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

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Question 51

Multiple Choice

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The term cash includes

A) coins, currency (paper money) , checks
B) money orders, and money on deposit that is available for unrestricted withdrawal
C) short-term receivables
D) both a and b

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Question 52

True/False

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Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus prevent fraud and misleading financial statements.

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Question 53

Multiple Choice

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Harris Company had checks outstanding totaling $15,400 on its May bank reconciliation. In June, Harris Company issued checks totaling $64,900. The June bank statement shows that $47,600 in checks cleared the bank in June. A check from one of Harris Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Harris Company's June bank reconciliation should be

Roper Electronics received its bank statement for the month of August with an ending balance of $11,740.00. Roper determined that check #613 for $155.00 and check #601 for $420.00 were both outstanding. Also, a $6,900.00 deposit for August 30th was in transit as of the end of the month. Northern Regional Bank also collected a $5,000.00 notes receivable on August 1st that was issued March 1st at 12% annual interest. No interest revenue has been accrued on this note and Northern Regional Bank charged a $35.00 fee for the collection service.The bank statement reveals a bank service charge of $20.00. A customer check for $68.00 was returned with the bank statement marked "NSF". The ending balance of the Roper cash account is $12,938.00. Complete a bank/account reconciliation and prepare any necessary journal entries for the reconciliation.

The notification accompanying a check that indicates the specific invoice being paid is called a

Which one of the following would not cause a bank to debit a company's account?

During 2010, Tempo Inc has monthly cash expenses of $115,000. On December 31, 2010, their cash balance is $1,437,500. The ratio of cash to monthly cash expenses is

Distinguish preventive controls from detective controls and give examples of each as they relate to cash.

Money orders are considered cash.

A voucher

The bank reconciliation

You began your new job as the accountant at Bolivar Industries during the month of December. During your first month, you found several interesting issues. 1) While looking through the invoices, you found Invoices 213-242, 245-271, and 275-290. It appears that invoices 243, 244, 272, 273, and 274 are missing. 2) During the month, Clerk # 3 issued $250 in refunds as compared to Clerks #1, #2, and #4 who issued less than $50 each. 3) The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month. 4) Business is generally brisk during the holiday season, but two weeks before Christmas there was a sudden increase in slow payments. REQUIRED: Part A: What kind of warning signs could be associated with these issues? Part B: What control could you put in place regarding cash refunds mentioned in Part A (2)?

Cash equivalents

In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records.

The debit recorded in the journal to reimburse the petty cash fund is to

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

Which of the following would be deducted from the balance per books on a bank reconciliation?

Cash equivalents include

When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

Which of the following items that appeared on the bank reconciliation did not require an adjusting entry?