Chapter 9 - College Accounting: A Practical Approach

Question 1

What is internal control?

Answer 1

Methods to control assets and monitor operations

Question 2

What does internal control prevent?

Answer 2

Avoidable loss

Question 3

How many objectives are there to internal control?

Answer 3

3

Question 4

What are the three objectives of internal control?

Answer 4

1. Assets are safeguarded and used for business
2. Business info is accurate
3. Compliance

Question 5

How many general principles of internal control are there?

Answer 5

7

Question 6

What does a signature card do?

Answer 6

Verify the authenticity of the signature on a cheque

Question 7

What is endorsement?

Answer 7

Signing by depositing party

Question 8

Who is the drawer?

Answer 8

The person writing the cheque

Question 9

Who is the drawee?

Answer 9

The bank transfer funds

Question 10

Who is the payee?

Answer 10

The person receiving the funds or being paid

Question 11

What are cancelled cheques?

Answer 11

Cheques processed by the bank and non-negotiable

Question 12

What is the purpose of a bank reconciliation?

Answer 12

Prove accuracy of company and bank records

Question 13

What are deposits in transit?

Answer 13

Deposits not yet recorded by the bank

Question 14

What are outstanding cheques?

Answer 14

Cheques that are written but have not yet cleared the bank

Question 15

What is petty cash?

Answer 15

Funds used to pay small day to day expenses

Question 16

What type of account is petty cash?

Answer 16

Asset

Question 17

What report does petty cash fall on?

Answer 17

Balance sheet

Question 18

What is a custodian in regards to petty cash?

Answer 18

The person designated to control petty cash

Question 19

Does the petty cash account get regularlily effected by journal entries?

Answer 19

NO

Question 20

What type of slip is used with petty cash to record transactions in the funds?

Answer 20

Petty cash voucher

Question 21

What two signatures are on the petty cash voucher?

Answer 21

Person giving the money out and person using the money

Question 22

What is a tool used that is like a worksheet for petty cash?

Answer 22

Auxiliary Petty Cash Record

Question 23

What is a change fund?

Answer 23

Cash used to make change for customers paying in cash

Question 24

What is another name for change fund?

Answer 24

Float

Question 25

Does the float change day to day?

Answer 25

NO

Question 26

What type of account is the change fund?

Answer 26

Asset

Question 27

What report can you find the change fund on?

Answer 27

Balance Sheet

Question 28

What is the account used to record small errors in giving change?

Answer 28

Cash over and shorts

Question 29

What type of account is the cash over and shorts?

Answer 29

Expense furthermore miscellaneous expense

Question 30

What report would you find the over and short account on?

Answer 30

Income Statement

Question 31

What account do over and shorts effect on the cash side?

Answer 31

Other income

Question 32

When is over and short a revenue?

Answer 32

When there is a credit balance