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Exam 7: Fraud, Internal Control, and Cash

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Question 61

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Internal control is defined, in part, as a plan that safeguards

A) all statement of financial position accounts.
B) assets.
C) liabilities.
D) equity.

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Question 62

Multiple Choice

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Which of the following would not be reported on the statement of financial position as a cash equivalent?

A) Money market funds
B) Commercial paper
C) Treasury bills
D) Restricted cash

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Question 63

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Employees of a company who evaluate the effectiveness of the company's system of internal controls on a year-round basis are called ______________.

Which of the following would not be reported on the statement of financial position as a cash equivalent?

Hemingway Company uses an imprest petty cash system. The fund was established on March 1 with a balance of $200. During March the following petty cash receipts were found in the petty cash box. The fund was replenished on March 15 when the fund contained $8 in cash. On March 20, the amount in the fund was increased to $300. Instructions Journalize the entries in March that pertain to the operation of the petty cash fund.

If the month-end bank statement shows a balance of ¥720,000, outstanding checks are ¥240,000, a deposit of ¥80,000 was in transit at month end, and a check for ¥10,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

A bank may issue a credit memorandum for

Internal control systems must be monitored periodically for their adequacy.

Reconciling the bank statement monthly is an example of

A $100 petty cash fund has cash of $17 and receipts of $82. The journal entry to replenish the account would include a

Nolan Company had checks outstanding totaling $14,400 on its June bank reconciliation. In July, Nolan Company issued checks totaling $103,800. The July bank statement shows that $64,800 in checks cleared the bank in July. A check from one of Nolan Company's customers in the amount of $800 was also returned marked "NSF." The amount of outstanding checks on Nolan Company's July bank reconciliation should be

On May 1, 2014, Vuitton Company established a petty cash fund by issuing a check for €500 to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2014, Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is €20 cash in the fund: The journal entry to establish the petty cash fund would include a

Match the cash disbursements procedure described with the internal control principle below.

Epley 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 $59 written to the company by J. Neutron was returned NSF. 2. The monthly service charge by the bank was $34. 3. The bank collected a $1,000 note plus interest of $97 on the company's behalf. The company had not accrued the interest.

Using prenumbered checks and having an approved invoice for each check is an example of

The difference between the cash in bank balance shown on the company's books and the cash balance shown on the bank statement may be caused by ______________ and by ______________ in recording transactions by either party.

Hanson-Swiss Wholesale Corporation gathered the following reconciling information in preparing its March bank reconciliation: The cash balance reported on the company's March statement of financial position is

Firms use physical controls primarily to safeguard their assets.

Below are descriptions of internal control problems match them to best internal control principle that is related to the problem described.

Match the internal control principle below with the appropriate cash disbursements procedure described. a. Establishment of responsibility b. Segregation of duties c. Documentation procedures d. Physical controls e. Independent internal verification f. Human resource controls _____ 1. Compare checks to invoices. _____ 2. Different individuals approve and make payments. _____ 3. Print check amounts by machine with indelible ink. _____ 4. Only designated personnel are authorized to sign checks. _____ 5. Each check must have approved invoice. _____ 6. Requiring employees to take vacations.