Exam 7: Fraud, Internal Control, and Cash

A basic principle of cash management involves the investment of idle cash. a. Explain why this should be done. b. What type of investment is appropriate for the idle cash?

Which of the following would be added to the balance per bank on a bank reconciliation?

Your friend, Jeff, has opened a movie theater. Jeff states that he does not have time to develop and implement a system of internal controls. a. Provide Jeff with the objectives of a system of internal control. b. Explain to Jeff why he should develop a system of internal control.

Two individuals at a retail store work the same cash register. You evaluate this situation as

Mrs. Smith has worked for Bosco Inc. for 20 years without taking a vacation. An internal control feature that would address this situation would be

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

A debit memorandum would not be issued by the bank for

A bank reconciliation should be prepared

All of the following are examples of internal control procedures except

Cash equivalents do not include

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

A $100 petty cash fund has cash of $16 and receipts of $86. The journal entry to replenish the account would include a

Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described.

Which of the following is not a necessary internal control procedure for the replenishment of the petty cash fund?

Control over cash disbursements is generally more effective when

Dekin Company had checks outstanding totaling $17,000 on its May bank reconciliation. In June, Dekin Company issued checks totaling $106,400. The July bank statement shows that $79,200 in checks cleared the bank in July. A check from one of Dekin Company's customers in the amount of $800 was also returned marked "NSF." The amount of outstanding checks on Dekin Company's July bank reconciliation should be

A $200 petty cash fund has cash of $32 and receipts of $171. The journal entry to replenish the account would include

On April 30, the bank reconciliation of Baxter Company shows three outstanding checks: no. 354, $650, no. 355, $920, and no. 357, $615. The May bank statement and the May cash payments journal show the following. Instructions Using step 2 in the reconciliation procedure, list the outstanding checks at May 31.

Clark Company developed the following reconciling information in preparing its September bank reconciliation: Using the above information, determine the cash balance per books (before adjustments) for the Clark Company.

The treasurer should prepare and sign a check only after authorization to issue a check has been provided.