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Exam 7: Fraud, Internal Control, and Cash

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Question 91

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

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Question 92

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A bank may issue a credit memorandum for

A) a bank service charge.
B) an NSF (not sufficient funds) check from a customer.
C) the collection of a note receivable for the depositor by the bank.
D) the cost of printing checks.

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Question 93

Multiple Choice

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A debit balance in Cash Over and Short is reported as a

Tangible frauds include

At June 30, Yaddof Company has the following bank information: cash balance per bank $1,800; outstanding checks $340; deposits in transit $275; credit memo for interest $75; bank service charge $10. What is Mareska's adjusted cash balance on June 30?

In preparing its August 31, 2018 bank reconciliation, Annie Corp. has available the following information: $\begin{array}{lr}\text { Balance per bank statement, } 8 / 31 / 18 & \$ 64,950 \\\text { Deposit in transit, } 8 / 31 / 18 & 11,700 \\\text { Return of customer's check not sufficient funds, } 8 / 30 / 18 & 1,800 \\\text { Outstanding checks, } 8 / 31 / 18 & 8,250 \\\text { Bank service charges for August } & 300\end{array}$ At August 31, 2018, Annie's adjusted cash balance is

Internal control consists of the plan of organization and all of the related methods and measures adopted within a business to (a) safeguard its assets, and (b) enhance the accuracy and reliability of its accounting records.

Compensating balances are a restriction on the use of a company's cash and should be

All of the following would involve a debit memorandum except

Match the internal control principle below with the appropriate cash receipts procedure described.

Management is responsible for establishing a system of internal control.

A debit memorandum would not be issued by the bank for

Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

Internal auditors

An application of good internal control over cash disbursements is

Harnish Company needs to make adjusting entries for each of the following reconciling items. Identify the account to be debited and the account to be credited in each case. 1. A check for $127 written to the company by J. Chandler was returned NSF. 2. The monthly service charge by the bank was $20. 3. The bank collected a $1,000 note plus interest of $100 on the company's behalf. The company had not accrued the interest.

A voucher is recorded in the ________________ and filed according to the date on which it is to be paid.

Two limitations of systems of internal control are the concept of ______________ and the ______________.

Internal control is most effective when several people are responsible for a given task.