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Exam 5: Fraud, Internal Control, and Cash

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Question 91

True/False

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Bonding means insuring a company against theft by employees.

A) True
B) False

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Question 92

Multiple Choice

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Zahler Company's July bank statement shows that $177800 in checks cleared the bank during the month.A check from one of Zahler Company's customers in the amount of $1800 was also returned marked "NSF." Use the following tabular analysis to determine the impact of the adjusting entry for the NSF check on Zahler's accounts:

A) Increase Cash and increase Accounts Payable by $1800.
B) Decrease Cash and increase Accounts Receivable by $1800.
C) Increase Cash and decrease Accounts Receivable by $1800.
D) Decrease Cash and decrease Accounts Payable by $1800.

E) B) and C)
F) A) and C)

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Question 93

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Only large companies need to be concerned with a system of internal control.

Each of the following is a feature of internal control except

What is the rationale for the internal control principle segregation of duties?

Which of the following would not be subtracted from the balance per books on a bank reconciliation?

For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?

All of the following are items that would most likely be paid from a petty cash fund except

To obtain maximum benefit from a bank reconciliation the reconciliation should be prepared by the employee authorized to sign checks.

Which of the following would not be reported on the balance sheet as a cash equivalent?

In the month of November (its first period of operations) Gavin Company Inc.wrote checks in the amount of $46250.In December checks in the amount of $63290 were written.During November $42340 of these checks were presented to the bank for payment and $54415 during December.What is the amount of outstanding checks at the end of December?

Sam's Grocery Store has the following policy.'Only one cashier can have access to a cash drawer.' Which internal control principle supports this policy?

For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

The following credit sales are budgeted by Gonzalez Company: $\begin{array} { l r } \text { January } & \$ 170,000 \\\text { February } & 250,000 \\\text { March } & 350,000\end{array}$ The company's past experience indicates that 80% of the accounts receivable are collected in the month of sale 20% in the month following the sale.The anticipated cash inflow for the month of March is

A company's past experience indicates that 60% of its credit sales are collected in the month of sale 30% in the next month and 5% in the second month after the sale; the remainder is never collected.Budgeted credit sales were: $\begin{array} { l r } \text { April } & \$ 250,000 \\\text { May } & 150,000 \\\text { June } & 375,000\end{array}$ The cash inflow in the month of June is expected to be

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote operational efficiency.

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

Under the concept of establishment of responsibility how many people should have the ultimate responsibility?

Under an effective system of internal control errors occur only as a result of fraud or dishonesty.