Accounting Chp 8

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Author:
tchmura
ID:
134449
Filename:
Accounting Chp 8
Updated:
2012-02-11 17:08:54
Tags:
chp Cash Internal Controls
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Description:
Cash & Internal Controls True & False
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  1. The use of internal controls provides guaranteed protection against losses due to operating activities
    False

    Can't guarantee
  2. A properly designed internal control system is a key part of accounting info systems design, analysis and preformance
    True
  3. Internal control policies and procedures are identical across companies
    False

    policies & procedures differ
  4. Maintaining adequate records is an important internal control principle
    True
  5. Proper internal control means that responsibilitiy for a task is clearly established and assigned to one person.
    True
  6. Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.
    True
  7. An internal control system refers to the policies and procedures companies use to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
    True
  8. Internal control systems used to monitor and control operations are a low priority for managers.
    False
  9. 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.
    True
  10. Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft.
    False
  11. Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.
    False

    Should be separate
  12. Once a good system of internal control is in place, it rarely needs review.
    False

    Always necessary to make sure policies have not changed and controls are working properly
  13. Two important limitations of internal control systems are (1) human error or human fraud, and (2) cost-benefit.
    True
  14. Collusion is when a person embezzles money from a company and tries to hide the evidence.
    False

    It is when two or more people work together to steal, etc. from a company because one person doesn't have full control
  15. Separation of duties divides responsibility for a transaction or a series of transactions between two or more individuals or departments. Separation of duties reduces the risk of error and fraud.
    True
  16. Cash includes currency, coins, and the deposits in most checking accounts.
    True
  17. Cash equivalents are short-term highly liquid investment assets that are easily converted to cash, and have maturities of one year.
    False

    They have near-term maturities
  18. Liquidity refers to a company's ability to pay its near-term obligations.
    True
  19. Money orders, cashier's checks, and certified checks are examples of cash equivalents.
    False
  20. Checking accounts are also called demand deposits.
    True
  21. Basic bank services such as bank accounts, bank deposits, and checking contribute to the control and safeguarding of cash.
    True
  22. The payee is the person who signs a check, authorizing its payment.
    False

    it is the recipient
  23. Electronic funds transfer (EFT) is the use of electronic communicattion transfer of cash from one party to another.
    True
  24. Cancelled checks are checks the bank has paid and deducted from the customer's account during the period.
    True
  25. A check involves 3 parties: the maker who signs the check, the payee who is the recipient, and the bank on which the check is drawn.
    True
  26. Internal control devices for banking activities include signature cards, deposit tickets, checks, and bank statements
    True
  27. The days' sales uncollected ratio reflects on the liquidity of accounts receivable.
    True
  28. The days' sales uncollected ratio is calculated by dividing accounts receivable by net sales and multiplying this quotient by 365
    True
  29. When evaluating the days' sales uncollected ratio, generally the less time that money is tied up in receivables often translates into increased profitability.
    True
  30. Internal control of cash receipts aims to ensure that all cash received is properly recorded and depositied
    True
  31. If the Cash Over and Short account has a debit balance at the end of the period, the amount is reported as miscellaneous revenue.
    False

    It is an expense
  32. The clerk who has access to the cash in the cash register should not have access to the cash register tape or file.
    True
  33. To streamline a voucher system, procedures for purchasing, receiving, and paying for merchandise can be performed by one department or individual.
    False

    one dept. or individual does not provide a check or control on the action
  34. Cash receipts by mail requires only two people: One to open the mail, and a second person to deposit the cash in the bank and record the cash receipt in the accounting records.
    False

    One person is doing more than one responsibility
  35. A voucher is an internal document or file used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded.
    True
  36. Assume that cash sales according to the register file total $805 but the amount of cash in the register is $785. This cash shortage of $20 represents a Miscellaneous Expense.
    True
  37. The Petty Cash account is a separate checking account used for small amounts.
    False

    Not a checking account
  38. All disbursements from petty cash should be documented by a petty cash receipt.
    True
  39. The journal entry for petty cash reimbursement involves a debit to the appropriate expenses and a credit to Petty Cash.
    False

    Credit to cash
  40. 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.
    True
  41. Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.
    False

    They have not cleared the bank so bank has not deducted from the customer's account
  42. When merchandise is needed, a department manager must inform the purchasing dept of its needs by preparing and signing a purchase requisition, which lists the merchandise needed and requests that it be purchased.
    True
  43. In order to streamline the purchasing process, dept managers should place orders directly with suppliers.
    False

    Everyone has their own responsibility
  44. The Discounts Lost account represents the savings earned in taking advantage of purchase discounts.
    False

    it is what they lost for not taking advantage of the discounts

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