Quiz 7 Flashcards
When preparing a bank reconciliation, if the adjusted book balance and the adjusted bank balance are equal, then there is no need to have an external auditor test internal controls for the “cash” account
false
the use of internal controls provides guaranteed protection against losses due to operating activities
false
an internal control system is comprised of the policies and procedures companies use to protect assets, ensure reliable accounting and promote efficient operations
true
the principles of internal control include: ensure transactions and activities are authorized, maintain records, insure assets, separate record-keeping and custody of assets, and perform internal and internal audits
true
risk involved in e-commerce include: credit card theft, computer viruses and impersonation
true
firewalls and encryption can be used as methods to eliminate some of the risks involved in e-commerce
true
separation of duties divides responsibility for a series of transactions between two or more employees or departments despite the increased complexity separation of duties reduces the risk of error and fraud
true
Cash consists of cash on hand and demand deposits this includes coins currency and amounts on deposits in bank accounts chequing accounts and some saving accounts
true
Liquidity measures how easily assets can be converted to another asset or be used to pay for services or obligations
true
If cash over and short has a debit at the end of the period the dollar amount represents miscellaneous revenus
false
cash sales total $750 and the amount of cash in the register is $685 the shortage of $20 represents an expense
true
the petty cash account is a separate chequing account used for small anounts
false
all monies disbursed from petty cash should be documented by a petty cash receipt
true
the journal entry for petty cash reimbursement is a debit to various expenses and a credit to petty cash
false
the petty cash fund should be reimbursed at the period even if the fund is not low on money
true
the entry to increase the balance in petty cash from$50 to $75 would include a credit to petty cash of $25
false
banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions
true
and NSF cheque for $17.50 would be recorded as a debit to cash and a credit to accounts receivable
false
factors that cause the bank statement balance of a chequing account to be different from the business chequing account balance include outstanding cheques deposits in transit deductions for bank fees additions for interest and errors
true
an internal control system is the policies and procedures that managers use to….
protect assets, ensure reliable accounting, promote efficient operations, encourage adherence to company policies
cash equivalents…..
- are readily convertible to a know cash amount
- include short-term investments purchased to increase earnings
- are often combined with cash as a single balance sheet item
- are readily convertible to a know cash amount and include short-term investments purchased to increase earnings
and income statement account used to record cash overages and cash shortages arising from omitted petty cash receipts and from errors in making change is the ….
cash over and short account
the entry necessary to establish a petty cash fund should include…
a credit to cash and a debit to petty cash
in reimbursing the petty cash fund….
expense accounts are debited
outstanding cheques are cheques that
have been written recorded on the company books and sent to the payees but have not yet been paid by the bank
