Chapter 4 Accounting

1. Which of the following reconciling items does not require a journal entry?

Deposits in transit

Bank collection of notes receivable

Bank service charge

NSF check

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2. Each of the following is an example of a control procedure, except

Sound personell procedures

Limited access to assets

A sound marketing plan

Separation of duties

3. A check was written for $462 to purchase supplies. The check was recorded in the journal as $426. The entry to correct the error would

Increase supplies 36

Decrease cash 36

Decrease supplies 36

Both a and b

4. Which of the following is an example of poor internal control?

Rotate employees through various jobs

The accounting department compares goods received with the related purchase order

Employees must take vacations

The mailroom clerk records daily cash receipts in the journal

5. A cash budget helps control cash by

Developing a plan for increasing sales

Ensuring accurate cash records

Helping to determine whether additional cash is available for investments or new financing is needed

All of the above

6. Internal control has its own terminology. Match each internal control concept with its term by writing the appropriate letter in the space provided

Internal control cannot always safeguard against this problem

this is often mentioned as the cornerstone of a good system of internal control

pay employees enough to require them to do a good job

this procedure limits access to sensitive data

this type of insurance policy covers losses due to employee theft

trusting your employees can lead you to overlook this procedure

this is the most basic purpose of internal control

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