Exam 7: Fraud, Internal Control, and Cash

Collusion may result when one individual circumvents prescribed controls and may significantly impair the effectiveness of a system.

The information below relates to the Cash account in the ledger of Remington Company. Balance September 1-$25,720; Cash deposited-$96,000. Balance September 30-$26,100; Checks written-$95,620. The September bank statement shows a balance of $24,635 on September 30 and the following memoranda. Credits Debits Collection of $1,250 note plus interest $50 $1,300 NSF check: J. E. Hoover $635 Interest earned on checking account $65 Safety deposit box rent $75 At September 30, deposits in transit were $6,695, and outstanding checks totaled $4,575. Instructions Prepare the bank reconciliation at September 30.

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

A voucher system is used by many large companies as a means of controlling cash receipts.

Joe Foss has worked for Dr. Sam Milton for several years. Joe demonstrates a loyalty that is rare among employees. He hasn't taken a vacation in the last three years. One of Joe's primary duties at the medical office is to open the mail and list the checks received. He also takes cash from patients at the cashier window as patients leave. At times it is so hectic that Joe doesn't bother with giving each patient a receipt for the cash paid on their accounts. He assures them he will see to it that they receive the proper credit. When the traffic is slow in the office, Joe offers to help Ann post the payments to the patients' accounts receivable. She is always happy to receive his help because he is a very conscientious worker. Instructions Identify any principles of internal control that may be violated in this medical office situation.

The safeguarding of assets is an objective of a company's system of internal control.

Kline Company had checks outstanding totaling $19,200 on its May bank reconciliation. In June, Kline Company issued checks totaling $119,700. The July bank statement shows that $89,100 in checks cleared the bank in July. A check from one of Kline Company's customers in the amount of $900 was also returned marked "NSF." The amount of outstanding checks on Kline Company's July bank reconciliation should be

If employees are bonded

Longfellow Company gathered the following reconciling information in preparing its April bank reconciliation: The adjusted cash balance per books at April 30 is

Entries are made to the Petty Cash account when

Allowing only designated personnel to handle cash receipts is an example of

Heath Company gathered the following reconciling information in preparing its July bank reconciliation: The adjusted cash balance per books on July 31 is

The duties of approving an item for payment and paying the item should be done by different departments or individuals.

All of the following would be included as a cash equivalent on the statement of financial position except

Related purchasing activities include

Bellingham Company's ₤150 petty cash fund has cash of ₤28 and receipts of ₤120. The journal entry to replenish the account would include a

At August 31, Litke Company has this bank information: cash balance per bank ₤7,150; outstanding checks ₤962; deposits in transit ₤1,700; and a bank service charge ₤20. Determine the adjusted cash balance per bank at August 31, 2014.

Checks from customers who pay their accounts promptly are called outstanding checks.

Which of the following is the correct accounting under GAAP for cash?

Tyler, Inc. had the following bank reconciliation at March 31, 2014: All reconciling items at March 31, 2014 cleared the bank in April. Outstanding checks at April 30, 2014 totaled €6,000. There were no deposits in transit at April 30, 2014. What is the cash balance per books at April 30, 2014?