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Accounting Chapter 6
Terms in this set (35)
An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:
Cash over and short
A voucher system is a set of procedures and approvals:
Designed to control cash payments and the acceptance of liabilities.
An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):
Outstanding checks refer to checks that have been:
Written, recorded on the company books, sent to the payee, but not yet paid by the bank.
Basic bank services do not include:
Petty Cash Management
When reimbursing the petty cash fund:
Appropriate expense accounts are debited.
Cash, not including cash equivalents, includes:
Customer checks, cashier checks, and money orders.
Preparing a bank reconciliation on a monthly basis is an example of:
Protecting assets by proving the accuracy of cash records.
It is good internal control for the recordkeeper to be in charge of writing and signing checks when the owner is out of town.
A petty cash system of control is a system used only for cash receipts.
A good internal control is to require that all cash receipts be deposited daily.
To reduce theft, the salesclerk should not have access to the accounting records for cash sales.
Separating the responsibility for a transaction between two or more individuals or departments never improves a system of internal control.
The internal control of separation of duties requires that employees duplicate each other's wor
Separation of recordkeeping for assets from the custody over assets does not prevent collusion between two or more employees to commit fraud.
One objective of internal control procedures is to safeguard the assets of the business.
summarizes the projected cash payments and cash receipts.
refers to a company's ability to pay for its current liabilities.
is a set of approvals and procedures used to control the acceptance of liabilities and cash payments.
An itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of sale.
An internal file used to store documents and information to control cash payments and to ensure that a transaction is properly authorized and recorded.
A document used to place an order with a vendor that authorizes the vendor to ship ordered merchandise at the stated price and terms.
A checklist of steps necessary for the approval of an invoice for recording and payment; also known as a check authorization.
A document used by department managers to inform the purchasing department to place an order with a vendor.
A document used to notify the appropriate persons that ordered goods have arrived, including a description of the quantities and condition of goods.
Explanation for a payment by check.
Are short-term, highly liquid investment assets.
The principles of internal control include:
Separate recordkeeping from custody of assets.
Spencer Co. decides to establish a petty cash fund with a beginning balance of $200. The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system. The journal entry to record establishing the account is:
Debit Petty Cash $200 and credit Cash $200.
Establishes procedures for verifying, approving, and recording liabilities for eventual cash payment.
The voucher system of control:
A company had $43 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:
Debit Cash Over and Short for $43.
Interest earned on the cash balance in the bank is recorded by the bank as:
An increase in the depositor's bank account.
If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:
Add the deposit to the bank statement balance.
If a check correctly written and paid by the bank for $749 is incorrectly recorded in the company's books for $794, how should this error be treated on the bank reconciliation?
Add $45 to the book balance.
Assume that the custodian of a $450 petty cash fund has $62 in coins and currency plus $383 in receipts at the end of the month. The entry to replenish the petty cash fund will include:
a debit to cash short and over of 5
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