Exam 8: Fraud, Internal Control, and Cash

Speed Racer Company developed the following reconciling information in preparing its September bank reconciliation: Cash balance per bank, 9/30 \ 27,000 Note receivable collected by bank 12,800 Outstanding checks 14,000 Deposits in transit 6,000 Bank service charge 350 NSF check 2,900 Determine the cash balance per books (before adjustments) for Speed Racer Company.

GAAP compared to IFRS tends to be more

On a bank reconciliation deposits in transit are

Replenishing the petty cash fund requires

An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of

A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

Phil Goss has worked for Dr. Stan Hilton for several years. Phil demonstrates a loyalty that is rare among employees. He hasn't taken a vacation in the last three years. One of Phil'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 Phil 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 Phil offers to help Pam 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.

Internal controls are concerned with

If the month-end bank statement shows a balance of $58000 outstanding checks are $15000 a deposit of $7000 was in transit at month end and a check for $600 was erroneously charged by the bank against the account the correct balance in the bank account at month end is

The principles of internal control activities are used

A bank may issue a credit memorandum for

Journal entries are required by the depositor for all of the following except

Cash is defined by IFRS as

Jared is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates

What percentage of companies worldwide have experienced fraud in a recent 12-month period?

The following adjusting entries for Donkey Company were prepared after completing a bank reconciliation. For each of the following adjustments prepare a probable explanation for the adjusting entry.

Ernest Company uses an imprest petty cash system. The fund was established on March 1 with a balance of $200. During March the following petty cash receipts were found in the petty cash box. Receipt Date No. For Amount 3/5 1 Stamp Inventory \ 74 7 2 Freight-Out 42 9 3 Miscellaneous Expense 22 11 4 Travel Expense 49 The fund was replenished on March 15 when the fund contained $9 in cash. On March 20 the amount in the fund was increased to $300. Instructions Journalize the entries in March that pertain to the operation of the petty cash fund.

Smothers Company assembled the following information in completing its March bank reconciliation: balance per bank $7640; outstanding checks $1700; deposits in transit $2600; NSF check $130; bank service charge $40; cash balance per books $8800. As a result of this reconciliation Smothers will

An example of poor internal control is

The cash records of Saturn Company show the following: 1. The June 30 bank reconciliation indicated that deposits in transit totaled $970. During July the general ledger account Cash shows deposits of $9700 but the bank statement indicates that only $8420 in deposits were received during the month. 2. The June 30 bank reconciliation also reported outstanding checks of $2100. During the month of July Saturn Company books show that $11750 of checks were issued yet the bank statement showed that $11100 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 Saturn Company. Answer the following questions: (a) What were the deposits in transit at July 31? (b) What were the outstanding checks at July 31?