FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Cash, fraud, and Internal Controls

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 111

True/False

Review LaterAdd Note

Review Later

A properly designed internal control system is a key part of systems design,analysis,and performance.

Correct Answer

verified

Show Answer

Question 112

Multiple Choice

Review LaterAdd Note

Review Later

Internal controls are crucial to companies that convert from U.S.GAAP to IFRS because of all of the following risks except:

A) Possible misstatement of financial information.
B) Possible fraud.
C) Controls are significantly different across the globe.
D) Ineffective communication of the change to investors, creditors, and others.
E) Management's inability to certify the effectiveness of the controls.

Correct Answer

verified

Show Answer

Question 113

Essay

Review LaterAdd Note

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

Deposits in transit are deposits made and recorded by the depositor but not yet recorded on the bank statement.

In the process of reconciling its bank statement for April,Donahue Enterprises' accountant compiles the following information: $\begin{array} { | l | r | } \hline \text { Cash balance per company books on April 30 } & \$ 6,275 \\\hline \text { Deposits in transit at month-end } & \$ 1,300 \\\hline \text { Outstanding checks at month-end } & \$ 620 \\\hline \text { Bank charge for printing new checks } & \$ 45 \\\hline \text { Note receivable and interest collected by bank on Donahue's behalf } & \$ 770 \\\hline \begin{array} { l } \text { A check paid to Donahue during the month by a customer is returned by } \\\text { the bank as NSF }\end{array} & \$ 480 \\\hline\end{array}$ The adjusted cash balance per the books on April 30 is:

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:

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 internal document prepared by a department manager that informs the purchasing department of its merchandise needs and requests that the merchandise be purchased is the:

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

Match each of the following terms with the appropriate definitions. -Fundamental guidelines applicable to all companies established to minimize the risk of fraud and theft and to increase the reliability and accuracy of the accounting records.

The Cash Over and Short account:

A ________ is an internal document (or file)that is used to accumulate information to control cash disbursements.

Two sales clerks not being permitted to share the same cash register is an example of the internal control principle of ________.

When a voucher system is used,an invoice approval is not needed as long as the purchase is evidenced by an invoice and purchase order.

According to good internal control policies,a person who controls an asset also maintains that asset's accounting records.

The following information is available for the Topper Company for the month of July. a.On July 31,after all transactions have been recorded,the balance in the company's Cash account has a balance of $15,244. b.The company's bank statement shows a balance on July of $16,450. c.Outstanding checks at July total $2,063. d.A credit memo included with the bank statement indicates that the bank collected $570 on a note receivable for Topper.The $570 includes $550 principle and $20 interest. e.A debit memo included with the bank statement shows a $107 NSF check from a customer,P.Flank. f.A deposit placed in the bank's night depository on July 31 totaling $1,275 did not appear on the bank statement. h.Included with the bank statement was a debit memorandum in the amount of $45 for check printing charges that have not been recorded on the company's books. Prepare the July bank reconciliation for the Topper Company.

Spencer Co.decides to establish a petty cash fund with a beginning balance of $200.The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system.The journal entry to record establishing the account is:

Explain the difference between cash and cash equivalents.

The entry to establish a petty cash fund includes:

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.