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Exam 5: Fraud, Internal Control, and Cash

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Question 21

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All of the following are requirements of the Sarbanes-Oxley Act (SOX) except:

A) evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies.
B) evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies.
C) establishment of an audit committee of independent directors to ensure the company's accounting, internal control, and audit functions are effective.
D) adoption of a code of ethics covering all employees.

E) All of the above
F) C) and D)

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Question 22

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Employee fraud includes all of the following categories except:

A) asset misappropriation.
B) corruption.
C) deception.
D) financial statement fraud.

E) C) and D)
F) None of the above

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Question 23

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Before reconciling its bank statement,Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250.The bank reconciliation for the month contained the following items: Given the above information,what up-to-date ending cash balance should Lauren report at month-end?

The control components used by companies as a framework when analyzing their internal control systems include all of the following except:

The entry to record to replenishing the petty cash fund involves debiting ______ and crediting:

Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins plus $387.50 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

Which of the following statements is correct regarding a voucher system

If the company's accountant mistakenly recorded a $58 deposit as $85,the error would be shown on the bank reconciliation as a(n) :

McDermott Company's bank statement for September 30 showed an ending cash balance of $1,350.The company's Cash account in its general ledger showed a $995 debit balance.The following information was also available as of September 30. -The bank deducted $125 for an NSF check from a customer deposited on September 15. -The September 30 cash receipts,$1,250,were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. -A $15 debit memorandum for checks printed by the bank was included with the canceled checks. -Outstanding checks amounted to $1,145. -Included with the bank statement was a credit memo in the amount of $875 for an EFT in payment of a customer's account. -Included with the canceled checks was a check for $275,drawn on the account of another company. Required: Part a.Prepare a bank reconciliation as of September 30. Part b.Prepare the journal entries for the items on the company's bank reconciliation as of September 30.

The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as:

On October 31,2015,your company's records say that the company has $16,451.03 in its checking account.A review of the bank statement shows you have three outstanding checks totaling $5,643.01,and the bank has paid you interest of $12.19 and charged you $9.00 in service charges.The bank statement dated October 31,2015 would report a balance of:

Common control principles include all of the following,except:

While preparing the bank reconciliation for March,the accountant for ABC Company discovered that a $694 check in payment of an account payable had been entered incorrectly in the journal as $649.Which of the following is true?

Which of the following statement about internal control is not correct?

Segregation of duties means that a company assigns responsibilities so that:

Following are seven items (a)through (g)that would cause Coyle 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 that was mailed to the bank on the last day of the current month and is unrecorded on this month's bank statement. (e)A check paid by the bank at its correct $190 amount was recorded in error in the company's Check Register at $109. (f)An unrecorded credit memorandum indicated that bank had collected a note receivable for Xavier Company and deposited the proceeds in the company's account. (g)A check was written in the current period that is not yet paid or returned by the bank. Indicate where each item (a)through (g)would appear on Coyle's bank reconciliation by placing its identifying letter in the parentheses in the proper section of the form below.

For each of the independent cases below,identify and describe the principle of internal control that is violated and recommend what should be done to remedy the violation.

The customer typically explains the purpose of the payment using a(n) :

Which of the following statements concerning a petty cash fund is not correct?

All of the following are requirements of the Sarbanes-Oxley Act (SOX) except: