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

During the reconciliation process an accountant for Snyder Company discovered that Check #4261 for $136 for an Accounts Payable payment was recorded in the company books as $163.

Indicate whether each of the following statements about a bank statement is true or false. -When an auditor is unable to perform audit procedures that are necessary to determine the financial statements' compliance with GAAP, a qualified opinion must be issued

Indicate whether each of the following statements regarding internal controls is true or false. -Cash receipts should be deposited in a bank on a periodic basis such as once a week

During the reconciliation process an accountant for Shalimar Corporation discovered that Check #4901 for $552 for an Accounts Payable payment was recorded in the company books as $525.

Independent auditors are

A good system of internal controls cannot be overridden by collusion among employees.

At the end of the month, Grant Entertainment Company showed a $9,300 book balance in its cash account. The following information was gathered by studying the bank statement and the company's cash records: (1) deposits in transit amounted to $3,150 (2) outstanding checks were $6,200 (3) a $550 check had been incorrectly drawn on Grant's account by the bank (4) NSF checks returned by the bank were $750 (5) bank service charge was $29 (6) credit memo for $75 for the collection of one of the company's account receivable Based on the above information the true cash balance would be:

An element that is often present when fraud occurs is

In preparing a bank reconciliation, is a deposit in transit an adjustment to the book balance, the bank balance, or neither?

While reconciling Swanson Company's bank statement an error was discovered. A $394 cash receipt for the collection of an account receivable was recorded in the company's books as $349. The deposit was recorded correctly by the bank.

Indicate whether each of the following statements regarding internal controls is true or false. -Accounting controls are concerned with the evaluation of performance and the assessment of the degree of compliance with company policies and public laws

Indicate whether each of the following statements about cash payments is true or false. -Use of prenumbered checks is no longer recommended as part of an internal control system over cash

Indicate whether each of the following statements about a bank statement is true or false. -A qualified opinion is the most favorable opinion that can be expressed by an independent auditor

The most effective way to reduce opportunities for ethical or criminal misconduct is:

Indicate whether each of the following statements is true or false. -Debit memos in a bank statement describe transactions that act to increase the depositor's assets

Indicate whether each of the following statements about cash receipts is true or false. -Giving a written receipt to customers who pay cash is part of a business's internal controls over cash

When a "debit memo" is included in a bank statement, what effect does that have on the cash balance?

What were the events that led Congress to pass the Sarbanes-Oxley Act of 2002?

Indicate whether each of the following statements about cash receipts is true or false. -The amount of cash on hand, including petty cash, should be counted periodically

In performing the bank reconciliation for Bounds Company, a company employee found that the bank statement included a bank service charge of $12.