Exam 6: Internal Control and Accounting for Cash

While performing its monthly bank reconciliation, the bookkeeper for Mosaic Company discovered that a check written for $421 for advertising expense was recorded in the firm's books as $241. Which of the following shows the effect of correcting the error on the financial statements?

Which of the following is not a typical document associated with a bank checking account?

Segregation of duties in an organization should be required to reduce the likelihood of theft.

As of May 31, the bank statement of Xi Company showed an ending balance of $8,632.52. The following information was available: Required:Determine the true cash balance by preparing (only)the section of the bank reconciliation that starts with the bank balance.

At March 31, Cummins Company had an unadjusted balance in its cash account of $11,300. At the end of March, the company determined that it had outstanding checks of $1,290, deposits in transit of $780, a bank service charge of $50, and a NSF check from a customer for $230. What is the true cash balance at March 31?

Indicate whether each of the following statements regarding internal controls is true or false.a)________ The Sarbanes-Oxley Act of 2002 (SOX)requires public companies to evaluate their internal controls and publish those findings with their SEC filings.b)________ The Sarbanes-Oxley Act (SOX)applies to all companies, while the Enterprise Risk Management (ERM)framework is used by public companies only.c)________ Enterprise Risk Management (ERM)is an expansion of the earlier framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO).d)________ The COSO framework includes five interrelated components: segregation of duties, quality employees, prenumbered documents, physical controls, and performance evaluations.e)________ Congress passed the Sarbanes-Oxley Act in 2002 (SOX)in response to high profile accounting scandals, such as Enron and WorldCom.

Peterson Company's petty cash fund was established on January 1 with $500. On January 31, a count of the fund revealed: $105 in cash remaining and vouchers for miscellaneous expenses totaling $400. If the company records both the disbursements and the replenishments to the fund, what is the overall effect on Peterson's financial statements?

On September 30 the bank statement of Fine Company showed a balance of $7,800. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records:Deposits in transit amounted to $3,150Outstanding checks amounted to $6,200A $550 check was incorrectly drawn on Fine's accountNSF checks returned by the bank were $750The bank service charge was $29Credit memo for $75 for the collection of one of the company's account receivable What is the true cash balance?

The following information pertains to the bank reconciliation as of January 31 for Greis Company: In addition, the reconciliation revealed one error: Check #2146 for $152, written to pay utilities expense, was incorrectly recorded in the books for $125. Required:Using the above information, determine the unadjusted book balance for cash.

Internal controls designed to evaluate performance and the degree of compliance with company policies and public laws are classified as administrative controls.

Indicate whether each of the following items regarding internal control is true or false. a)________ Accounting controls are composed of procedures designed to safeguard assets and ensure accounting records contain reliable information.b)________ Administrative controls concern the reliability of the financial statements and the accuracy of the general ledger.c)________ Whenever possible, the functions of authorization, recording and custody should be exercised by the same dependable employee.d)________ Cash is most susceptible to embezzlement at the points of receipt and disbursement.e)________ A well-designed internal control system prevents collusion among employees.

For each of the following items, indicate whether it is an adjustment to the unadjusted bank balance, the unadjusted book balance, or not applicable when preparing a bank reconciliation. Use + for addition, − for subtraction, and NA for no adjustment.

Duke Company's unadjusted bank balance at March 31 is $5,500. The bank reconciliation revealed outstanding checks amounting to $800 and deposits in transit of $550. What is the true cash balance?

The April 30 bank statement for Trimble Corporation shows an ending balance of $35,192. The unadjusted cash account balance was $29,150. The accountant for Trimble gathered the following information:There was a deposit in transit for $4,406.The bank statement reports a service charge of $59.A credit memo included in the bank statement shows interest earned of $215.Outstanding checks totaled $11,362.The bank statement included a $1,070 NSF check deposited in April.What is the true cash balance as of April 30?

Who can conduct a financial audit?

Which of the following is not an example of a common control activity?

Which of the following statements accurately describes a fidelity bond?

Typical adjustments to the unadjusted book balance on a bank reconciliation include bank service charges, customer NSF checks, and certified checks.

After the adjustments identified on the bank reconciliation have been recorded, the ending cash (book)balance reflected in the company's records will equal the true cash balance.

The April 30 bank statement for Trimble Corporation shows an ending balance of $34,351. The unadjusted cash account balance was $28,250. The accountant for Trimble gathered the following information:There was a deposit in transit for $4,240.The bank statement reports a service charge of $39.A credit memo included in the bank statement shows interest earned of $95.Outstanding checks totaled $10,935.The bank statement included a $650 NSF check deposited in April.What is the true cash balance as of April 30?