Exam 7: Fraud, Internal Control, and Cash

A highly automated computerized system of accounting eliminates the need for internal control.

Storing cash in a company safe is an application of which internal control principle?

At April 30, Yaddof Company has the following bank information: cash balance per bank $2,300; outstanding checks $390; deposits in transit $275; credit memo for interest $50; bank service charge $10. What is Mareska's adjusted cash balance on April 30?

The preparation of a bank reconciliation is an important cash control procedure. If a company deposits cash receipts daily and makes all cash disbursements by check, explain why the cash balance per books might not agree with the cash balance shown on the bank statement. Identify specific examples that may cause differences between the cash balance per books and the cash balance per bank.

The cash records of Jasmin Company show the following four situations. 1. The June 30 bank reconciliation indicated that deposits in transit total $2,110. During July the general ledger account Cash shows deposits of $23,620, but the bank statement indicates that only $23,400 in deposits were received during the month. 2. The June 30 bank reconciliation also reported outstanding checks of $1,250. During the month of July, Jasmin Company books show that $25,800 of checks were issued. The bank statement showed that $24,600 of checks cleared the bank in July. 3. In September, deposits per the bank statement totaled $40,100, deposits per books were $38,100, and deposits in transit at September 30 were $2,900. 4. In September, cash disbursements per books were $36,550, checks clearing the bank were $37,500, and outstanding checks at September 30 were $3,200. There were no bank debit or credit memoranda. No errors were made by either the bank or Jasmin Company. Instructions Answer the following questions. (a) In situation (1), what were the deposits in transit at July 31? (b) In situation (2), what were the outstanding checks at July 31? (c) In situation (3), what were the deposits in transit at August 31? (d) In situation (4), what were the outstanding checks at August 31?

All of the following are parties to a check except the

IFRS, compared to GAAP, tends to be more

Fraud experts often say that there are three primary factors that contribute to employee fraud. Identify the three factors and explain what is meant by each a. Provide Dean with the objectives of a system of internal controls. b. Explain to Dean why he should develop a system of internal controls. ,

Jukebox Company had checks outstanding totaling $10,800 on its June bank reconciliation. In July, Jukebox Company issued checks totaling $77,800. The July bank statement shows that $76,600 in checks cleared the bank in July. A check from one of Jukebox Company's customers in the amount of $1,000 was also returned marked "NSF." The amount of outstanding checks on Jukebox Company's July bank reconciliation should be

Identify whether each of the following items would be (a) added to the book balance, or (b) deducted from the book balance in a bank reconciliation. 1. EFT transfer to a supplier 2. Bank service charge 3. Check printing charge 4. Error recording check # 214 which was written for $450 but recorded for $540 5. Collection of note and interest by bank on company's behalf

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

Identify which principle of internal control is being followed in each of the following cases. 1. Warehouse employees do not have access to the accounting records. 2. Pre-numbered shipping documents are prepared for each shipment of goods. 3. The locked warehouse is accessible only by warehouse employees with keys.

The size of the petty cash fund is dependent on

In preparing its bank reconciliation for the month of April 2018, Haskins, Inc. has available the following information. Balance per bank statement, 4/30/18 \ 40,920 NSF check returned with 4/30/18 bank statement 1,350 Deposits in transit, 4/30/18 10,500 Outstanding checks, 4/30/18 15,600 Bank service charges for April 60 What should be the adjusted cash balance at April 30, 2018?

The following adjusting entries for Donkey Company were prepared after completing a bank reconciliation. For each of the following adjustments, prepare a probable explanation for the adjusting entry.

Checks from customers who pay their accounts promptly are called outstanding checks.

In general, documents should be pre-numbered and all documents should be accounted for.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Firms use physical controls primarily to safeguard their assets.

For efficiency of operations and better control over cash, a company should maintain only one bank account.