Question

$135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the account would

include a

a. credit to Petty Cash for $120

b. debit to Cash for $120

c. credit to Cash Short and Over for $3

The bank reconciliation

a. should be prepared by an employee who records cash transactions

b. is part of the internal control system

c.is for information purposes only

d.is sent to the bank for verification

Which one of the following below is NOT an element of internal control?

a.   risk assessment

b.   monitoring

c.   information and communication

d.   cost-benefit considerations

How is the

Internal Control—Integrated Framework

used by companies?

a.

as a standard for designing, analyzing, and evaluating internal controls

b.

as a standard for making statements about a company’s finances to the public

c.

as an extension of internal controls

d.

as an extension of GAAP

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430.

What entry is required in the company’s accounts?

a.   debit Accounts Payable, credit Cash

b.   debit Cash; credit Accounts Receivable

c.   debit Cash; credit Accounts Payable

d.   debit Accounts Receivable; credit Cash

Answer 1

Solution 1:

$135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the account would

include a "credit to Cash Short and Over for $3"

Hence option c is correct.

Solution 2:

The bank reconciliation "is part of the internal control system"

Hence option b is correct.

Solution 3:

cost-benefit considerations is NOT an element of internal control

Hence option d is correct.

Solution 4:

Internal Control—Integrated Framework used by companies "as a standard for designing, analyzing, and evaluating internal controls"

Hence option a is correct.

Solution 5:

entry is required in the company’s accounts "debit Cash; credit Accounts Payable"

Hence option c is correct.