Question 1

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Check written on the company's account and paid by the bank is returned with the bank statement

Accepted Answer

The check has already been paid by the bank and is reflected in the bank statement, so it does not need to be adjusted in the reconciliation.

Question 2

A(n) _______________ is a form sent by the seller to the buyer as evidence of a sale.

Accepted Answer

The answer of A(n) _______________ is a form sent by...

Question 3

Match the term with the statement that best defines it.
-Consists of all methods and records used to accurately report an entity's transactions.

Accepted Answer

An accounting system is the set of methods and records used to accurately report an entity's transactions.

Note: Accounting controls refer to the policies and procedures designed to ensure the accuracy and reliability of financial reporting, while administrative controls relate to the management of an organization's operations. The audit committee and board of directors are two important components of corporate governance.

Question 4

Match the action with the category of internal control procedures
-Independent verification

Accepted Answer

Independent verification involves one department or individual checking the work of another to ensure accuracy and compliance with policies.

Question 5

A(n) ____________________ is a form that a department uses to initiate a request to order merchandise.

Accepted Answer

The answer of A(n) ____________________ is a form that a...

Question 6

Match the action with the category of internal control procedures
-Proper authorization

Accepted Answer

Proper authorization is when specific authority is given by management for the performance of activities.

Answer: A
 One department should check on another is an example of segregation of duties where multiple departments or individuals are involved in a process to ensure no one person has too much control.

Answer: B
 Internal audit staff ensure all is working as intended refers to monitoring and reviewing internal control procedures to ensure they are effective.

Answer: C
 Accounting and cash collection is properly separated is an example of segregation of duties where different functions are assigned to different individuals to prevent fraud or errors.

Answer: D
 Blank checks are locked at all times when not in use is an example of physical control where measures are taken to protect assets such as locking up blank checks to prevent theft or misuse.

Answer: E
 Origination of initial entry into accounting system refers to recording transactions accurately and timely to ensure the accounting system's completeness and accuracy.

Question 7

Match the action with the category of internal control procedures
-Safeguarding assets

Accepted Answer

Locking blank checks when not in use is a direct method of safeguarding assets by preventing unauthorized access or theft.

Question 8

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Service charge on the May bank statement for new checks

Accepted Answer

Service charges on a bank statement, such as for new checks, are expenses recognized by the company. Therefore, they are subtracted from the company's book balance to reconcile with the bank's records.

Question 9

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Check written in May that does not appear on the bank statement

Accepted Answer

A check written in May that does not appear on the bank statement is an outstanding check. It has been recorded in the company's books but has not yet been processed by the bank, so it is subtracted from the bank balance in the reconciliation to match the company's records.

Question 10

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Customer's NSF check is returned with the bank statement

Accepted Answer

A customer's NSF (Non-Sufficient Funds) check returned with the bank statement would be a subtraction from the book balance, as the company would have previously recorded this check as a deposit, increasing their book balance. When the check is returned NSF, the company must reverse this entry, decreasing their book balance.

Question 11

______________________________ are the crucial link between economic transactions entered into by an entity and the accounting for these events.

Accepted Answer

The answer of ______________________________ are the crucial link between economic...

Question 12

Match the term with the statement that best defines it.
-Controls that are focused more on efficient operation than with correct reporting of information.

Accepted Answer

Administrative controls are focused on efficiency rather than reporting accuracy. Accounting controls are focused on accurate reporting of financial information. Accounting system refers to the software and processes used for financial recording. Audit committee is responsible for overseeing financial audits. Board of directors is the governing body that makes strategic decisions for the organization.

Question 13

Match the action with the category of internal control procedures
-Segregation of duties

Accepted Answer

Segregation of duties is a key internal control that aims to reduce the risk of errors or fraud by dividing responsibilities among different individuals. In this context, separating the accounting and cash collection duties ensures that no single individual has control over all aspects of a financial transaction, thereby reducing the risk of misappropriation of assets or financial misstatement.

Question 14

A(n) ___________________ is a form used by the receiving department to account for the quantity and condition of merchandise received from a supplier.

Accepted Answer

The answer of A(n) ___________________ is a form used by...

Question 15

Match the term with the statement that best defines it.
-Provides direct contact between the shareholders and the independent auditing firm.

Accepted Answer

The audit committee provides direct contact between the shareholders and the independent auditing firm.

Question 16

A(n) _________________ is a form the accounting department uses before making payment to document the accuracy of all information about a purchase.

Accepted Answer

The answer of A(n) _________________ is a form the accounting...

Question 17

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Interest earned on the checking account for May

Accepted Answer

Interest earned on the checking account is an addition to the book balance because it increases the company's cash balance as recorded in its books.

Question 18

Match
Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation.
-Customer's check which was deposited on May 31 is not listed on the bank statement

Accepted Answer

This item represents a deposit in transit, which means it was recorded by the company but not yet by the bank. Therefore, it should be added to the bank balance on the reconciliation to reflect the amount that will be credited by the bank.

Question 19

A(n) ____________________ is a form sent by the purchasing department to the supplier.

Accepted Answer

The answer of A(n) ____________________ is a form sent by...

Question 20

Match the term with the statement that best defines it.
-Procedures concerned with safeguarding the assets or the reliability of financial statements.

Accepted Answer

Accounting controls are procedures put in place to protect a company's assets and ensure the accuracy of financial statements. They include measures such as segregating duties, conducting regular internal and external audits, and establishing a system of checks and balances.

B) Accounting system refers to the procedures, processes, and software used by a company to record and report financial transactions.

C) Administrative controls are policies and procedures that govern the day-to-day operations of a company, such as hiring practices and employee training.

D) Audit committee is a group of independent directors responsible for overseeing a company's financial reporting and auditing processes.

E) Board of directors is a group of elected individuals responsible for setting the overall strategic direction of a company and providing guidance to management.

Quiz 6: Cash and Internal Control

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Check written on the company's account and paid by the bank is returned with the bank statement

A(n) _______________ is a form sent by the seller to the buyer as evidence of a sale.

Match the term with the statement that best defines it. -Consists of all methods and records used to accurately report an entity's transactions.

Match the action with the category of internal control procedures -Independent verification

A(n) ____________________ is a form that a department uses to initiate a request to order merchandise.

Match the action with the category of internal control procedures -Proper authorization

Match the action with the category of internal control procedures -Safeguarding assets

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Service charge on the May bank statement for new checks

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Check written in May that does not appear on the bank statement

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Customer's NSF check is returned with the bank statement

______________________________ are the crucial link between economic transactions entered into by an entity and the accounting for these events.

Match the term with the statement that best defines it. -Controls that are focused more on efficient operation than with correct reporting of information.

Match the action with the category of internal control procedures -Segregation of duties

A(n) ___________________ is a form used by the receiving department to account for the quantity and condition of merchandise received from a supplier.

Match the term with the statement that best defines it. -Provides direct contact between the shareholders and the independent auditing firm.

A(n) _________________ is a form the accounting department uses before making payment to document the accuracy of all information about a purchase.

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Interest earned on the checking account for May

Match Latahmer Corporation is reconciling its May bank account. For each item listed, state how it would be handled on the bank reconciliation. -Customer's check which was deposited on May 31 is not listed on the bank statement

A(n) ____________________ is a form sent by the purchasing department to the supplier.

Match the term with the statement that best defines it. -Procedures concerned with safeguarding the assets or the reliability of financial statements.