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Exam 7: Sarbanes-Oxley,internal Control,and Cash

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Question 51

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Internal control does not consist of policies and procedures that

A) protect assets from misuse
B) ensure employees and managers comply with laws and regulations
C) guarantee the company will earn a profit
D) ensure that business information is accurate

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

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Question 52

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Groceries R Us,Inc.reported the following data in its annual report. a What is the company's "cash burn" per month? b What is the company's ratio of cash to monthly cash expenses? c Interpret the ratio you computed in part 2.What are the implications for Groceries R Us,Inc.?

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1. $240,000/12 = $20,000 per month

2. ...

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Question 53

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Which of the following would be subtracted from the balance per bank on a bank reconciliation?

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation.Calculate the adjusted cash balance per books on May 31.

The following data is from the Muffin Shoppe for the past four years. $\begin{array}{l}\hline\mid\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad~~\mid\quad\quad\quad\quad\text { Year Ending December } 31 \quad\mid\\\begin{array}{|l|r|r|r|r|} \hline & \text { Year } 1 & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\ \hline \text { Cash \& cash equivalents } & 38,788 & 65,216 & 70,691 & 78,274 \\ \hline \text { Cash flow from operations } & 39,264 & 50,580 & 45,768 & 57,744 \\\hline\end{array}\end{array}$ Calculate the following: $\begin{array}{l}\hline\mid\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad~~\mid\quad\quad\quad\quad\text { Year Ending December } 31 \quad\mid\\\begin{array}{|l|r|r|r|r|} \hline & \text { Year } 1 & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \\ \hline \text { Cash \& cash equivalents } & \\ \hline \text { Cash flow from operations } & \\\hline\end{array}\end{array}$

Consider the following information taken from the cash account.Assume cash payments were 80% of collections. $\begin{array}{|c|l|}\hline \text { Cash } & \\\hline ? ? & \text { Beg. balance } \\\hline \$ 115,375 & \text { Collections } \\\hline ? ? & \text { Disbursements } \\\hline \$ 80,275 & \text { End balance } \\\hline\end{array}$ How much was the beginning balance of the cash account?

Expenditures from a petty cash fund are documented by a petty cash receipt.

The amount of deposits in transit is included on the bank reconciliation as an

The bank statement for Farmer Co.indicates a balance of $7,735.00 on June 30.After the journals for June had been posted,the cash account had a balance of $4,098.00.Prepare a bank reconciliation on the basis of the following reconciling items: a Cash sales of $742 had been erroneously recorded in the cash receipts journal as $724. b Deposits in transit not recorded by bank,$425. c Bank debit memo for service charges,$35. d Bank credit memo for note collected by bank,$2,475 including $75 interest. e Bank debit memo for $256 NSF not sufficient funds check from Janice Smith,a customer. f Checks outstanding,$1,860.

When the voucher system is used,the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.

Roper Electronics received its bank statement for the month of August with an ending balance of $11,740.Roper determined that check #613 for $155 and check #601 for $420 were both outstanding.Also,a $6,900 deposit for August 30 was in transit as of the end of the month.Northern Regional Bank also collected a $5,000 notes receivable on August 1 that was issued March 1.Accrued interest is $250.Northern Regional Bank charged a $35 fee for the collection service.The bank statement reveals a bank service charge of $20.A customer check for $68 was returned with the bank statement marked "NSF." The ending balance of the Roper cash account is $12,938. Prepare a bank/account reconciliation and any necessary journal entries for the reconciliation.

Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus deter fraud and prevent misleading financial statements.

Jamison Company gathered the following reconciling information in preparing its June bank reconciliation: $\begin{array}{|l|r|}\hline \text { Cash balance per bank, } 6 / 30 & \$ 13,000 \\\hline \text { Note receivable collected by bank } & 4,000 \\\hline \text { Outstanding checks } & 7,000 \\\hline \text { Deposits-in-transit } & 2,500 \\\hline \text { Bank service charge } & 35 \\\hline \text { NSF check } & 1,900 \\\hline\end{array}$ Using the above information,determine the cash balance per books before adjustments for the Jamison Company.

An element of internal control is

When a firm uses internal auditors,it is adhering to which of the following internal control elements?

All bank memos reported on the bank reconciliation require entries in the company's accounts.

Sarbanes­Oxley applies to

Internal control is enhanced by separating the control of a transaction from the record-keeping function.

Accompanying the bank statement was a debit memo for an NSF check received from a customer.What entry is required in the company's accounts?

A $200 petty cash fund has cash of $20 and receipts of $177.The journal entry to replenish the account would include a credit to