Acct Exam 2 Chapter 7

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What does the term "bonding" mean when it refers to employees?

They have been insured against theft of assets.

Identify the example of poor internal control.

One person should be responsible for handling related transactions.

Which of the following is BEST at providing evidence that helps companies enforce the principle of establishing responsibility?

requiring identifying passcodes in order to carry out activities

________ controls enhance the accuracy and reliability of the accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.

Internal

A small business owner has two employees but each employee has a separate cash register drawer. This situation can be viewed as

supporting establishment of responsibility.

When a company allows only designated personnel to handle cash receipts, it is applying the internal control principle of

establishment of responsibility.

A voucher system is a series of prescribed control procedures that are designed to

ensure that disbursements by check are proper.

When a company uses prenumbered checks and requires an approved invoice for each check, it is using which internal control?

documentation procedures

Printing check amounts by machine in indelible ink is an example of

physical controls.

Which of the following items would most likely be paid from a petty cash fund?

working lunches for employees

Why should a bank reconciliation be prepared?

to explain any difference between the company’s balance per books and the balance per bank

Which of the following affects the cash balance per bank?

outstanding checks

A(n)________ requires a journal entry by the depositor.

NSF check

Which of the following is an example of an electronic funds transfer?

sending payroll data directly to banks for direct deposit to employee accounts

If a check written and paid by the bank for $638 is incorrectly recorded on the company’s books at $683, the appropriate treatment on the bank reconciliation would be to

add $45 to the book’s balance.

Which of the following is considered a cash equivalent?

money market funds

Cash equivalents are highly liquid investments that are both

readily convertible and very close to their maturity dates.

Which of the following would be reported on the balance sheet as a cash equivalent? Select all that apply.

60-day certificate of deposit money market fund money market savings certificate

What does a check marked NSF mean?

no sufficient funds

Which of the following statements correctly describes the reporting of cash?

Cash is listed first in the current assets section.

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