Exam 6: Cash,fraud,and Internal Controls

Determine whether each of the following is an internal control strength or weakness 1.Receiving department manager places an order with the vendor for merchandise inventory. 2.A voucher is used to certify a transaction and authorize recording of the liability. 3.Goods are received by the receiving department and documented with a receiving report. 4.Accounting department pays the vendor's invoice before goods are received. 5.Invoices are paid after completion of the invoice approval documenting the purchase requisition,purchase order,receiving report,invoice,and approval for payment.

A person who controls or has access to an asset must not keep that asset's accounting records.This describes the internal control principle of ________.

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

Cash Over and Short

________ are short-term,highly liquid investment assets that are readily convertible to a known amount of cash.

The following items a through f would cause Samson Company's book balance of cash to differ from its bank statement balance of cash. a.A check printing charge imposed by the bank. b.A check listed as outstanding on the previous period's reconciliation and still outstanding at the end of this month. c.A deposit made on the last day of the month was not included on the bank statement. d.A customer's check was returned for insufficient funds (NSF). e.A check written in the current period has not yet been paid or returned by the bank. f.A note receivable was collected by the bank and added to Samson's account. Indicate where each item,letters a-f,would appear on Samson Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

A properly designed internal control system:

On June 1,a company established a $75 petty cash fund.On June 27,the petty cash fund contains $5.25 in cash and the following paid petty cash receipts: postage,$19.50; office supplies,$36.25; and miscellaneous expense $14.00.Give the general journal entry to reimburse the fund on June 27.

The number of days' sales uncollected is used to:

A set of procedures and approvals for verifying,approving and recording liabilities for eventual cash payment,and for issuing checks for payment only of verified,approved,and recorded liabilities is referred to as a(n):

The entry to record reimbursement of the petty cash fund for postage expense should include:

A petty cash fund was originally established with a check for $100.On August 31,which is the period end,the petty cash fund included the following: Prepare the general journal entry to record the replenishment of the petty cash fund on August 31.

At the end of the day,the cash register's record shows $2,050,but the count of cash in the cash register is $2,058.The correct entry to record the cash sales is

An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):

The days' sales uncollected ratio measures the liquidity of accounts receivable.

The following information is available to reconcile Hinckley Company's book balance of cash with its bank statement cash balance as of June 30.The June 30 cash balance according to the accounting records is $57,542,and the bank statement cash balance for that date is $67,047. a.The bank erroneously cleared a $295 check against the account in June that was not issued by Hinckley.The check documentation included with the bank statement indicates the check was actually issued by Dancer Co. b.$35 interest earned on Hinckley's cash balance in the bank is not yet recorded by Hinckley. c.When the June checks are compared with entries in the accounting records,it is found that Check No.1727 had been correctly drawn for $1,450 to pay for advertising but was erroneously entered in the accounting records as $1,540. d.The bank collected $8,970 cash on a note receivable for Hinckley.Hinckley did not record this transaction before receiving the statement. e.An $865 NSF check received from a customer is shown on the bank statement,but not yet recorded by Hinckley Company. f.Hinckley's June 30 daily cash receipts of $6,425 were placed in the bank's night depository on that date,but do not appear on the June 30 bank statement. g.Hinckley's June 30 cash payments journal indicates that Check No.1737 for $4,830 and Check No.1740 for $3,280 were both written and entered in the accounting records,but are not among the canceled checks. h.The bank lock box fee for $115.00 is shown on the bank statement,but not yet recorded by Hinckley Company. 1.Prepare the bank reconciliation for this company as of June 30. 2.Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciled cash balance as of June 30.

Cost-benefit

A voucher is an external document used to accumulate information to control cash payments and to ensure that a transaction is properly recorded.

The following information is available for Bosch Company for the month of May. a.On May 31,after all transactions have been recorded,the balance in the company's Cash account has a balance of $6,322. b.The company's bank statement shows a balance on July of $6,450. c.Outstanding checks total $63. d.A $47 NSF check from a customer,T.Shannon is shown on the bank statement but not yet recorded by Bosch Company. e.A deposit placed in the bank's night depository on May 31 totaling $275 did not appear on the bank statement. f.Bank fees for check printing of $45 are not yet recorded by Bosch Company. g.A note receivable for $432 is collected by the bank for Bosch Company,but it not yet recorded by Bosch Company. Prepare the May bank reconciliation for the Bosch Company.