Exam 8: Fraud, Internal Control, and Cash

Identify whether each of the following items would be (a) added to the book balance or (b) deducted from the book balance in a bank reconciliation. 1. EFT transfer to a supplier 2. Bank service charge 3. Check printing charge 4. Error recording check # 214 which was written for $450 but recorded for $540 5. Collection of note and interest by bank on company's behalf

Entries are made to the Petty Cash account when

Sarbanes Oxley applies to

Blank checks

Cash equivalents do not include

At June 30 Yaddof Company has the following bank information: cash balance per bank $1650; outstanding checks $430; deposits in transit $527; credit memo for interest $75; bank service charge $10. What is Mareska's adjusted cash balance on June 30?

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

A check correctly written for $260 was incorrectly entered in the cash payments journal for $620. In preparing a bank reconciliation $_____________ must be ______________ the cash balance per ______________.

Identify the three activities that pertain to a petty cash fund and indicate an internal control principle that is applicable to each activity. (b) When are journal entries required in the operation of a petty cash fund?

The following information was used to prepare the March 2016 bank reconciliation for Sam's Store. Identify the items that require adjustment to the cash balance per books and prepare the appropriate adjusting entries. 1. Included with the bank statement materials was a check from Stan Kenton for $50 stamped "NSF." 2. A personal deposit by Sam Snead to his personal account in the amount of $380 for dividends on his General Motors common stock was credited to the company account. 3. The bank statement included a debit memorandum for $31.00 for two books of blank checks for Sam's Store. 4. The bank statement contains a credit memorandum for $27.45 interest on the average checking account balance. 5. The daily deposits of March 30 and March 31 for $3632 and $3215 respectively were not included in the bank statement postings. 6. Two checks totaling $361.86 which were outstanding at the end of February cleared in March and were returned with the March statement. 7. The bank statement included a credit memorandum dated March 28 2016 for $54.00 for the monthly interest on a 6-month $18000 certificate of deposit that the company owns. 8. Four checks #8722 #8726 #8728 #8729 totaling $5936.65 did not clear the bank during March. 9. On March 24 2016 Sam's Store delivered to the bank for collection a $5400 3-month note from Bill Becker. A credit memorandum dated March 29 2016 indicated the collection of the note and $120.00 of interest. 10. The bank statement included a debit memorandum for $25.00 for the collection service on the above note and interest.

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.

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

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

A system of internal control

Maximum benefit from independent internal verification is obtained when

The petty cash fund of $200 for George Company appeared as follows on December 31 2016: Cash \ 59.40 Petty cash vouchers Freight in \ 27.60 Postage 40.00 Balloons for a special occasion 68.00 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 $50. Make the appropriate journal entry.

The difference between the cash in bank balance shown on the company's books and the cash balance shown on the bank statement may be caused by ______________ and by ______________ in recording transactions by either party.

Tangible frauds include

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