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CHAPTER 8 INTERNAL CONTROL AND CASH PART 9 BRIEF EXERCISES BE 148 Match the principle of internal control to each of the following cases. a) Establishment of responsibility b) Segregation of duties c) Accountability for assets d) Documentation procedures e) Physical, mechanical and electronic controls _____ 1. Employees’ time is tracked using a time clock. _____ 2. Employees who receive shipments of goods do not have access to the accounting records for merchandise. _____ 3. Shipping documents are prenumbered. _____ 4. The bookkeeper does not have physical custody of assets. _____ 5. Only the treasurer of the company can sign checks. BE 149 Identify which principle of internal control is being followed in each of the following cases. 1. Warehouse employees do not have access to the accounting records. 2. Prenumbered shipping documents are prepared for each shipment of goods. 3. The locked warehouse is accessible only by warehouse employees with keys. 8 – 24 Test Bank for Accounting Principles, Eighth Edition BE 150 Identify the internal control procedures applicable to cash receipts for Colorado Company in each of the following cases. 1. All cashiers are bonded. 2. The treasurer compares the total cash receipts to the bank deposit daily. 3. The bookkeeper records cash receipts which are held by the treasurer. 4. Only the treasurer holds cash receipts. 5. Deposit slips are completed for each deposit. BE 151 Identify the internal control procedures applicable to cash disbursements followed by Kerry Company in each of the following cases. 1. Company checks are prenumbered. 2. Only the treasurer is authorized to sign checks. 3. Invoices are stamped PAID. 4. Blank checks are stored in a locked safe. 5. The bookkeeper, not the treasurer, records cash disbursements. BE 152 On October 1, Grayson Company’s petty cash fund of $120 is replenished. The fund contains cash of $40, and receipts for supplies of $55 and postage of $25. Prepare the journal entry to record the replenishment of the petty cash fund. BE 153 Identify whether each of the following items would be (a) added to the book balance, or (b) deducted from the book balance in a bank reconciliation. 1. EFT transfer to a supplier 2. Bank service charge 3. Check printing charge 4. Error recording check # 214 which was written for $230 but recorded for $320 5. Collection of note and interest by bank on company’s behalf BE 154 Identify whether each of the following items would be (a) added to the book balance, (b) deducted from the book balance in a bank reconciliation, (c) added to the bank balance, or (d) deducted from the bank balance. 1. Deposits in transit 2. Bank service charge 3. Collection of note and interest by bank on company’s behalf 4. NSF check 5. Outstanding checks BE 155 Identify which of the following reconciling items would require an adjusting entry to be made by Beutron Company. 1. Deposits in transit totaled $2,000. 2. A check written to the company for $350 by Taxton Company was returned NSF. 3. The bank charged the company $46 for printing checks. 4. Outstanding checks totaled $1,667 5. A debit memorandum reported an EFT of $178 to Paco Utilities 8 – 26 Test Bank for Accounting Principles, Eighth Edition BE 156 Acton Company needs to make adjusting entries for each of the following reconciling items. Identify the account to be debited and the account to be credited in each case. 1. A check for $59 written to the company by J. Neutron was returned NSF. 2. The monthly service charge by the bank was $34. 3. The bank collected a $1,000 note plus interest of $97 on the company’s behalf. The company had not accrued the interest. BE 157 The following reconciling items are applicable to the bank reconciliation for the Motley Crew Company. Indicate how each item should be shown on a bank reconciliation. a. Outstanding chec

CHAPTER 8 INTERNAL CONTROL AND CASH PART 9

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