Exam 8: Fraud, Internal Control, and Cash

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate.

In the month of November, Coler Company Inc. wrote checks in the amount of $9,250. In December, checks in the amount of $12,658 were written. In November, $8,468 of these checks were presented to the bank for payment, and $10,883 were presented in December. What is the amount of outstanding checks at the end of December?

A debit memorandum would not be issued by the bank for

Internal control over cash disbursements is more effective when payments are made by ______________, rather than by ______________.

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

A credit balance in Cash Over and Short is reported as a(n)

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

Blank checks

Identify which of the following reconciling items would require an adjusting entry to be made by Farrell Company. 1. Deposits in transit totaled $2,000. 2. A check written to the company for $350 by Harder Company was returned NSF. 3. The bank charged the company $46 for printing checks. 4. Outstanding checks totaled $1,667 5. A debit memorandum reported an EFT of $178 to Paco Utilities

The responsibility for ordering, receiving, and paying for merchandise should be assigned to different individuals.

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

Compensating balances are a restriction on the use of a company's cash and should be

The cash account shows a balance of $90,000 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

Postage stamps on hand are considered to be

Which one of the following would not cause a bank to debit a depositor's account?

Match the items below by entering the appropriate code letter in the space provided. A. Prenumbered documents B. Custody of an asset should be kept separate from the record-keeping for that asset C. Cash registers, garment sensors and burglar alarms are examples D. Bonding employees E. Collusion F. Cash G. Bank signature card H. Payee I. Maker J. Canceled checks K. NSF checks L. Outstanding checks M. Petty cash receipt N. Cash equivalents O. Voucher system 1. Segregation of duties. 2. One to whom a check is payable. 3. Two or more employees circumventing prescribed procedures. 4. Prevent a transaction from being recorded more than once. 5. Checks which have been returned by the maker's bank for lack of funds. 6. Checks which have been paid by the depositor's bank. 7. Indicates those people authorized to sign checks. 8. Anything that a bank will accept for deposit. 9. Mechanical and electronic control devices. 10. One who issues a check. 11. Insurance protection against misappropriation of assets. 12. An extensive network of approvals by authorized individuals. 13. Document indicating the purpose of a petty cash expenditure. 14. Issued checks that have not been paid by the bank. 15. Highly liquid investments.

In preparing a bank reconciliation, outstanding checks are

Reconciling the bank statement monthly is an example of

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them