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

As of May 31,2012,the bank statement for Feldman Corporation showed an ending balance of $17,632.52.The following information was available: Required: Compute the true cash balance at May 31,2012.

Which of the following statements accurately describes a fidelity bond?

An unqualified audit opinion:

Explain why it is impossible to have a foolproof internal control system.

What is a "material misstatement"?

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

What are the primary roles of the independent auditor?

At June 30,2012,the bank reconciliation of Stein Company reveals outstanding checks of $820.

Check no.147 for $200 was outstanding as of September 30.In performing the September bank reconciliation,this outstanding check should be

Rich Company's unadjusted book balance at October 31,2012 is $2,550.The following information is available for the bank reconciliation. Outstanding checks,$600 Deposits in transit,$450 Bank service charges,$90 Bank collected an accounts receivable for Rich Company,$1,000 NSF check written by one of Rich's customers,$600. Based on this information Rich's true cash balance is:

In preparing a bank reconciliation,typical adjustments to the bank balance are deposits in transit and bank service charges.

While performing the monthly bank reconciliation,the bookkeeper for Grace Corporation noted that a deposit of $100 (received from a customer on account)was recorded in the company books as $1,000.Which of the following shows the effect of the correcting entry on the financial statements?

Martha Hanson operates a small gift shop that sells various antiques,such as glassware.She employs two clerks who make sales to customers,accept returns when a customer is dissatisfied with merchandise,and put new merchandise on display.One of the clerks,Jill Hays,was hired recently.Martha had always done all the accounting for the store and had made bank deposits.However,Jill has offered to do the accounting for the store during slow periods when there are no customers in the store; she also has begun making bank deposits as she leaves for the day.Having Jill take these responsibilities allows Martha more time for acquiring merchandise for the store and for personal errands.What potential risks for the success of Martha's business are present in this situation?

How will a certified check be treated in a company's bank reconciliation?

In preparing a bank reconciliation,typical adjustments to the book balance include bank service charges,customer NSF checks,and interest earned on the account.

The unadjusted cash account balance for Few Company at December 31,2012 is $21,380.The bank statement showed an ending balance of $27,388 on that date.The following information is available: Check #433 for the purchase of inventory was written correctly and paid by the bank correctly for $234,but was recorded on the books at $432.Few uses the perpetual inventory system. Required: Prepare a bank reconciliation as of December 31,2012.

When a customer's NSF check is returned to a business with its bank statement,the business should make a journal entry increasing

Which of the item(s)would be added to the company's unadjusted book balance to determine the true cash balance?

The most negative opinion that an auditor can express is the

Wren Company accepted a check from Jay Company as payment for services rendered.Wren's bank statement revealed that the Jay check was an NSF check.What effect will the entry to record the NSF check have on the accounting equation of Wren Company?