Question 1

Why would a bank require a company to maintain a compensating balance?

Accepted Answer

The answer of Why would a bank require a company...

Question 2

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation.
-outstanding checks

Accepted Answer

Outstanding checks are checks that have been written by the company but have not yet been cleared by the bank. Therefore, they are subtracted from the bank statement balance during the bank reconciliation process to match the company's books.

Question 3

Match the following elements of internal control:
-control procedures

Accepted Answer

The answer of Match the following elements of internal control:
-control...

Question 4

The Garden Gate, Inc. reported the following data in its August 31 annual report.
Cash and cash equivalents $ 485 625
Cash flow from operations 630,000)a) What is the company's "cash burn" per month?
b) What is the company's ratio of cash to monthly cash expenses?
c) Interpret the ratio you computed in part 2. What are the implications for The Garden Gate, Inc.?

Accepted Answer

The answer of The Garden Gate, Inc. reported the following...

Question 5

Match the following elements of internal control:
-control environment

Accepted Answer

The control environment is the overall attitude of management and employees regarding the importance of controls, setting the tone for the organization's internal control system.

Question 6

Farm Store, Inc. reported the following data in its December 31 annual report.
Cash and cash equivalents
$1,050,000
Negative cash flows from operations
420,000)a) What is the company's "cash burn" per month?
b) What is the company's ratio of cash to monthly cash expenses?
c) Interpret the ratio you computed in part 2. What are the implications for Farm Store, Inc.?

Accepted Answer

The answer of Farm Store, Inc. reported the following data...

Question 7

Aspen, Inc. reported the following data in its annual report:
Cash and cash equivalents $ 460,000
Cash flow from operations 240,000)1) What is the company's "cash burn" per month?
2) What is the company's ratio of cash to monthly cash expenses?

Accepted Answer

The answer of Aspen, Inc. reported the following data in...

Question 8

Match the following elements of internal control:
-information and communication

Accepted Answer

Information and communication are used by management for guiding operations and ensuring compliance with requirements. This element of internal control ensures that all relevant information is identified, captured, and communicated in a form and timeframe that enable people to carry out their responsibilities.

Question 9

The following data is from the Autumn Company for the past four years.  Calculate the following:

Accepted Answer

The answer of The following data is from the Autumn...

Question 10

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Bank charges

Accepted Answer

Bank charges are typically recorded as an adjustment to the company's books because the company needs to account for the expense that was not previously recorded in its ledger.

Question 11

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Note collected by the bank

Accepted Answer

The answer of Match each item to a bank statement...

Question 12

Groceries R Us, Inc. reported the following data in its annual report.
Cash and cash equivalents $2,280,000
Cash flow from operations 240,000)a) What is the company's "cash burn" per month?
b) What is the company's ratio of cash to monthly cash expenses?
c) Interpret the ratio you computed in part 2. What are the implications for Groceries R Us, Inc.?

Accepted Answer

The answer of Groceries R Us, Inc. reported the following...

Question 13

Match each item to a bank statement adjustment, a company books adjustment, or either.
-NSF check

Accepted Answer

An NSF (Non-Sufficient Funds) check is an adjustment on the company's books because when a check is returned due to insufficient funds, the company must reverse the previously recorded deposit.

Question 14

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Outstanding checks

Accepted Answer

Outstanding checks are adjustments made on the bank statement. The bank statement may show checks that have not yet cleared the account, so these checks need to be subtracted from the balance on the statement to get an accurate account balance.

Question 15

Match the following elements of internal control:
-monitoring

Accepted Answer

Monitoring is a process used to locate weaknesses in the internal control system and to improve controls, ensuring they are effective and updated as necessary.

Question 16

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Interest revenue

Accepted Answer

Interest revenue would be recorded in the company's books as a revenue adjustment, but it would not typically appear on a bank statement as it is not related to banking transactions. Therefore, it is only a company books adjustment.

Question 17

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Error in recording a check

Accepted Answer

An error in recording a check is corrected on the company's books because the mistake was made by the company when recording the transaction.

Question 18

Match each item to a bank statement adjustment, a company books adjustment, or either.
-Deposit in transit

Accepted Answer

Deposits in transit are adjustments on the bank statement side because they represent amounts that have been recorded by the company but not yet reflected on the bank statement.

Question 19

Match the following elements of internal control:
-risk assessment

Accepted Answer

Risk assessment involves identifying, analyzing, and assessing the likelihood of vulnerabilities within an organization's internal control system.

Question 20

The following data is from the Muffin Shoppe for the past four years.  Calculate the following:

Accepted Answer

The answer of The following data is from the Muffin...

Quiz 7: Sarbanes-Oxley, Internal Control, and Cash

Why would a bank require a company to maintain a compensating balance?

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -outstanding checks

Match the following elements of internal control: -control procedures

Match the following elements of internal control: -control environment

Aspen, Inc. reported the following data in its annual report: Cash and cash equivalents $ 460,000 Cash flow from operations 240,000)1) What is the company's "cash burn" per month? 2) What is the company's ratio of cash to monthly cash expenses?

Match the following elements of internal control: -information and communication

The following data is from the Autumn Company for the past four years. Calculate the following:

Match each item to a bank statement adjustment, a company books adjustment, or either. -Bank charges

Match each item to a bank statement adjustment, a company books adjustment, or either. -Note collected by the bank

Match each item to a bank statement adjustment, a company books adjustment, or either. -NSF check

Match each item to a bank statement adjustment, a company books adjustment, or either. -Outstanding checks

Match the following elements of internal control: -monitoring

Match each item to a bank statement adjustment, a company books adjustment, or either. -Interest revenue

Match each item to a bank statement adjustment, a company books adjustment, or either. -Error in recording a check

Match each item to a bank statement adjustment, a company books adjustment, or either. -Deposit in transit

Match the following elements of internal control: -risk assessment

The following data is from the Muffin Shoppe for the past four years. Calculate the following: