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Exam 8: Banking Procedures and Control of Cash

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Question 91

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The Petty Cash account is used to pay for small items such as postage stamps and supplies.

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Question 92

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External control includes control over the assets as well as ways of monitoring the company's operations.

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Question 93

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Calculate from the following information accumulated by Linda Lee the adjusted bank balance at the end of August 2020. Bank statement ending cash balance $2,500 General ledger cash balance ending 2,750 Bank monthly service charge 20 Deposits in transit 1,400 Outstanding cheques 1,235 NSF cheque returned with bank statement 65

A payment for $49 is incorrectly recorded in the accounting records as $94. The $45 error should be shown on the bank reconciliation as

Discuss reasons why a manager would be concerned about developing a system of internal control over the cash receipts and cash payments of the business. Describe at least five company policies that would be included in an internal control system.

If the ending balance in the Cash Short/Over account is a debit, it indicates that cash shortages have exceeded cash overages for the period.

List at least five company policies that would be included in an internal control system.

Internal control over a company's assets should include the following policy:

The cheque is written and signed by the

The drawee of the cheque is the person receiving the money.

The change fund is what type of account?

The entry to replenish the petty cash fund included a debit to Equipment instead of Supplies for the purchase of supplies. This would cause

An example of an internal control is

If there is an overage in the petty cash fund it would be considered other income.

If a business deposits a customer's cheque and later learns that it is an insufficient funds cheque, the

The May bank statement for Lawn Services shows a balance of $6,300, but the balance per books shows a cash balance of $7,980. Other information includes 1. A cheque for $200 to pay the electric bill was recorded incorrectly on the books as $20. 2) Included on the bank statement was a note collected by the bank for $300 plus interest of $30. 3) Cheques outstanding totaled $360. 4) Bank service charges were $50. 5) Deposits in transit were $2,140. The adjusted cash balance at the end of May should be

When a cheque is presented for payment, the bank will

Which of the following would NOT be shown on the bank statement?

The bank statement included bank charges. On the bank reconciliation, the item is