Exam 4: Internal Controls, Accounting for Cash, and Ethics

As of May 31, the bank statement of Flore Company showed an ending balance of $8,632.52. The following information was available: Bank service charge \3 5.00 Outstanding checks 2,480.36 NSF check from a customer 127.50 Deposit in transit 799.55 Deposit exroneously recorded in Flores's account 229.00 that should have heen recorded in Flowers 's a account Required:Compute Flore's true cash balance at May 31.

When preparing the monthly bank reconciliation, Mayhew Company's accountant found the following adjustments to make to either the unadjusted book balance or unadjusted bank balance: Deposits in transit \1 ,200 NSF check 175 Bank service charge 50 Outstanding checks 1,060 Credit memo for interest 80 Required:Indicate how each of the required adjusting entries impacts the company's financial statements.

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NA During the process of preparing the bank reconciliation, an employee for Heath Company discovered that Check number 4261 for $65, used to pay an account payable, was recorded in the company books as $56.

What term is used for a customer's check that is returned by the bank on which it was drawn because the customer did not have enough funds to pay the check?

What is the "fraud triangle"?

On November 30, Hernandez Company's bank statement showed an ending balance of $37,341. The following information is available about Hernandez's account: Debit memo in bank statement for bank service charge, $39Deposit in transit, $2,988Outstanding checks, $3,156Customer's NSF check for $723 was returned with the bank statement Required:Determine the true cash balance as of November 30.Determine the unadjusted balance of the company's Cash account as of November 30.

List three of the five primary roles of the independent auditor (CPA).

List three measures that a business can use to achieve strong internal controls.

The May 31 balance per bank statement was $12,400. The cash balance per books was $17,000. Outstanding checks amounted to $1,700, and deposits in transit were $4,800. The bank statement contained an NSF check for $1,100, a service charge for $50, and a debit memo for direct payment of the telephone bill of $350. Required:Prepare a bank reconciliation to determine the true cash balance at May 31.Indicate how each of the required adjusting entries impact the financial statements.

Rexrode Company's bank statement at January 31 showed an ending balance of $24,712.80. The unadjusted cash account balance for Rexrode is $21,245.75. The following data were gathered by Rexrode's accountant:Outstanding checks as of January 31: $4,895.44NSF check from customer: $183.62Debit memo related to the returned deposit: $20.00Credit memo for interest earned: $12.00Deposits in transit: $1,236.77 Required:Prepare a bank reconciliation for Rexrode Company at January 31.Indicate how each of the required adjusting entries impact the financial statements.

Discuss the importance of ethics in the accounting profession.

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NAIn preparing the bank reconciliation for Heath Company, an employee discovered an error. A $654 cash receipt for the collection of an account receivable was recorded in the company's books as $645. The deposit slip was correct, and the bank deposit had been correctly prepared. The error appeared only in the company's accounting records.

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NAIn preparing the bank reconciliation for Heath Company, an employee found that a certified check that the company had used to settle an account payable remained outstanding.

Explain the meaning of "internal control."

What is a fidelity bond and what is its purpose?

For each of the following items, indicate whether it is an adjustment to the bank balance or to the book balance when preparing a bank reconciliation. Use "+" for addition to the related balance, "−" for subtraction from the related balance, or "NA" for no adjustment to the related balance.

Woods Company recorded the following entries related to its bank reconciliation for October 31: * Increase to cash and decrease to accounts receivable** Increase to accounts receivable and decrease to cashRequired:Assuming that the unadjusted cash balance on Woods's books was $8,354.28, what was the true cash balance at the end of the month?Prepare the portion of the bank reconciliation that begins with the unadjusted book balance and ends with the true cash balance.

What are the primary roles of the independent auditor? What professional license is required of an independent auditor?