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Exam 8: Cash and Internal Controls

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Question 1

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Marbel had $2,816 million in sales and $555 million in ending accounts receivable for the current period. For the same period, Maxtel reported $4,885 million in sales and $491 million in ending accounts receivable. Calculate the days' sales uncollected for both companies as of the end of the current period. Which company is doing a better job in managing the collection of its receivables?

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Marbel: ($555/$2,816) x 365 = ...

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Question 2

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

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Control of cash disbursements is important for companies as most large thefts occur from payment of fictitious invoices.

In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information: The adjusted cash balance per the books on September 30 is:

The following account balances are taken from Mesky Sports at December 31. Calculate the number of days' sales uncollected for both years. According to this analysis, is the company's collection of receivables improving? Explain.

The entry to record reimbursement of the petty cash fund for postage expense should include:

A petty cash fund was originally established with a check for $150. In the petty cash fund on December 31 (the period-end), you find the following: Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

The clerk who has access to the cash in the cash register should not have access to the cash register tape or file.

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

A company reported net sales for Year 1 of $285,000 and $575,000 for Year 2. The year-end balances of accounts receivable were $49,000 for Year 1 and $85,000 for Year 2. Calculate the days' sales uncollected at the end of each year for this company and describe any changes in the apparent liquidity of the company's receivables.

A voucher system is a series of prescribed control procedures:

The _____________ of recording purchases records purchases under the assumption that the cash discount for prompt payment will be taken.

At the end of the current period, a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable. Calculate this company's days' sales uncollected at the end of the current period.

The principles of internal control include: establish responsibilities, maintain adequate records, insure assets, separate recordkeeping from custody of assets, and perform regular and independent reviews.

A voucher is an internal file:

At the end of the day, the cash register's record shows $1,250, but the count of cash in the cash register is $1,245. The correct entry to record the cash sales is

A company had net sales of $31,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals:

After preparing a bank reconciliation, adjustments must be made for items reconciling the bank balance and items reconciling the book balance.

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

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