Exam 7: Fraud, Internal Control, and Cash

Use the following information to answer questions . On May 1, 2011, Vuitton Company established a petty cash fund by issuing a check for $€250$ to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2011 , Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is $€ 10$ cash in the fund: Freight-in 83 Office Supplies Expense 65 Entertainment of clients 62 Postage Expense 25 -The journal entry to establish the petty cash fund would include a

Reconciling the bank statement monthly is an example of

Physical controls to safeguard assets do not include

Controls that enhance the accuracy and reliability of the accounting records are

An exception to disbursements being made by check is acceptable when cash is paid

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

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

To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by an employee who has no other responsibilities pertaining to cash.

If a petty cash fund is established in the amount of $£ 250$ , and contains $£ 150$ in cash and $£ 95$ in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

The use of remittance advices for mail receipts is an example of

If a check correctly written and paid by the bank for $537 is incorrectly recorded on the company's books for $573, the appropriate treatment on the bank reconciliation would be to

Bank errors

For efficiency of operations and better control over cash, a company should maintain only one bank account.

A compensating balance is excluded from the amount of cash reported on the statement of financial position.

If a petty cash fund is established in the amount of $200, and contains $120 in cash and $85 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

Electronic Funds Transfer (EFT) is a disbursement system that uses telephone or computer to transfer cash from one location to another.

Control over cash disbursements is generally more effective when

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

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Control over cash disbursements is improved if major expenditures are paid by check.