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Exam 8: Cash and Internal Controls

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Question 21

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Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation.

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Question 22

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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.

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B) False

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Question 23

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

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

The principles of internal control include:

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 properly designed internal control system:

The treasurer of a company is responsible for cash management. List five cash management principles that are essential for effective cash management.

Cash equivalents:

For which item does a bank NOT issue a debit memorandum?

Liquidity refers to a company's ability to pay its near-term obligations.

Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.

A check involves three parties:

Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.

The following information is available for the Avisa Company for the month of November. a. On November 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $27,202. b. The company's bank statement shows a balance on November 30 of $29,279. c. Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459. d. A credit memo included with the bank statement indicates that the bank collected $780 on a noninterest-bearing note receivable for Avisa. The bank deducted a $10 collection fee, and credited the remainder of $770 to Avisa's account. e. A debit memo included with the bank statement shows a $67 NSF check from a customer, J. Brown. f. A deposit placed in the bank's night depository on November 30 totaled $1,675, and did not appear on the bank statement. g. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540. h. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded on the company's books. 1. Prepare the November bank reconciliation for the Avisa Company. 2. Prepare the general journal entries to bring the company's book balance of cash into conformity with the reconciled balance as of November 30.

In order to streamline the purchasing process, department managers should place orders directly with suppliers.

A company that uses the net method of recording invoices made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would include:

A seller of goods or services, usually a manufacturer or wholesaler, is known as a:

The Cash Over and Short account:

The days' sales uncollected ratio measures a company's ability to manage its debt.