Exam 7: Fraud, Internal Control, and Cash

Rainey Company wrote checks totaling $17,080 during October and $18,650 during November. $16,240 of these checks cleared the bank in October, and $18,220 cleared the bank in November. What was the amount of outstanding checks on November 30?

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

Cash register overages are deposited in the petty cash fund and cash shortages are made-up from the petty cash fund.

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

The custodian of the petty cash fund has the responsibility of recording a journal entry every time cash is used from the fund.

In preparing its bank reconciliation for the month of April 2014, Gantner, Inc. has the following information available. What should be the adjusted cash balance at April 30, 2014?

The petty cash fund of €200 for Vernon Company appeared as follows on December 31, 2014: Cash €94.60 Petty cash vouchers Supplies €19.40 Postage 40.00 Balloons for a special occasion 18.00 Meals 25.00 Instructions 1. Briefly describe when the petty cash fund should be replenished. Because there is cash on hand, is there a need to replenish the fund at year end on December 31? Explain. 2. Prepare in general journal form the entry to replenish the fund. 3. On December 31, the office manager gives instructions to increase the petty cash fund by €100. Make the appropriate journal entry.

Match the items below by entering the appropriate code letter in the space provided.

Related selling activities do not include

A system of internal control

On May 1, 2014, Vuitton Company established a petty cash fund by issuing a check for €500 to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2014, Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is €20 cash in the fund: The journal entry to establish the petty cash fund would include a

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

An employee authorized to sign checks should not record

Certificates of deposit are currently classified as cash on the statement of financial position.

On April 30, the bank reconciliation of Baxter Company shows three outstanding checks: no. 354, $650, no. 355, $820, and no. 357, $655. The May bank statement and the May cash payments journal show the following. Instructions Using step 2 in the reconciliation procedure, list the outstanding checks at May 31.

If a check correctly written and paid by the bank for $517 is incorrectly recorded on the company's books for $571, the appropriate treatment on the bank reconciliation would be to

Mrs. Smith has worked for Grand Inc., for 20 years without taking a vacation. An internal control feature that would address this situation would be

A deposit made by a company will appear on the bank statement as a

Epley Company needs to make adjusting entries for each of the following reconciling items. Identify the account to be debited and the account to be credited in each case. 1. A check for $59 written to the company by J. Neutron was returned NSF. 2. The monthly service charge by the bank was $34. 3. The bank collected a $1,000 note plus interest of $97 on the company's behalf. The company had not accrued the interest.

Match the internal control principle below with the appropriate cash receipts procedure described. a. Documentation procedures b. Establishment of responsibility c. Independent internal verification d. Human resource controls e. Physical controls f. Segregation of duties _____ 1. Only designated personnel are authorized to handle cash receipts. _____ 2. Different individuals receive cash and record cash receipts. _____ 3. Use remittance advice and cash register tapes. _____ 4. Store cash in safes and bank vaults. _____ 5. Treasurer compares total receipts to bank deposits daily. _____ 6. Bonding of employees that handle cash.