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Exam 8: Cash and Internal Controls

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Question 61

True/False

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Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

A) True
B) False

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Question 62

Multiple Choice

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Prenumbered printed checks are an example of which internal control principle?

A) Technological controls.
B) Maintain adequate records.
C) Perform regular and independent reviews.
D) Establish responsibilities.
E) Divide responsibility for related transactions.

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

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Question 63

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On June 3, a company received and recorded a $4,500 invoice for merchandise on which the terms were 2/10, n/60. The company records invoices at net amounts. On June 23, the company discovered that the invoice had been incorrectly filed and the discount lost. Prepare the June 3 general journal entry to record the purchase, the June 23 entry to record the discount lost, and the August 2 entry to record payment of the invoice.

What is a voucher system?

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

Define an internal control system and describe its purpose.

Two important limitations of internal control systems are (1) human error or human fraud, and (2) cost-benefit.

When merchandise is needed, a department manager must inform the purchasing department of its needs by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

When a petty cash fund is in use:

The gross method of recording purchases refers to the method of recording:

Maxtel had net sales of $4,235 million and ending accounts receivable of $775 million. Its days' sales uncollected equals:

An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

Electronic funds transfer (EFT) is the electronic transfer of cash from one party to another.

The payee is the person who signs a check, authorizing its payment.

An internal control system consists of all of the following policies and procedures except ones designed to:

________________________ are checks written (or drawn) by the depositor, deducted on the depositor's records, and sent to the payee, but not yet recorded by the bank for payment at the bank statement date.

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared.

________________ includes currency, coins, and amounts on deposit in checking accounts and many savings accounts.

A ________ is an internal document (or file) that is used to accumulate information to control cash disbursements.

At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,035. The proper entry to account for this excess includes a: