Exam 7: Fraud, Internal Control, and Cash

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

The cash account shows a balance of $75,000 before reconciliation. The bank statement does not include a deposit of $4,600 made on the last day of the month. The bank statement shows a collection by the bank of $1,880 and a customer's check for $640 was returned because it was NSF. A customer's check for $790 was recorded on the books as $970, and a check written for $159 was recorded as $195. The correct balance in the cash account was

Cash equivalents include each of the following except

Match each of the following principles of internal control with the appropriate description below.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

A petty cash fund should not be used for

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash.

Because cash is the most liquid current asset it is listed first in the current assets section of the statement of financial position.

The principle of establishing responsibility does not include

Indicate how each of the following items would be shown on a bank reconciliation. 1. Bank error (The bank charged our account with another company's check) 2. Check printing charge 3. Deposits in transit 4. Note collected by the bank 5. NSF checks 6. Outstanding checks

Physical controls to safeguard assets do not include

The cash account shows a balance of $55,000 before reconciliation. The bank statement does not include a deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank of $940 and a customer's check for $320 was returned because it was NSF. A customer's check for $450 was recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the cash account was

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

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

The preparation of a bank reconciliation is an important cash control procedure. If a company deposits cash receipts daily and makes all cash disbursements by check, explain why the cash balance per books might not agree with the cash balance shown on the bank statement. Identify specific examples that may cause differences between the cash balance per books and the cash balance per bank.

Savings accounts are usually classified as cash on the statement of financial position.

A segregation of duties among employees eliminates the possibility of collusion.

Because cash is the least liquid current asset it is listed last in the current assets section of the statement of financial position.

In large companies, the independent internal verification procedure is often assigned to

All of the following would involve a debit memorandum except