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Exam 4: Cash and Internal Controls

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Question 61

Multiple Choice

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Common examples of cash equivalents include all of the following except:

A) Money market funds.
B) Treasury bills.
C) Certificates of deposit.
D) Accounts receivable.

E) B) and C)
F) None of the above

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Question 62

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Whether a customer uses cash,a check,or a debit card to make a purchase,the company records the transaction as a cash sale.

A) True
B) False

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Question 63

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The amount of cash reported in a company's balance sheet includes the balance of accounts receivable if cash collection is highly likely in the near future.

A company's Cash account shows a balance of $3,450 at the end of the month.Comparing the company's Cash account with the monthly bank statement reveals several additional cash transactions such as bank service fees ($50),an NSF check from a customer ($300),a customer's note receivable collected by the bank ($1,000),and interest earned ($100).Prepare the necessary entries to adjust the balance of cash.

A company's cash balance is reported in which two financial statements?

Having management periodically determine whether the amount of physical assets of the company match the accounting records is an example of which detective control?

The petty cash fund represents cash on hand and is used to pay for minor purchases.

Effective internal controls ensure a company's success and survival.

Which of the following would NOT represent good controls over cash disbursements?

The final step in reconciling the bank's cash balance and the company's cash balance is to update the company's cash balance for the items used to reconcile the bank's cash balance.

Which employees are the ones who must take final responsibility for the establishment and success of internal controls?

What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category.

Which of the following best describes the goal of internal controls?

One benefit of internal control is greater reliance by investors on reported financial statements.

When a company pays for services received using a check,it should credit Accounts Payable until the check is paid by the bank.

Cash transactions recorded by the bank but not yet recorded by the company include all of the following except

A company's cash is reported in two financial statements - income statement and statement of cash flows.

Section 404 of the Sarbanes-Oxley Act requires that a company's management document and assess the effectiveness of all internal control processes that could affect financial reporting.

A company's operating cash inflows less operating cash outflows generally equals the reported amount of net income in the income statement.

Which of the following is correct with respect to a bank reconciliation?