Determine the implementation of controls over petty cash.

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Chapter 8, Problem 9DQ

(a)

To determine

Determine the implementation of controls over petty cash.

(b)

To determine

Determine the controls for petty cash fund.

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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.