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Exam 7: Fraud, Internal Control, and Cash

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Question 51

Multiple Choice

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Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

A) 1 month or less when purchased.
B) 3 months or less when purchased.
C) 6 months or less when purchased.
D) 1 year or less when purchased.

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Question 52

Multiple Choice

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A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would

A) credit Cash Over and Short for $3.
B) credit Miscellaneous Revenue for $3.
C) debit Cash Over and Short for $3.
D) debit Miscellaneous Expense for $3.

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Question 53

Multiple Choice

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In preparing its bank reconciliation for the month of April 2014, Franklin, Inc. has available the following information. What should be the adjusted cash balance at April 30, 2014?

Listed below are items that may be useful in preparing the March 2014, bank reconciliation for Grider Machine Works. Using the following code, insert in the space before each item the letter where the amount would be located or otherwise treated in the bank reconciliation process.

On a bank reconciliation, deposits in transit are

Which one of the following is not an objective of a system of internal controls?

Le Bateau Manufacturing Inc. gathered the following reconciling information in preparing its May bank reconciliation: The adjusted cash balance per books on May 31 is

In the month of May, Jansen Company wrote checks in the amount of $39,100. In the June, checks in the amount of $35,000 were written. In May, $37,000 of these checks were presented to the bank for payment, and $32,000 in June. What is the amount of outstanding checks at the end of May?

Tavarez Company assembled the following information in completing its July bank reconciliation: balance per bank $22,920; outstanding checks $4,650; deposits in transit $7,500; NSF check $480; bank service charge $150; cash balance per books $26,400. As a result of this reconciliation, Tavarez will

Which one of the following would not cause a bank to debit a depositor's account?

A debit balance in Cash Over and Short is reported as a

The difference between the cash in bank balance shown on the company's books and the cash balance shown on the bank statement may be caused by ______________ and by ______________ in recording transactions by either party.

Identify whether each of the following items would be (a) added to the book balance, or (b) deducted from the book balance in a bank reconciliation. 1. EFT transfer to a supplier 2. Bank service charge 3. Check printing charge 4. Error recording check # 214 which was written for $230 but recorded for $320 5. Collection of note and interest by bank on company's behalf

Which of the following is not one of the main factors that contribute to fraudulent activity?

Which of the following would not be reported on the statement of financial position as a cash equivalent?

A petty cash fund should be replenished

On May 1, 2014, Vuitton Company established a petty cash fund by issuing a check for €500 to Antoinette Mercier, the custodian of the petty cash fund. On May 31, 2014, Mercier submitted the following paid petty cash vouchers for replenishment of the petty cash fund when there is €20 cash in the fund: The journal entry to replenish the account would include a

The following information was used to prepare the March 2014, bank reconciliation for Grider Machine Works. Identify the items that require adjustment to the cash balance per books and prepare the appropriate adjusting entries. 1. Included with the bank statement materials was a check from Bob Simpson for $50 stamped "NSF." 2. A personal deposit by Jim Grider to his personal account in the amount of $300 for dividends on his General Electric ordinary shares was credited to the company account. 3. The bank statement included a debit memorandum for $27 for two books of blank checks for Grider Machine Works. 4. The bank statement contains a credit memorandum for $15 interest on the average checking account balance. 5. The daily deposits of March 30 and March 31, for $3,362 and $3,125 respectively, were not included in the bank statement postings. 6. Two checks totaling $316, which were outstanding at the end of February, cleared in March and were returned with the March statement. 7. The bank statement included a credit memorandum dated March 28, 2014, for $30 for the monthly interest on a 6-month, $15,000 certificate of deposit that the company owns. 8. Four checks, #8712, #8716, #8718, #8719, totaling $5,369, did not clear the bank during March. 9. On March 24, 2014, Grider Machine Works delivered to the bank for collection a $5,000, 3-month note from Don Decker. A credit memorandum dated March 29, 2014, indicated the collection of the note and $100 of interest. 10. The bank statement included a debit memorandum for $20 for the collection service on the above note and interest.

Tayler Company wrote checks totaling $34,160 during October and $37,300 during November. $32,480 of these checks cleared the bank in October, and $36,440 cleared the bank in November. What was the amount of outstanding checks on November 30?

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains an account which is