Ch 08_Cash

Chapter 8—Sarbanes-Oxley, Internal Control, and CashTRUE/FALSE (easy)1. If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortageshave exceeded cash overages for the period.2. For efficiency of operations and better control over cash, a company should maintain only one bankaccount.3. The bank reconciliation is an important part of the system of internal controls.4. The main reason that the bank statement cash balance and the company's cash balance do not initiallybalance is due to timing differences.5. In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debitto Accounts Payable and a credit to Petty Cash.6. Expenditures from a petty cash fund are documented by a petty cash receipt.ANS: T PTS: 1 DIF: Easy OBJ: 08-06NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-10-Internal Control7. The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to thebalance in the Petty Cash account.8. A petty cash fund is used to pay relatively large amounts.9. The petty cash fund eliminates the need for a bank checking account.MULTIPLE CHOICE1. Which one of the following below reflects a weak internal control system?a. all employees are well supervisedb. a single employee is responsible for comparing a receiving report to an invoicec. all employees must take their vacationsd. a single employee is responsible for collecting and recording of cash2. An element of internal control isa. risk assessmentb. journalsc. subsidiary ledgersd. controlling accounts3. The cash account in the company's ledger is a(n)a. asset with a debit balanceb. asset with a credit balancec. liability with a debit balance© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.d. liability with a credit balance4. The debit balance in Cash Short and Over at the end of an accounting period is reported asa. an expense on the income statementb. income on the income statementc. an asset on the balance sheetd. a liability on the balance sheet5. What entry is required in the company's accounts to record outstanding checks?a. debit Accounts Receivable; credit Cashb. debit Cash; credit Accounts Receivablec. debit Cash; credit Accounts Payabled. none6. A $150 petty cash fund has cash of $28 and receipts of $110. The journal entry to replenish the accountwould include aa. credit to Petty Cash for $82.b. debit to Cash for $110.c. debit to Cash Over and Short for $12.d. credit to Cash for $1107. A $135 petty cash fund has cash of $44 and receipts of $93. The journal entry to replenish the accountwould include aa. credit to Petty Cash for $93.b. debit to Cash for $93.c. credit to Cash Over and Short for $2.d. credit to Cash for $49.8. Entries are made to the Petty Cash account whena. making payments out of the fund.b. recording shortages in the fund.c. replenishing the petty cash fund.d. establishing the fund.9. The type of account and normal balance of Petty Cash is a(n)a. revenue, creditb. asset, debitc. liability, creditd. expense, debit10. A $100 petty cash fund contains $89 in petty cash receipts, and $7.50 in currency and coins. Thejournal entry to record the replenishment of the fund would include aa. credit to Petty Cash for $96.50.b. credit to Cash for $89.c. debit to Cash Short and Over for $3.50.d. credit to Cash Short and Over for $3.50.11. A $140 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the accountwould include a credit toa. Cash for $120.b. Cash Over and Short for $2.© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.c. Petty Cash for $122.d. Cash for $122.12. Cash equivalentsa. are illegal in some statesb. will be converted to cash within two yearsc. will be converted to cash within 90 daysd. will be converted to cash within 120 daysEXERCISE/OTHER1. The following selected transactions relate to cash collections for a firm that maintains a $100 changefund at all times. Present entries to record the transactions for each of the two days of cash receipts from sales.(a) Actual cash in cash register, $4,512.36; cash receipts per cash register tally, $4,413.07.(b) Actual cash in cash register, $3,812.95; cash receipts per cash register tally, $3,712.16.2. The actual cash received during the week ended September 23 for cash sales was $15,543.00 and theamount indicated by the cash register total was $15,539.00. Journalize the entry to record the cash receipts and cash sales.3. The actual cash received during the week ended October 31 for cash sales was $23,447.00 and the amount indicated by the cash register total was $23,457.00. Journalize the entry to record the cash receipts and cash sales. Journal Date Description Post Ref.Debit Credit4. The actual cash received during the week ended June 7 for cash sales was $18,632.00, and the amountindicated by the cash register total was $18,628.00. Journalize the entry to record the cash receipts and cash sales.JournalDate Description Post Ref DebitCredit5.Journalize the entries to record the following:Date Description Post Ref.Debit Credit© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. Mar 1 Established a petty cash fund of $450.00Mar 31 The amount of cash in the petty cash fund is now $173.00. The fund is replenishedbased on the following receipts: office supplies, $145.00; selling expenses, $135.00.Record any discrepancy in the cash short and over account.6. Journalize the entries to record the following:Sept 1 Established a petty cash fund of $350Sept 30 The amount of cash in the petty cash fund is now $130. The fund is replenishedbased on the following receipts: office supplies, $116; postage $100.Record any discrepancy in the cash short and over account.JournalDate Description Post Ref.Debit Credit7. The Scharf Company is a retailer located in a state without sales tax. The following data was given to youto complete the transactions for the day’s sales to be recorded. All cash drawers start with $100 in change .Reg. #1 Reg.#2 Reg. #3 Reg.#4 Cash in Drawer 1,096.54 2,398.76 844.22 1,255.88Sales Reading 998.75 2,307.76 744.22 1,151.66DifferenceRecord the Journal Entries for EACH cash register to determine the cashier’s accuracy.8. Present entries to record the following transactions:(a) Established a petty cash fund of $235.00.(b) The petty cash fund now has a balance of $42.80. Replenished the fund, based on thefollowing disbursements as indicated by a summary of the petty cash receipts: officesupplies, $74.50; miscellaneous administrative expense, $92.75; and miscellaneous sellingexpense, $18.60.(c) Increased the petty cash fund to $300.00.。