internal control

Cash consists of cash on hand and demand deposits. This includes coins, currency, and amounts on deposits in bank accounts, chequing accounts and some savings accounts.

• True

• False

Basic services provided by banks such as bank accounts, deposit slips and cheques contribute to the control and safeguarding of cash.

• True

• False

Principles of internal control include:

• Record purchases using the gross method.

• Perform regular and independent reviews.

• Divide responsibilities for related transactions and perform regular and independent reviews.

TB 07-72 The owner of Zeke's

The owner of Zeke's Landscaping Designs just hired an office manager to handle all the office functions for him. Among other responsibilities, the office manager will handle key accounting functions such as processing customer payments, writing cheques to employees to pay the payroll, handle daily bank deposits at the bank, pay suppliers, and reconcile the company bank account bank reconciliations. What internal cash control practice is being overlooked by the owner?

• Frequent preparation of bank reconciliations

• Ensuring all cash disbursements are tracked by making payments by cheque

• Separation of cash payment from cash disbursement function

An income statement account used to record cash overages and cash shortages arising from omitted petty cash receipts and from errors in making change is the

• Petty Cash account

• Cash Over and Short account

• Cash Lost account

An analysis that explains the difference between the balance of a chequing account shown in the depositor's records and the balance shown on the bank statement is a(n)

• Bank audit

• Internal audit

• Bank reconciliation

The acid-test ratio

• s also called the quick ratio

• Is also called the quick ratio and measures liquidity

• Measures profitability

The quick assets are

• Cash, accounts receivable, prepaid expenses

• Cash, short-term investments, accounts receivable

• Cash, inventory, accounts receivable

A credit memorandum from the bank may be used as

• An EFT

• An explanation for a payment by cheque

• A voucher.

A bank issues a debit memorandum

• To notify a depositor of a deduction from a depositor's account

• To notify a depositor of a deduction from a depositor's account and to notify a depositor of an NSF cheque

• To notify a depositor of an NSF cheque