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Exam 6: Cash,fraud,and Internal Controls

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Question 91

Multiple Choice

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If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30,in preparing the September 30 bank reconciliation,the company should:

A) Deduct the deposit from the bank statement balance.
B) Skip the bank reconciliation this month.
C) Deduct the deposit from the September 30 book balance and add it to the October 1 book balance.
D) Add the deposit to the book balance of cash.
E) Add the deposit to the bank statement balance.

F) None of the above
G) B) and E)

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Question 92

Multiple Choice

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Great Falls Co.'s bank reconciliation as of February 28 is shown below. One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes:

A) Debit Note Payable $745; credit Cash $745.
B) Debit Cash $745; credit Note Receivable $745.
C) Debit Cash $2,950; credit Sales $2,950.
D) Debit Cash $2,950; credit Accounts Receivable $2,950.
E) Debit Miscellaneous Expense $35; credit Accounts Payable $35.

F) A) and D)
G) C) and D)

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Question 93

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Basic bank services such as bank accounts,bank deposits,and checking contribute to the control of cash.

________ are checks written by the depositor,deducted on the depositor's records,and sent to the payee,but not yet recorded by the bank at the bank statement date.

Discuss how the principles of internal control apply to cash receipts over-the-counter by giving several examples of good control measures that should be implemented.

A seller (or supplier) of goods or services to a business organization is known as a:

Proper internal control would require that a department manager inform the purchasing department of its needs for additional merchandise by preparing and signing a purchase requisition which lists the merchandise requested to be purchased.

Canceled checks are checks the bank has paid and deducted from the customer's account during the period.

The ________ account is used to record the effects of cash overages and shortages from errors in making change or managing a petty cash fund.

The treasurer of a company is responsible for cash management.List five cash management principles that are essential for effective cash management.

Petty cash reimbursement requires a journal entry that involves a debit to the appropriate expenses and a credit to Cash.

Pelcher Co.maintains a $400 petty cash fund.On January 31,the fund is replenished.The accumulated receipts on that date represent $110 for office supplies,$140 for merchandise inventory,and $70 for miscellaneous expenses.There is a cash overage of $4. -Based on this information,the amount of cash in the fund before the replenishment is:

On March 1,a company established a $75 petty cash fund.On March 12,the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25; postage,$19.50; and office supplies,$36.Give the general journal entry to reimburse the fund and to increase its amount to $150 on March 12.

Internal controls are crucial to global companies because of all of the following risks except:

Basic bank services do not include:

Internal control procedures for cash receipts do not require that:

Zhang Co.uses a voucher system for documentation and verification.Complete the following grid regarding their system.

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

The following information is taken from Reagan Company's December 31 balance sheet: If net sales for the current year were $612,000,the firm's days' sales uncollected for the year is: $\bold{\text{(Use 365 days a year.) }}$

Internal control policies and procedures have limitations not including: