account. Journal

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Question 63

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A voucher

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Which one of the following below is not a factor that influences a business's control environment?

Consider the cash account below. Additional Information: cash disbursements were 80% of collections. How much was the Beginning Balance of the Cash Account?

The following procedures were recently implemented at the Health Station, Inc. For each procedure, indicate whether the internal control over cash represents (1) a strength or (2) a weakness. If it is a weakness, please explain why. (a) All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. (b) The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer's office for approval. (c) At the end of each day, all cash receipts are placed in the bank's night depository. (d) The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.

Consider the cash account below. Additional Information: cash disbursements were 80% of collections. How much was the Beginning Balance of the Cash Account?

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n)

The following items may appear on a bank statement: Indicate whether the item would appear as debit or credit memo on the bank statement and whether the item would increase or decrease the balance of your account. Use the following format:

Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting.

The following procedures were recently implemented at the Pampered Pets, Inc. For each procedure, indicate whether the internal control over cash represents (1) a strength or (2) a weakness. If it is a weakness, please explain why. (a) At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers. (b) At the end of the day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank. (c) After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher and supporting documentation to the accounts payable clerk for filing. (d) Along with the petty cash expense receipts for postage, office supplies, etc., several post-dated employee checks are in the petty cash fund.

Select each of the following reconciling items as (a) an addition to the cash balance according to the bank statement, (b) deduction from the cash balance according to the bank statement, (c) an addition to the cash balance according to the company's records, or (d) a deduction from the cash balance according to the company's records. Assume that none of the transactions reported by bank debit and credit memos have been recorded by the company. Also, indicate by writing (Entry) those items that will require a journal entry in the company's accounts.

A business that requires all cash payments be made by check can use a petty cash system.

Cash equivalents are short -term investments that will be converted to cash within 120 days.

Groceries R Us, Inc. reported the following date in it's December 31, 2011 annual report. Cash and cash equivalents $2,280,000 Cash flow from operations (240,000) (1) What is the company's "cash burn" per month? (2) What is the company's ratio of cash to monthly cash expenses? (3) Interpret the ratio you computed in part 2. What are the implications for Groceries R Us, Inc.?

The actual cash received during the week ended October 31 for cash sales was $23,447.00 and the amount indicated by the cash register total was $23,457.00. Journalize the entry to record the cash receipts and cash sales. Journal

A check outstanding for two consecutive months will appear only on the first month's bank reconciliation.

In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the balance per company's records.

Which of the following should not be considered cash by an accountant?