Question 1

Describe a petty cash account and its purpose.

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Question 2

Norman Co.had $5,925 million in sales and $1,155 million in ending accounts receivable for the current period.For the same period,Opal Co.reported $5,885 million in sales and $790 million in ending accounts receivable.Calculate the days' sales uncollected for both companies as of the end of the current period and indicate which company is doing a better job in managing the collection of its receivables.

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Question 3

List the principles of internal control.

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Question 4

For each of the independent cases below,identify the principle of internal control that is violated,and recommend what should be done to remedy the violation.
1.In order to save money,Indigo Company has decided to drop its property insurance on assets; and stop bonding the cashiers who handle upwards of $5,000 in cash each day.
2.Jobs Company records each sale on a preprinted invoice.Because invoices are sometimes damaged in the process of preparation,the invoices are not prenumbered.Instead,the sales clerk writes the next number on each invoice as it is prepared.
3.Keegan Company is a very small business.Dylan Epps,one of the two office clerks,opens the mail each day and removes the cash receipts that come in the mail.Dylan also records the receipts in the cash records and the customer's account and deposits the cash in the bank.
4.Ludwig Company prides itself on hiring only the most competent employees.The owner,Jeremy Ludwig,believes that since the employees are highly competent he can show he trusts them completely by not checking up on their performance.
5.Maple Industries is a small business with three accounting employees.Each employee is well-trained and able to perform any of the accounting tasks,including handling cash receipts and cash disbursements,and preparing the bank reconciliation.Because of this cross-training,the employees share responsibilities for all of the tasks.

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Question 5

Describe a bank reconciliation and discuss its purpose.

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Question 6

Describe the basic bank services that contribute to the control of cash and identify at least two internal control objectives served by the banking activities.

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Question 7

What is a voucher system and what are the two areas for which it establishes control procedures?

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Question 8

At the end of the current period,a company reported $725,000 in net credit sales and $100,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.

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Question 9

Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation.
_____ 1.Bank service charges
_____ 2.Outstanding checks
_____ 3.Deposits in transit
_____ 4.NSF check
_____ 5.Interest on a checking account
_____ 6.The company properly wrote a check for $95.80 that the bank incorrectly paid as $9.58.
_____ 7.The bank printed checks for the depositor for a fee.
_____ 8.Bank debit memorandum
_____ 9.Bank credit memorandum
_____ 10.The bank collected a $1,000 note for the depositor.

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Question 10

Explain the difference between cash and cash equivalents.

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Question 11

A company reported net sales for 2014 of $265,000 and $545,000 for 2015.The year-end balances of accounts receivable were $39,000 for 2014 and $92,000 for 2015.Calculate the days' sales uncollected at the end of each year for this company and describe any changes in the apparent liquidity of the company's receivables.

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Question 12

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls.What are the specific requirements for auditors set forth by SOX?

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Question 13

Identify each of the following items 1 through 10 as either (A)cash or (B)cash equivalent.
_____ 1.Coins
_____ 2.Petty cash
_____ 3.Three-month certificate of deposit
_____ 4.Commercial paper
_____ 5.Currency
_____ 6.Certified check
_____ 7.Cashier's check
_____ 8.Money market accounts
_____ 9.Money orders
_____ 10.U.S.treasury bills

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Question 14

Describe the net method of accounting for purchases.Why might companies use the net method?

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Question 15

When using a voucher system,what are the steps on the invoice approval checklist that must be completed before an invoice approval is complete and a voucher prepared?

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Question 16

The treasurer of a company is responsible for cash management.List five cash management principles that are essential for effective cash management.

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Question 17

Discuss how the principles of internal control apply to cash receipts through the mail by giving several examples of good control measures that should be implemented.

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Question 18

Define an internal control system and describe its purpose.

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Question 19

What is the purpose of the days' sales uncollected ratio?

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Question 20

Discuss how the principles of internal control apply to cash receipts over-the-counter by giving several examples of good control measures that should be implemented.

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