Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 7, Problem 9DQ
(a)
To determine
Petty cash fund: Petty cash fund is a fund established to pay insignificant amounts like postage, office supplies, and lunches. In day-to-day life, it becomes difficult to use checks for daily expenses. Therefore, companies maintain some minimum amount of funds in the hand for such daily expenses. These funds are called as petty cash funds. These funds are managed by custodian. This system is otherwise called as imprest system.
To determine: The implementation of controls over petty cash.
(b)
To determine
The controls for petty cash
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Students have asked these similar questions
Which of the following statements are true regarding the control of cash receipts and cash payments? One key to controlling cash payments is to require that no expenditures be made by check; instead, all expenditures should be made from petty cash.
The following statements relate to cash. Which statement is false?
Legally restricted compensating balances required by a bank should always be excluded
from "cash and cash equivalent".
Classification of a restricted cash balance as current or noncurrent should be not parallel to
the classification of the related obligation for which the cash was restricted.
The term cash can refer to demand credit instruments such as money order and bank drafts.
The purpose of establishing a petty cash fund is to keep enough cash for small recurring
operating expenses for a period of time.
Which of the following statements is not a good internal control for petty cash.
a. The officer in charge of petty cash may have access to other company funds
b.Petty cash should be maintained on an imprest basis
c.All petty cash payment must be properly authorized by a responsible person and must be in accordance with laid down policies
d.Petty cash reimbursement should be made only after the petty cashier has properly accounted for all payments made during the period e.g. by supporting documents to duly authorized petty cash voucher
e.There should be a surprise cash count by an independent person e.g. the internal auditor.
Chapter 7 Solutions
Corporate Financial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Why should the responsibility for maintaining the...Ch. 7 - Assume that Brooke Miles, accounts payable clerk...Ch. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 7.1BECh. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - Prob. 7.1EXCh. 7 - Prob. 7.2EXCh. 7 - Prob. 7.3EXCh. 7 - Prob. 7.4EXCh. 7 - Prob. 7.5EXCh. 7 - Prob. 7.6EXCh. 7 - Prob. 7.7EXCh. 7 - Prob. 7.8EXCh. 7 - Prob. 7.9EXCh. 7 - Prob. 7.10EXCh. 7 - Prob. 7.11EXCh. 7 - Entry for cash sales; cash short The actual cash...Ch. 7 - Entry for cash sales; cash over The actual cash...Ch. 7 - Prob. 7.14EXCh. 7 - Prob. 7.15EXCh. 7 - Prob. 7.16EXCh. 7 - Prob. 7.17EXCh. 7 - Prob. 7.18EXCh. 7 - Prob. 7.19EXCh. 7 - Prob. 7.20EXCh. 7 - Prob. 7.21EXCh. 7 - Prob. 7.22EXCh. 7 - Prob. 7.23EXCh. 7 - Prob. 7.24EXCh. 7 - Prob. 7.1APRCh. 7 - Prob. 7.2APRCh. 7 - Prob. 7.3APRCh. 7 - Prob. 7.4APRCh. 7 - Prob. 7.5APRCh. 7 - Prob. 7.1BPRCh. 7 - Prob. 7.2BPRCh. 7 - Prob. 7.3BPRCh. 7 - Prob. 7.4BPRCh. 7 - Prob. 7.5BPRCh. 7 - Prob. 7.1ADMCh. 7 - Prob. 7.2ADMCh. 7 - Prob. 7.3ADMCh. 7 - Nike, lululemon, and Under Armour: Days cash on...Ch. 7 - Ethics in Action Tehra Dactyl is an accountant for...Ch. 7 - Prob. 7.3TIF
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following does not show good cash management regarding the controls over cash disbursements? Use a petty cash fund to make only small expenditures. Make all major disbursements by check. Combine the handling of receiving bills, writing checks, and signing checks to one person. Prepare bank reconciliations in a timely manner. All the above shows good cash management controls over cash disbursements. A. В. C. D. E.arrow_forwardThink about internal control over receivables collections. What task must be delegated to a company's credit department in order to protect its cash? What can a credit department employee do to harm the organization if this task is performed by the credit department?arrow_forwardWhat feature(s) could SEI have installed in its cash receipts internal controls that would have been expected to prevent the cash receipts journal and recorded cash sales from reflecting more than the amount shown on the daily deposit slips?arrow_forward
- Answer the following questions about internal control over cash payments:1. Payment by check includes three controls over cash. What are they?2. Suppose a purchasing agent receives the goods that she purchases and also approves payment for those goods. How could a dishonest purchasing agent cheat the company? Howdo companies avoid this internal control weakness?arrow_forwardWhich of the following generally would be considered good internal control of cash disbursements? a. Make all cash disbursements using cash rather than debit cards or credit cards. b. Set maximum purchase limits on debit cards and credit cards. c. The employee responsible for making cash disbursements should be in charge of cash receipts. d. The employee who authorizes payments should also prepare the check.arrow_forwardWhat types of controls should be in place to make sure people in the office don't just take from petty cash (for their own personal use) whenever they feel like it? In your opinion, what is an appropriate amount to have in petty cash?arrow_forward
- Entity A maintains a petty cash fund. At any given point of time, the cash on hand and the petty cash vouchers must be equal to the ledger balance of the petty cash fund. If these are not equal, the difference is either shortage or overage. This system of handling petty cash fund is called Imprest system Fluctuating balance system Pretty cash system Imprest System According to GAM for NGAs, the establishment of a petty cash fund Requires the approval of the head of the agency Requires the approval of the chief accountant Requires the approval of the office of the president Does not require any formal approval because petty cash funds are likely to be immaterial The “loans Receivable account is most likely to be used in the books of accounts of which of the following government agencies? COA NIA BTr All of these Entity A, a government entity, purchases inventories. To record a purchase, Entity A would most likely debit the (a) Inventory account Purchases account Expenses…arrow_forwardWhich of the following is a reason that businesses use bank accounts as part of their internal control measures. a.The bank records incoming checks as liabilities. b.Customer’s returned checks can be charged an NSF fee. c.Differences between the company balance and the bank balance will automatically indicate fraud. d.Bank accounts are an independent record of cash transactions.arrow_forwardAnswer the following questions to ponder: 1. What is the purpose of internal controls? 2. What will happen if companies do not impose internal controls? 3. Think of possible controls over cash, receivables and inventories. Explain.arrow_forward
- Which of the following is NOT an example of an internal control system? Select one: a )Prenumber checks b)Maintain separate duties between cash handling and cash recording c)Keep petty cash locked up and under one person’s control D)Make weekly depositsarrow_forwardWhich of the following are important elements of a cash disbursement control system? Note: Select all that apply. Check All That Apply All expenditures are authorized before a check is prepared. Checks are signed only by authorized Individuals. The bank-generated deposit slip should be compared with the check listing. The person opening the mall is not the person who maintains the accounting records. Unauthorized payments are prevented.arrow_forward55. According to GAM for NGAs, the establishment of a petty cash fund Requires the approval of the head of the agency Requires the approval of the chief accountant Requires the approval of the office of the president Does not require any formal approval because petty cash funds are likely to be immaterialarrow_forward
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