17. In a good system of internal control, which functions should be segregated?
ID: 2460415 • Letter: 1
Question
17. In a good system of internal control, which functions should be segregated?
a. management functions should be separated from operating functions.
b. accountring functions should be separated from operating functions
c. accountring functions should be separated from asset custody functions.
d. both a and b
e. both b and c
18. Target established a $100 petty cash fund to pay small expense. The JE to record creation of the petty cash fund was:
Journal entry
a.
Miscellaneous Expense 100
Cash 100
b.
Petty cash 100
Cash 100
c.
Cash 100
Petty cash 100
d.
Miscellaneous Expense 100
Petty cash 100
e.
None of the above
19. At the end of the month, Target replenished the petty cash fund established in question #18 above. At month end the petty cash box contained vouchers of $10 for the purchase of office supplies, $5 for transportation expense, and cash on hand of $84. The proper journal entry to reflect replenishment of the petty cash fund would be here
Journal entry
a.
Office supplies 10
Transportation Expense 5
Petty cash 15
b.
Office supplies 10
Transportation Expense 5
cash 15
c.
Office supplies 10
Transportation Expense 5
Cash Short & Over 1
Cash 16
d.
Office supplies 10
Transportation Expense 5
Cash Short & Over 1
Petty cash 14
e.
None of the above
At the end of October Brown Co. received the following bank statement and reported the following information in its general ledger regarding cash transactions.
Bank Statement – October
Description
Transaction
Posting date
Amount
Comment
Cash balance, October 1
1,000
Charges: check #254
Oct.12
(170)
Check#256
Oct.20
(350)
NSF check
Oct.22
(70)
Bad check in deposit posted Oct. 16, was a customer’s payment on account
Service charge
Oct.16
300
Deposits: Night Deposit
Oct. 16
300
Interest Paid
Oct.31
10
The bank account pays interest on the average balance.
Cash Balance, October 31
700
Brown Co. General Ledger Cash activity – October
Description
Transaction
Posting date
Amount
Comment
Cash balance, October 1
1,000
Debits: Check#254
Oct.10
(170)
Check#255
Oct.12
(240)
Check#256
Oct.18
(530)
Correct check amount = $350, this was a payment to settle a vendor account (liability).
Credits: Deposit
Oct. 15
300
Placed in bank night depositary at 9:00 p.m.
Deposit
Oct.31
600
Placed in bank night depositary at 9:00 p.m.
Cash balance, October 31
960
20. When Brown Co. prepared the cash reconciliation which reconciles the general ledger (book) balance of cash and computes the correct (adjust) amount of cash, how will the bank service charge of October 31 be used?
a. The service charge will be added to the book amount of cash to compute the correct amount of cash.
b. The service charge will be subtracted from the book amount of cash to compute the correct amount of cash
c. The service charge will not be used in the reconciliation for the book amount of cash.
d. A bank service charge is typically used to adjust the bank amount of cash.
e. None of the above.
Journal entry
a.
Miscellaneous Expense 100
Cash 100
b.
Petty cash 100
Cash 100
c.
Cash 100
Petty cash 100
d.
Miscellaneous Expense 100
Petty cash 100
e.
None of the above
Explanation / Answer
17 - e. Both b and c.
18 - d.
19 - d
20 - b.
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