When accounting for employee purchases, effective internal controls could include which of the following?

A) Credit card receipts are reconciled to credit card statements.

B) Employees should be required to provide receipts and justification for those receipts on a timely basis.

C) A separate employee reviews receipts and supporting documents to ensure all expenditures are made appropriately.

D) All of the other answers represent effective internal controls.

Answer: All of the other answers represent effective internal controls.

Which of the following is correct regarding a petty cash fund?

A) A petty cash fund represents cash on hand at the business for quick access.

B) A petty cash fund is used for minor purposes.

C) When cash from this fund is taken out, it should be replaced with a voucher.

D) All of the answers are correct regarding a petty cash fund.

Answer: All of the answers are correct regarding a petty cash fund.

At the time a $400 petty cash fund is being replenished, the company's accountant finds vouchers totaling $350 and petty cash of $50. The vouchers include: postage, $100; business lunches, $150; delivery fees, $75; and office supplies, $25. Which of the following is not recorded when recognizing expenditures from the petty cash fund?

A) Debit Postage Expense, $100.

B) Debit Supplies, $25.

C) Credit Cash, $350.

D) Debit Cash, $350.

Answer: Debit Cash, $350.

Which of the following is NOT involved in the replenishment of the petty cash fund?

A) Transactions related to vouchers will be recorded.

B) Management will verify that the total of all vouchers equals the amount of cash missing from the petty cash fund.

C) Weekly payroll checks will be recorded.

D) Management will withdraw cash from the bank and place it in the petty cash fund.

Answer: Weekly payroll checks will be recorded.

At the end of the month, employees have made the following expenditures from the petty cash fund and with company-issued credit cards. None of these transactions has been recorded previously.

Supplies (petty cash) $ 50

Delivery (petty cash) $ 75

Advertising (credit card) $ 1,100

Equipment (credit card) $ 4,200

Accounting for these employee purchases would include a:

A) Credit to Cash for $5,425.

B) Credit to Accounts Payable for $5,300.

C) Credit to Equipment for $4,200.

D) Debit to Accounts Receivable for $5,300.

Answer: Credit to Accounts Payable for $5,300.

At the end of the month, employees have made the following expenditures from the petty cash fund and with company-issued credit cards. None of these transactions has been recorded previously.

Supplies (petty cash) $ 50

Delivery (petty cash) $ 75

Advertising (credit card) $ 1,100

Equipment (credit card) $ 4,200

Accounting for these employee purchases would include a:

A) Credit to Cash for $125.

B) Debit to Accounts Payable for $5,300.

C) Credit to Cash for $1,225.

D) Credit to Accounts Payable for $5,425.

Answer: Credit to Cash for $125.

A minor amount of cash kept on hand to pay for small purchases is referred to as a:

A) Petty cash fund.

B) Cash receipts fund.

C) Cash payments fund.

D) Cookie jar fund.

Answer: Petty cash fund.