College Acct 1- Chapter 6

Which one of the following is NOT one of the policies and procedures that make up an internal control system?

• Promote efficient operations

• Urge adherence to company policies

• Ensure reliable accounting

• Guarantee a return to investors

• Protect assets

Assume that the custodian of a $300 petty cash fund has $50 in coins and currency plus $242 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

• A debit to Cash for $250

• A credit to Cash for $250

• A debit to Petty Cash for $242

• A credit to Cash Short and Over for $8

• A debit to Cash for $250

Outstanding checks refer to checks that have been:

• Held as blank checks

• Written, recorded, sent to payees, and received and paid by the bank

• Issued by the bank

• Written and not yet recorded in the company books

• Written, recorded on the company books, sent to the payee, but not yet paid by the bank

Cash equivalents:

• Include time deposits

• Include checking accounts

• Have no immediate value

• Include savings accounts

• Are readily converted to a known cash amount

Meng Company maintains a $500 petty cash fund. On February 28, the fund is replenished. The accumulated receipts on that date represent $100 for Office Supplies, $200 for Travel Expense, and $50 for Miscellaneous Expense. There is a cash shortage of $10. The journal entry to replenish the fund on February 28 is:

• Debit Office Supplies, $100; Debit Travel Expense, $200; Debit Miscellaneous Expense, $50; Credit Cash Over and Short, $10; Credit Cash, $360.

• Debit Office Supplies, $100; Debit Travel Expense, $200; Debit Miscellaneous Expense, $50; Credit Cash Over and Short, $10; Credit Petty Cash, $360.

• Debit Office Supplies, $100; Debit Travel Expense, $200; Debit Miscellaneous Expense, $50; Debit Cash Over and Short, $10; Credit Petty Cash, $370.

• Debit Office Supplies, $100; Debit Travel Expense, $200; Debit Miscellaneous Expense, $50; Debit Cash Over and Short, $10; Credit Cash, $360.

Assume that the custodian of a $450 petty cash fund has $62 in coins and currency plus $383 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

• A debit to Cash Short and Over for $5

• A credit to Cash Short and Over for $5

• A credit to Cash for $383

• A debit to Cash for $378

• A debit to Petty Cash for $383

Internal control procedures for cash receipts DO NOT require that:

• Clerks having access to cash in a cash register should not have access to the register tape or file

• All collections for sales are received immediately upon making the sales

• Cash sales should be recorded on a cash register at the time of each sale

• Custody over cash is kept separate from its recordkeeping

• An employee with no access to cash receipts should compare the total cash recorded by the register with the record of cash receipts reported by the cashier

The entry to establish a petty cash fund includes:

• A debit to Cash and a credit to Cash Short and Over

• A debit to Cash and a credit to Petty Cash Over and Short

• A debit to Cash and a credit to Petty Cash

• A debit to Petty Cash and a credit to Cash

• A debit to Petty Cash and a credit to Accounts Receivable

Which of the following is NOT a principle of internal control?

• Establish responsibilities.

• Maintain adequate records.

• Combine recordkeeping with custody of assets.

• Divide responsibility for related transactions.

On a bank reconciliation, the amount of an unrecorded bank service charge should be:

• Deducted from the bank balance of cash

• Added to the bank balance of cash

• Noted in memorandum form only

• Deducted from the book balance of cash

• Added to the book balance of cash