Transcribed image text: 1. Which of the following describes the internal control procedure "assignment of responsibilities"? A) To validate their accounting records, a company should have an audit by an external accountant. B) Separate the custody of assets from accounting. C) External auditors monitor internal controls. D) With clearly assigned responsibilities, all important jobs get done. 2. Which of the following describes the internal control procedure "separation of duties"? A) Cashiers must not have access to accounting records. B) External auditors will monitor internal controls. C) The information system is critical. D) Prenumber invoices and other documents. 3. Which of the following describes the internal control procedure "proper documents"? A) Mandatory vacations will improve internal control. B) Separate the custody of assets from accounting. C) Prenumber invoices and other documents. D) A company should purchase a fireproof vault. 4. Employees who receive shipments of goods do not have access to the accounting records for merchandise. Which of the following principles of internal control does the company followot follow:? A. D. Physical controls Establishment of responsibility Segregation of duties E. Independent internal verification F. Human resource controls Documentation procedures ABC B. C. 1. Involves the review, comparison, and reconciliation of data prepared by other employees. Which of the following principles of internal control does the company followot follow: A. Establishment of responsibility B. Segregation of duties D. Physical controls C. Documentation procedures E. Independent internal verification F. Human resource controls 2. Three people handle cash sales from the same cash register drawer. Which of the following principles of internal control does the company followot follow: D. Physical controls A. Establishment of responsibility B. Segregation of duties E. Independent internal verification F. Human resource controls C. Documentation procedures I Q3 Match the principle of internal control to each of the following cases. a) Establishment of responsibility b) Segregation of duties c) Accountability for assets d) Documentation procedures e) Physical controls 1. Cash is locked in a safe overnight. 2. Employees who receive shipments of goods do not have access to the accounting records for merchandise. 3. Shipping documents are prenumbered. 4. The bookkeeper does not have physical custody of assets. 5. Only the treasurer of the company can sign checks. Q4 Match each of the following principles of internal control with the appropriate description below. D. Physical controls A, Establishment of responsibility B. Segregation of duties E. Independent internal verification F. Human resource controls C. Documentation procedures 1. Involves the review, comparison, and reconciliation of data prepared by other employees. 2. Provide evidence that transactions and events have occurred. I 2 3. Includes the authorization and approval of transactions. 4. Rotating employees' duties and requiring employees to take vacations. 5. Related activities should be assigned to different individuals. 6. Using garment sensors to deter theft. Q5 Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described. Internal Control Principles A. Establishment of responsibility B. Segregation of duties C. Physical controls D. Documentation procedures E. Independent internal verification F. Human resource controls ? 1. The same person opens incoming mail and posts the accounts receivable subsidiary ledger. 2. Three people handle cash sales from the same cash register drawer. 3. A clothing store is experiencing a high level of inventory shortages because people try on clothing and walk out of the store without paying for the merchandise. - 4. The person who is authorized to sign checks approves purchase orders for payment. 5. Some cash payments are not recorded because checks are not prenumbered. 6. Cash shortages are not discovered because there are no daily cash counts by supervisors. 7. The treasurer of the company has not taken a vacation for over 20 years. PETTY CASH 1. An imprest petty cash fund of $400 was established for minor disbursements. At the end of the month, the fund included petty cash tickets for the purchase of $185 in supplies, $41 for postage, $86 for fuel and a delivery charge of $65 and cash of $23 (left in PC). How much cash is required to replenish the fund? A) $ 23 B) $226 C) $312 D) $377 3 I 2. An imprest petty cash fund of $400 was established for minor disbursements. At the end of the month the fund included petty cash tickets for the purchase of $185 in supplies, $41 for postage, $86 for fuel and a delivery charge of $65. How much cash is left in the fund if there is no shortage or overage? A) $ 23 B) $88 C) $174 D) $377 3. An imprest petty cash fund of $400 was established for minor disbursements. At the end of the month the fund included petty cash tickets for the purchase of $185 in supplies, $41 for postage, $86 for fuel and a delivery charge of $65. If there is $13 left in the fund, how much cash is required to replenish the fund? A) $377 B) $236 C) $387 D) $367 4. On October 1, 2016, Ellis Company establishes an imprest petty cash fund by issuing a check for $150 to Pat Harmon, the custodian of the petty cash fund. On October 31, 2016, Pat Harmon submitted the following paid petty cash receipts for replenishment of the petty cash fund when there is $12 cash in the fund: Freight-In $25 Supplies Expense 32 Entertainment of Clients 55 24 Postage Expense Total receipt 136 Instructions Prepare the journal entries required to establish the petty cash fund on October 1 and the replenishment of the fund on October 31. 5. On November 1, 2009, Jones Company established a $400 petty cash fund. At the end of November, the petty cash fund contained the following petty cash tickets. Postage $73.50 87.55 Office supplies Miscellaneous items 90.95 a. Prepare the journal entry to establish the petty cash fund on November 1. Prepare the journal entry to replenish the fund on November 30. b. 1. Using the following items from a bank reconciliation, classify each of these reconciling items: a. an addition to the bank balance b. a deduction from the bank balance an addition to the book balance C. d. a deduction from the book balance e. not a reconciling item 1. Collection of note receivable plus interest revenue by bank Bookkeeper recorded check written for $755 as $557 in the cash 2. payments journal 3. Bank service charges 4. Bank charge for printing checks 5. Bank added deposit to company's account in error 6. Deposits in transit 7. Bank withdrew $1,270 from company's account for a check written for $12,700 8. Check returned by the bank marked NSF 9. Outstanding checks 10. Bank returned all cancelled checks 2. The following information is available for Andersen Company for the month ending June 30, 2008. Prepare a bank reconciliation for Andersen Company for June 30, 2008. Balance per the bank statement is $10,241.43. Balance per books is $9,745.06. ? Check # 506 for $1,948.52 and check # 510 for $1,800.25 were not returned with the June 30 bank statement. ? A deposit in transit of $5,113.40 had not been received by the bank when the bank statement was generated. . A bank debit memo indicated an NSF check in the amount of $79 written by Bruce Garrett to Andersen Company on June 13. . A bank credit memo indicated a note collected by the bank of $1,900 and interest revenue of $75 on June 20. . The bank statement indicated service charges of $35. + Q 8/5 3. Use the following information for Woods Paper Products to answer the question(s) below. A deposit of $5,794.62 is in transit Outstanding checks total $1,533.25 The book balance is $5,695.62 The bookkeeper recorded a $1,524.00 check as $15,240 in payment of the current month's rent The bank balance at February 28, 2008 was $16,500.25 A deposit of $300 was credited by the bank for $3,000 ? A customer's check for $1,280 was returned for nonsufficient funds The bank service charge is $70 Refer to the above information for Woods Paper Products. Complete a bank reconciliation for Woods Paper Products as of February 28, 2008. 4. Use the following information from Jim's T-Shirt Shop to answer the following questions. Checkbook balance: $6,105.42 on July 31 Bank statement: $4,146.46 on July 31 a. NSF check from a customer for $21.25 (debit memo from bank) b. deposit made on July 31 not yet recorded by bank $1,948.25 c. bank services charges of $18.50 (debit memo from bank) d. checks not cleared during July of $152.38 e. check written for $18.90 was deducted as $19.80 by the bank f. check written for $145.60 was recorded in checkbook as $14.56