Exam 7: Fraud, Internal Control, and Cash

One example of a periodic independent verification is the bank reconciliation.

The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.

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

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item.

A $100 petty cash fund has cash of $14 and receipts of $84. The journal entry to replenish the account would include a

Entries are made to the Petty Cash account when

Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

Related selling activities do not include

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

For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation?

To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by the employee authorized to sign checks.

Which of the following is an example of a bank reconciliation item that requires an adjusting entry?

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 $230 but recorded for $320. 5. Collection of note and interest by bank on company's behalf.

A consequence of separation of duties is that

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

Which one of the following is not an objective of a system of internal controls?

Restricted cash should be reported

Ron Jones has been a trusted employee for over 10 years. He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items. Which internal control principle, if any, is being violated?

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