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Financial & Managerial Accounting
Found in: Page 305
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

A good system of internal control for cash provides adequate procedures for protecting both cash receipts and cash disbursements. Identify each of the following statements as either true or false regarding this protection.

d. A petty cash system is not a control procedure for safeguarding cash

Answer

The statement is a false statement.

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Meaning of Petty Cash

A petty cash fund alludes to an insignificant amount of money that is accessible for small expenses, such as utilities, office supplies, repayment for workers, etc. Management of petty cash reports would be vital since cash costs ought to be remembered for managing petty cash.

Step 2: Explanation of above statement

False

The petty cash book safeguards cash by considering small expenses associated with a company daily. It reduces the risk of fraud and theft as an assigned custodian will work and ensure that the funds are secured.

Most popular questions for Business-studies Textbooks

Prepare a table with the following headings for a monthly bank reconciliation dated September 30.

Bank Balance Book Balance Not Shown on the Reconciliation

Add Deduct Add Deduct Adjust

For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.

1. NSF check from customer is returned on September 25 but not yet recorded by this company.

2. Interest earned on the September cash balance in the bank.

3. Deposit made on September 5 and processed by the bank on September 6.

4. Checks written by another depositor but charged against this company’s account.

5. Bank service charge for September.

6. Checks outstanding on August 31 that cleared the bank in September.

7. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.

8. Principal and interest on a note receivable to this company is collected by the bank but not yet recorded by the company.

9. Checks written and mailed to payees on October 2.

10. Checks written by the company and mailed to payees on September 30.

11. Night deposit made on September 30 after the bank closed.

12. Special bank charge for collection of notes in part 8 on this company’s behalf.

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