Exam 7: Fraud, Internal Control, and Cash

The information below relates to the Cash account in the ledger of Remington Company. Balance September 1-$25,720 Cash deposited-$96,000. Balance September 30-$26,100 Checks written-$95,620. The September bank statement shows a balance of $24,635 on September 30 and the following memoranda. At September 30, deposits in transit were $7,195, and outstanding checks totaled $2,575. Instructions Prepare the bank reconciliation at September 30.

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

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

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.

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

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

The Hartman Boat Company's bank statement for the month of November showed a balance per bank of $7,000. The company's Cash account in the general ledger had a balance of $5,659 at November 30. Other information is as follows: (1) Cash receipts for November 30 recorded on the company's books were $6,000 but this amount does not appear on the bank statement. (2) The bank statement shows a debit memorandum for $40 for check printing charges. (3) Check No. 119 payable to Maris Company was recorded in the cash payments journal and cleared the bank for $248. A review of the accounts payable subsidiary ledger shows a $36 credit balance in the account of Maris Company and that the payment to them should have been for $284. (4) The total amount of checks still outstanding at November 30 amounted to $5,800. (5) Check No. 138 was correctly written and paid by the bank for $409. The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for $490. (6) The bank returned an NSF check from a customer for $560. (7) The bank included a credit memorandum for $2,060 which represents collection of a customer's note by the bank for the company; principal amount of the note was $2,000 and interest was $60. Interest has not been accrued. Instructions (a) Prepare a bank reconciliation for the Hartman Boat Company at November 30. (b) Prepare any adjusting entries necessary as a result of the bank reconciliation.

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

On a bank statement, paid checks are shown as

An employee authorized to sign checks should not record

In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

At April 30, Kessler Company has the following bank information: What is Kessler's adjusted cash balance on April 30?

Ferguson Company is preparing a cash budget for September. The company's cash balance on September 1 is $23,200. The company anticipates cash receipts of $111,800 and cash disbursements of $117,320. If Ferguson desires a cash balance of $24,000, it must

All of the following are items that would most likely be paid from a petty cash fund except

Bonding involves all of the following except

Bonding means insuring a company against theft by employees.

A petty cash fund of $200 is replenished when the fund contains $12 in cash and receipts for $184. The entry to replenish the fund would

If the cash budget showed a projected cash shortage, the company would most likely

The safeguarding of assets is an objective of a company's system of internal control.