Exam 6: Cash, fraud, and Internal Controls

On a bank statement,deposits are shown as ________,because the depositor's account is a liability on the bank's records.

Internal control of cash receipts aims to ensure that all cash received is properly recorded and deposited.

On a bank reconciliation,an unrecorded debit memorandum for printing checks is:

Havermill Co.establishes a $250 petty cash fund on September 1.On September 30,the fund is replenished.The accumulated receipts on that date represent $73 for Office Supplies,$137 for merchandise inventory,and $22 for miscellaneous expenses.The fund has a balance of $18.On October 1,the accountant determines that the fund should be increased by $50. -The journal entry to record the increase in the fund balance on October 1 is:

Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments.

The three parties involved with a check are:

The treasurer of a company is responsible for cash management.List five cash management principles that are essential for effective cash management.

Following are seven items a through g that would cause Rembrandt Company's book balance of cash to differ from its bank statement balance of cash. a.A service 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 customer's check returned by the bank is marked "Not Sufficient Funds (NSF)". d.A deposit mailed to the bank on the last day of the current month and not recorded on this month's bank statement. e.A check paid by the bank at its correct $190 amount recorded in error in the company's check register at $109. f.An unrecorded credit memorandum indicating that bank collected a note receivable for Rembrandt Company and deposited the proceeds in the company's account. g.A check written in the current period that is not yet paid or returned by the bank. Indicate where each item,letters a-g,would appear on Rembrandt Company's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

Match each of the following terms with the appropriate definitions. -A document used within the company to notify the appropriate persons that ordered goods have been received and to describe the quantity and condition of the goods.

Liquidity refers to a company's ability to pay its long-term obligations.

Meng Co.maintains a $300 petty cash fund.On January 31,the fund is replenished.The accumulated receipts on that date represent $80 for office supplies,$160 for merchandise inventory,and $20 for miscellaneous expenses.There is a cash shortage of $8. -Based on this information,the amount of cash in the fund before the replenishment is:

A purchase order is a document the purchasing department sends to the vendor to place an order.

Norman Co.had $5,925 million in sales and $1,155 million in ending accounts receivable for the current period.For the same period,Opal Co.reported $5,885 million in sales and $790 million in ending accounts receivable.Calculate the days' sales uncollected for both companies as of the end of the current period and indicate which company is doing a better job in managing the collection of its receivables.

Umber Company's bank reconciliation for September is presented below.Prepare the necessary adjusting journal entries based on the reconciliation report.

A properly designed internal control system:

The ________ requires the managers and auditors of companies whose stock is traded on an exchange (called public companies)to document and certify the system of internal controls.

A ________ is a document explaining the payment of a check.

Spencer Co.has a $200 petty cash fund.At the end of the first month the accumulated receipts represent $43 for delivery expenses,$127 for merchandise inventory,and $12 for miscellaneous expenses.The fund has a balance of $18.The journal entry to record the reimbursement of the account includes a:

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.