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Exam 6: Reporting and Analyzing Cash,fraud,and Internal Control

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Question 41

Multiple Choice

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A voucher system is a set of procedures and approvals:

A) Designed to eliminate the need for subsidiary ledgers.
B) Designed to determine if the company is operating profitably.
C) Used almost exclusively by small companies.
D) Used to ensure that the company sells on credit only to creditworthy customers.
E) Designed to control cash disbursements and the acceptance of obligations.

F) A) and E)
G) B) and D)

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Question 42

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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.

A) True
B) False

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Question 43

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A voucher system establishes procedures for verifying,approving,and recording obligations for eventual cash disbursement.

The document the purchasing department sends to the vendor that is used to place an order is the ________.

A company established a petty cash fund in April of the current year and experienced the following transactions affecting the fund during April.Prepare journal entries to establish the fund on April 1,to replenish it on April 25,and to record the increase in the fund on April 25.

On a bank statement,deposits are shown as ________,because the depositor's account is a liability on the bank's records.

The following information is available for Birch Company at December 31: Based on this information,Birch Company should report Cash and Cash Equivalents on December 31 of:

Deposits in transit are deposits made and recorded by the depositor but not yet recorded on the bank statement.

The Cash Over and Short account:

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Preparing a bank reconciliation on a monthly basis is an example of:

Because employees know that bonding is an insurance policy against loss from theft,bonding does not generally discourage loss from theft.

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

In the process of reconciling its bank statement for January,Maxi's Clothing's accountant compiles the following information: The adjusted cash balance per the books on January 31 is:

Define an internal control system and describe its purpose.

On a bank reconciliation,an unrecorded debit memorandum for printing checks is:

________ are short-term,highly liquid investment assets that are readily convertible to a known amount of cash.

A properly designed internal control system is a key part of systems design,analysis,and performance.

Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments.

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ________.