Exam 7: Fraud, Internal Control, and Cash

Foyle Company needs to make adjusting entries for each of the following reconciling items. Identify the account to be debited and the account to be credited in each case. 1. A check for $59 written to the company by J. Hammond was returned NSF. 2. The monthly service charge by the bank was $34. 3. The bank collected a $1,000 note plus interest of $60 on the company's behalf. The company had not accrued the interest.

A disbursement system that uses wire, telephone, computers, etc., to transfer cash from one location to another is referred to as ______________.

Bishop Company wrote checks totaling $34,160 during October and $37,300 during November. $32,480 of these checks cleared the bank in October, and $36,440 cleared the bank in November. What was the amount of outstanding checks on November 30?

Which of the following would not be included in the definition of cash?

Which of the following would be deducted from the balance per bank on a bank reconciliation?

Under the concept of establishment of responsibility, how many people should have the ultimate responsibility?

A petty cash fund should be replenished

Internal control is most effective when several people are responsible for a given task.

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

The following information was taken from Mitchell Company cash budget for the month of July: Beginning cash balance \ 100,000 Cash receipts 96,000 Cash disbursements 136,000 If the company has a policy of maintaining end of the month cash balance of $100,000, the amount the company would have to borrow is

At April 30, Mendoza Company has the following bank information: Cash balance per bank \ 7,200 Outstanding checks \ 560 Deposits in transit \ 1,100 Credit memo for interest \ 20 Bank service charge \ 40 What is Mendoza's adjusted cash balance on April 30?

The principle of internal control that prevents one individual from being responsible for all the related activities of a given task is ______________.

The following information is available for Nichols Company for the month of February: expected cash receipts $40,000; expected cash disbursements $44,000; cash balance February 1, $11,000. Management wishes to maintain a minimum cash balance of $10,000. Prepare a basic cash budget for the month of February.

Which of the following does not appear as a separate section on the cash budget?

In preparing a bank reconciliation, outstanding checks are ______________ from the cash balance per ______________.

Lowe Inc.'s bank statement from Western Bank at August 31, 2014, gives the following information. A summary of the Cash account in the ledger for August shows the following: balance, August 1, $21,100, receipts $81,000; disbursements $73,570; and balance, August 31, $28,530. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $7,000 and outstanding checks of $4,500. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40. Instructions (a) Determine deposits in transit. (b) Determine outstanding checks. (c) Prepare a bank reconciliation at August 31.

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

Cash equivalents include money market accounts, commercial paper, and U.S. treasury bills held for ninety days or less.

James Company had checks outstanding totaling $21,600 on its June bank reconciliation. In July, James Company issued checks totaling $155,600. The July bank statement shows that $105,200 in checks cleared the bank in July. A check from one of James Company's customers in the amount of $1,200 was also returned marked "NSF." The amount of outstanding checks on James Company's July bank reconciliation should be

Tangible frauds include