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Exam 4: Cash and Internal Controls

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Question 61

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The balance shown in the August bank statement of Colt Company was $23,200.After examining the August bank statement and items included with it,the company's accountant found: What is the amount of cash that should be reported in the balance sheet as of August 31?

A) $20,700.
B) $17,200.
C) $18,700.
D) $22,200.

E) A) and B)
F) A) and C)

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Question 62

Multiple Choice

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Cash flows from investing do not include cash flows from:

A) Lending.
B) The sale of equipment.
C) Borrowing.
D) The purchase of a building.

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

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Question 63

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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.

The Sarbanes-Oxley Act (SOX) mandates which of the following?

Companies should set maximum purchase limits on debit cards and credit cards as part of internal controls.

Investing cash flows would include which of the following?

Listed below are six terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Sell office building.

McGregor Company allows customers to pay with credit cards.The credit card company charges McGregor 3% of the sale.When a customer uses a credit card to pay McGregor $200 for services provided,McGregor would:

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

Terastar Corp.reports the following amounts for 2015 and 2016. What is the trend in free cash flows relative to net income?

A bank reconciliation matches the balance of cash in the bank account with the balance of cash in the company's own records.

Listed below are six terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Checks written to the company that are returned by the bank as not having adequate funds.

The following information was taken from the bank reconciliation for Mooner Sooner Inc.at the end of the year: Bank balance: $8,000 Checks outstanding: $5,800 Note collected by the bank: $1,500 Service fee: $20 Deposits outstanding: $4,000 NSF check (bad check) returned for $300 What is the correct cash balance that should be reported in Mooner Sooner's balance sheet at the end of the year?

Which of the following would not be considered good internal control for cash receipts?

When a company pays for services received using a credit card,it should credit Accounts Payable.

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

Keeping supplies in a locked room with access allowed only to authorized personnel is an example of which preventive control?

When preparing a bank reconciliation,a deposit outstanding would be:

Cash is typically reported as a current asset in the balance sheet.

What is the link between the balance sheet and the statement of cash flows? Describe the operating,investing,and financing sections of the statement of cash flows.