 In this presentation, we will take a look at multiple choice questions related to cash and internal controls. First question, which is not a principle of internal control? 1. Apply technological controls when applicable to a wide variety of situations. 2. Or B. One person tracks and records assets. 3. C. Perform reviews. 4. D. Separate record keeping from custody of assets. 5. Or E. Divide responsibility for related transactions. So once again, we will read through this and then see if we can eliminate some of the options with the process of elimination. So the question, which is not a principle of internal controls? A. Apply technological controls when applicable. That seems like something that we would do. So we would want to apply technological controls. So I don't think it's that. B. One person track and record assets. We may want to have different people do that. So I'm going to keep that for now as not possibly one of them. C. Perform reviews. That's going to be one of the things that we do do within the internal controls. We're going to have a review process to see that the system is doing what it should or that we are in compliance with the system. D. Separate record keeping and custody of assets. Note that B and D are kind of opposite of each other in a way, possibly not exact opposites, but I'll keep that for now. E. Divide responsibility for related transactions. And again, that's going to be one of the things we want to do. So I'm going to keep B and D just to compare and contrast the two. If we read this one more time, which is not a principle of internal controls, B. One person track and record assets or D. Separate record keeping for custody of assets. So one is saying that one person should do everything and well, these two procedures. And D is saying we should separate and remember that that separation of duties is the one that will be a principle. So we typically want to separate duties, not have an individual do more transaction. So at least at the very least, this isn't an objective of the internal control to have one person track and record assets. Whereas it is an objective to separate certain activities, especially custody of the assets versus the recording. So answer then, which is not a principle of internal controls, B. One person track and record assets. Next question. Cash equivalents. A. Our short term, highly liquid investment assets. B. Include sixth month certificates of deposit. C. Include the checking account. D. Include petty cash or E. Include the savings account. So once again, if we read through this and use the process of elimination, we're going to say cash equivalents either A are short term, highly liquid investment assets. That sounds pretty good. B says include six month certificate of deposits. Now cash equivalents have to be really liquid. They're really close to cash. If we're going to have a six month certificate, probably not short enough. And they have to be less than like three months to be considered, I would think, for a cash equivalent. So I don't think that's going to be liquid enough. C says include the checking account. Now the checking account is basically cash. It's not petty. It's not cash equivalent, which would be some type of investment, which is very liquid, but not cash. So it's not the checking account. Petty cash also cash. That's going to be cash, not a cash equivalent. They're going to be, they could be grouped together on the balance sheet as cash and cash equivalents, but this would be a cash and not a cash equivalent. E says includes the saving accounts, which again is a form of cash. As long as we have access to it and we can, you know, there's no restrictions on the savings account, then then it's a highly liquid, typically a liquid account and not, and not it'd be part of cash cash. So this one could be close if there are restrictions on the savings account. But I would think the best answer here is going to be a a. So if we read this cash equivalents are a are short term highly liquid investments. That's pretty much the definition of a cash equivalent. Next question. The internal control principle that requires that use of pre numbered checks is a technological controls, b maintain adequate wet records, c perform reviews, d establish responsibilities, or e divide responsibility for related transactions. So once again, we will read through this see if we can eliminate some of the options with the process of elimination. The internal control procedure that requires the use of pre numbered checks is a technological control. I don't think it's technological control to have the pre numbered checks be maintained adequate records. That sounds kind of reason might help with the maintaining of records, c perform reviews. So I don't think the pre number checks, we could use the pre number checks in the review, but I don't think that's part of that principle specifically, d establish responsibility. I don't think the pre number checks establish responsibility, particularly D or e divide responsibility for related transactions. So I don't think that's it either. I think we're I think we're left with be maintained adequate records. So if we read through this, we're going to say internal control procedures that require the use of pre numbered checks is be maintained adequate adequate records. So the pre numbered checks are going to help us to make sure that our checks it helps us to not have fraud or anything within the checks or miss a check that would be recorded because of the number sequence sequencing would help us to know if we're missing a check and therefore our records would be complete or help to be complete by having that type of internal control of the pre numbered checks. Next question cash includes a postage b customer checks cashier checks and money orders c accounts receivable d three year certificate of deposit or e notes. Once again cash equivalence includes or cash includes a postage. Now postage is going to be a like a current asset, but it's not of course cash or even a cash equivalent, even though it's going to be kind of liquid and that we're going to use it soon. Can't use it to pair bills typically except to pay postage bills. But anyway be customer checks cashier checks and money orders. That sounds pretty good. See says accounts receivable. Now accounts receivable is going to be something that we hope to be converting to cash soon, but it's not cash yet. So I don't think that's it. D says three year certificate of deposit. A CD is going to be a form of investment, but if it's not due for three years, then it's not liquid. It's not even a cash equivalent. So that's not it. And he says notes like a note payable. And once again, it's not cash. That's going that's cash leaving. So that's not it. So it looks like bees is going to be pretty much the definition of cash or cash includes or not the definition, but a good list of typical cash. What cash typically includes cash includes be customer checks cashier checks and money orders.