Term

Definition

$1.$

Internal control

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$2.$

Control procedures

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$3.$

Firewalls

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$4.$

Encryption

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$5.$

Environment

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$6.$

Information system

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$7.$

Separation of duties

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$8.$

Collusion

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$9.$

Documents

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$10.$

Audits

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$11.$

Operational efficiency

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$12.$

Risk assessment

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$13.$

Sarbanes$-$Oxley Act

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Definition

$1.$

Internal control

$$

$2.$

Control procedures

$$

$3.$

Firewalls

$$

$4.$

Encryption

$$

$5.$

Environment

$$

$6.$

Information system

$$

$7.$

Separation of duties

$$

$8.$

Collusion

$$

$9.$

Documents

$$

$10.$

Audits

$$

$11.$

Operational efficiency

$$

$12.$

Risk assessment

$$

$13.$

Sarbanes$-$Oxley Act

$$

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JuneJune

$1,$

MeadowMeadow

Salad Dressings creates a petty cash fund with an imprest balance of

$ $400$$$400.$

During

June commaJune,

Ruth Mangan commaRuth$$Mangan$,$

the fund$$ custodian, signs the following petty cash$$ tickets:

LOADING...

$($Click

the icon to view the petty cash$$ tickets.$)$

On

JuneJune

$3030,$

prior to$$ replenishment, the fund contains these tickets plus cash of

$ $120$$$120.$

The accounts affected by petty cash payments are Office$$ Supplies, Travel$$ Expense, Delivery$$ Expense, Entertainment$$ Expense, and Merchandise Inventory.

Read the

requirements

LOADING...

$.$

Question content area bottom

Part $1$

Requirement $1.$ Explain the characteristics and the internal control features of an imprest fund.

An imprest fund has

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$$

balance at all$$ times, which equals the sum of

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plus the

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check stubs

credit memos

total of the tickets

that support payments from the fund. The internal control feature of an imprest fund is that it

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the amount of money for which the fund custodian is responsible.

Part $2$

Requirement $2.$ On

JuneJune

$3030,$

how much cash should the petty cash fund hold before it is$$ replenished?

Before it is replenished, the petty cash fund should hold cash of

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Part $3$

Requirement $3.$ Journalize all required entries to create the fund and replenish it$.$ Include explanations. $($Record debits$$ first, then, credits. Select the explanation on the last line of the journal entry$$ table.$)$

Begin by journalizing the creation of the fund.

Date

Accounts and Explanation

Debit

Credit

June $1$

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Part $4$

Journalize the replenishment of the fund. $($Prepare a single compound journal$$ entry.$)$

Date

Accounts and Explanation

Debit

Credit

June $30$

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Part $5$

Requirement $4.$ Make the

JulyJuly

$1$ entry to increase the fund balance to

$ $550$$$550.$

Include an$$ explanation, and briefly describe what the custodian does. $($Record debits$$ first, then, credits. Select the explanation on the last line of the journal entry$$ table.$)$

Make the entry

JulyJuly

$1$ to increase the fund balance to

$ $550$$$550.$

Date

Accounts and Explanation

Debit

Credit

July $1$

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Part $6$

Briefly describe what the custodian does.

The custodian

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the check and places

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of currency and coin

$$

An imprest fund hasbalance at all times, which equals the sum ofbalance at all times, which equals the sum ofplus theplus thethat support payments from the fund.The internal control feature of an imprest fund is that itthe amount of money for which the fund custodian is responsible.