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Exam 6: Reporting and Analyzing Cash,fraud,and Internal Control

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Question 81

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A ________ is a report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.

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Question 82

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Money orders,cashier's checks,and certified checks are all examples of cash.

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Question 83

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Proper internal control would require that a department manager inform the purchasing department of its needs for additional merchandise by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

When a petty cash fund is in use:

On a bank reconciliation,the amount of an unrecorded bank service charge should be:

The following information is available for Montrose Company at December 31: Based on this information,the amounts considered Cash and Cash Equivalents,respectively on December 31 are:

The following information is available to reconcile Dibble Co.'s book balance of cash with its bank statement cash balance as of April 30.The April 30 cash balance according to the accounting records is $68,356,and the bank statement cash balance for that date is $73,525. a.The bank erroneously cleared a $480 check against the account in April that was not issued by Dibble.The check documentation included with the bank statement indicates the check was actually issued by Flushing Co. b.On April 30,the bank issued a credit memorandum for $53 interest earned on Dibble's account. c.When the April checks are compared with entries in the accounting records,it is found that Check No.1828 had been correctly drawn for $1,530 to pay for advertising but was erroneously entered in the accounting records as $1,350. d.A credit memorandum indicates that the bank collected $10,000 cash on a note receivable for Dibble,deducted a $30 collection fee,and credited the balance to the company's Cash account.Dibble did not record this transaction before receiving the statement. e.A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870 received from a customer.The bank assessed a $25 fee for processing it. f.Dibble's April 30 daily cash receipts of $5,102 were placed in the bank's night depository on that date,but do not appear on the April 30 bank statement. g.Dibble's April 30 cash disbursements journal indicates that Check No.1837 for $584 and Check No.1840 for $1,219 were both written and entered in the accounting records,but are not among the canceled checks. 1.Prepare the bank reconciliation for this company as of April 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 April 30.

What is a voucher system and what are the two areas for which it establishes control procedures?

Quibble Company established a $300 petty cash fund by issuing a check to the custodian on February 1.On February 15,the petty cash fund was replenished and increased to $800 in total.The contents of the petty cash fund at the time of the February 15 replenishment were:

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 ________.

Discuss how the principles of internal control apply to cash receipts over-the-counter by giving several examples of good control measures that should be implemented.

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.

Technologically advanced accounting systems rarely need monitoring for errors because computers always process transactions correctly.

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Clearly establishing responsibilities and assigning all accounting activities to one person is an important principle of internal control.

Internal control policies and procedures have limitations not including:

After preparing a bank reconciliation,adjustments must be made for items reconciling the bank balance.

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls.What are the specific requirements for auditors set forth by SOX?

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.On June 30,the bank issued a credit memorandum for $35 interest earned on Hinckley's account. 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.A credit memorandum indicates that the bank collected $9,000 cash on a note receivable for Hinckley,deducted a $30 collection fee,and credited the balance to the company's Cash account.Hinckley did not record this transaction before receiving the statement. e.A debit memorandum of $865 is enclosed with the bank statement for an NSF check for $840 received from a customer.The bank assessed a $25 fee for processing it. 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 disbursements 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.A debit memorandum for $115.00 indicates the bank deducted the annual lock box fee for the 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.

The following information is taken from Reagan Company's December 31 balance sheet: If net credit sales for the current year were $612,000,the firm's days' sales uncollected for the year is: (Use 365 days a year.)