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Exam 5: Fraud, Internal Control, and Cash

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Question 51

Multiple Choice

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Which of the following is not an internal control procedure relating to cash payments?

A) Using an voucher system
B) Using an imprest system
C) Preparing a bank reconciliation
D) The use of cash count sheets

E) None of the above
F) All of the above

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Question 52

Multiple Choice

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The services provided by banks help businesses to control cash by meeting all of the following control objectives except:

A) document procedures.
B) independently verify.
C) segregate duties.
D) restrict access.

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

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Question 53

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Maple Industries Inc.deposits all cash receipts on the day when they are received and it makes all cash payments by check.At the close of business on December 31,its Cash account shows a debit balance of $18,303.The company's bank statement as of June 30 shows an ending cash balance of $15,921.The following information was also available. -Outstanding checks as of December 31 total $2,261. -Included with the bank statement was a debit memo in the amount of $35 for service charges. -Check No.2519,listed with the canceled checks,was correctly drawn for $805 in payment of a utility bill on December 16.The company mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $850. -The December 31 cash receipts of $3,425 were placed in the bank's night depository after banking hours and were not recorded on the December 31 bank statement. -The bank deducted $1,228 for an NSF check from a customer deposited on December 10. Required: Prepare the bank reconciliation as of December 31.

Research has found that three factors exist when fraud occurs.Which of the following is not one of the three factors of the fraud triangle?

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation? Is it added to or deducted from the bank balance or the company's cash (book) balance?

A collection of documents prepared in the process of approving,processing and documenting all purchases and payment made on account is referred to as a:

The account Cash Overage is which type of account?

For each of the following cash activities,choose the appropriate letter to match the activity with the internal control principle to which it relates.Each internal control principle may be used more than once. Activity 1.____ A password is required to open up the cash register 2.____ The treasurer is the person who is approved to sign checks 3.____ A list of checks received in the mail is prepared 4.____ A bank reconciliation is prepared each month 5.____ The treasurer is not permitted to make bank deposits 6.____ Checks are pre-numbered. 7.____ Cashiers cannot approve price changes. 8.____ Unused checks are kept in the vault. Internal Control Principle A.Establish responsibility B.Segregate duties C.Restrict access D.Document procedures E.Independently verify

Considering current laws that deal with misstatements of financial results,which of the following statements is correct?

Cash equivalents are short-term,highly liquid investments purchased within one year of maturity.

Which of the following would not cause the bank balance to differ from the cash balance in the accounting records?

The attitude that people in the organization hold regarding internal control is referred to as the:

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

On April 1,a company established a petty cash fund of $1,000. Required: Prepare the journal entry,if any,required on April 1.

A company plans to decrease a $200 petty cash fund to $75.The current balance in the account includes $35 in receipts and $165 in currency.The entry to reduce the size of the petty cash fund will include a: 

Deposits in transit have:

A petty cash fund was originally established with a check for $150 On September 10,the petty cash fund was replenished when there was $4.25 remaining and there were petty cash receipts for postage,$43.50; supplies,$51.85; and equipment repair,$49.00. Required: Prepare the journal entry,if any,required,to record the replenishment of the petty cash fund on December 31.

The bank will show a customer's withdrawal as a:

Which of the following is not a reason that a business needs an effective internal control system?

Petty cash payments are recorded in the accounting system when: