Exam 7: Fraud, Internal Control, and Cash

The petty cash fund eliminates the need for a bank checking account.

A debit memorandum could show the collection of a note receivable by the bank.

Personnel who handle cash receipts should have the option of taking a vacation or not.

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

The entry to replenish a petty cash fund includes a credit to

Winter Gloves Company had checks outstanding totaling $12,800 on its May bank reconciliation. In June, Winter Gloves Company issued checks totaling $79,800. The July bank statement shows that $71,400 in checks cleared the bank in July. A check from one of Winter Gloves Company's customers in the amount of $2,000 was also returned marked "NSF." The amount of outstanding checks on Winter Gloves Company's July bank reconciliation should be

A company stamps checks received in the mail with the words "For Deposit Only". This endorsement is called a(n)

Proper control for over-the-counter cash receipts includes

The principles of internal control activities are used

A debit memorandum issued by the bank ______________ the cash balance in the depositor's account.

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

The cash records of Mercury Company show the following: 1. The June 30 bank reconciliation indicated that deposits in transit totaled $790. During July the general ledger account Cash shows deposits of $9,800, but the bank statement indicates that only $8,240 in deposits were received during the month. 2. The June 30 bank reconciliation also reported outstanding checks of $1,200. During the month of July, Mercury Company books show that $11,570 of checks were issued, yet the bank statement showed that $11,100 of checks cleared the bank in July. There were no bank debit or credit memoranda and no errors were made by either the bank or Mercury Company. Answer the following questions: (a) What were the deposits in transit at July 31? (b) What were the outstanding checks at July 31?

Maximum benefit from independent internal verification is obtained when

Blank checks

Bacher Company developed the following reconciling information in preparing its September bank reconciliation: Cash balance per bank, 9/30 \ 6,160 Note receivable collected by bank 3,360 Outstanding checks 3,200 Deposits in transit 2,520 Bank service charge 42 NSF check 672 Using the above information, determine the cash balance per books (before adjustments) for the Bacher Company.

An exception to disbursements being made by check is acceptable when cash is paid

The three main factors that contribute to fraudulent activity are depicted by the _______________.

For accounting purposes, postdated checks (checks payable in the future) are considered to be

Employees who handle cash should be ______________ in order to protect against misappropriation of assets by dishonest employees.