Exam 7: Fraud, Internal Control, and Cash

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed.This implementation is most consistent with which of the following basic principles of cash management?

The following credit sales are budgeted by Gonzalez Company: The company's past experience indicates that 80% of the accounts receivable are collected in the month of sale, 20% in the month following the sale.The anticipated cash inflow for the month of March is

For which of the following errors would the appropriate amount be added to the balance per books on a bank reconciliation?

Which of the following is not a suggested procedure to establish internal control over cash disbursements?

Only large companies need to be concerned with a system of internal control.

From an internal control standpoint, the asset most susceptible to improper diversion and use is

The following credit sales are budgeted by Milford Company: The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale.The anticipated cash inflow for the month of August is

Which item is a current asset?

All of the following activities occur at the time of a cash disbursement from petty cash except

What is the rationale for the internal control principle, segregation of duties?

A bank reconciliation is generally prepared by the bank and sent to the depositor along with canceled checks.

A consequence of the separation of duties is that

Sound internal control activities dictate that the amount of cash on hand should be kept to a maximum.

A liquid investment is one for which there is a ready market.

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

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

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

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Related selling activities do not include

Checks received in the mail should be immediately stamped "NSF" to prevent unauthorized cashing of the check.