chapter 5 accounting LS questions

the bank will show a customers withdrawal as a

debit, because a withdrawal decreases its liability from the banks point of view

In a bank reconciliation, the electric funds transfer received by the bank from a customers not receivable owed to the company is

added to the book balance

in a bank reconciliation interest revenue earned on the bank account balance is

-added to the book balance

fraudsters may rationalize their actions

-are legitimate since they are underpaid -by convincing themselves their actions are justified -through a feeling of personal entitlement

good internal controls for cash receipts that should be performed by a supervisor include

-comparing cash registers with cash count sheets -completing bank deposits -restricting access to cash by locking it up

bank reconciliations are needed to reconcile for

-deposits in transit -outstanding checks

which are typical reconciling items on the book side of a reconciliation because the company did not know about these items until it got the bank statement?

-electric funds transfer -service charges -interest income

the benefits of internal control procedures are that they

-improve the efficiency -enhance reliability of accounting info -protect against theft of assets

additional mechanisms of internal control include

-managing vacations -bonding -anonymous hotlines

a difference between an impress payroll account and petty cash is

-not held at the bank

the quality of financial reporting for publicly traded companies is improved through

-obtaining an external audit -evaluating and reporting on the effectiveness of internal controls

good internal control for cash receipts to be performed by the accounting department should include

-recording the cash receipts in the bank journal -comparing cash register sales w/ cash count sheets and bank deposit

steps of voucher system

-request goods or services be ordered -order goods or services -receive goods or services -obtain bill for goods or services -write check or initiate an EFT to pay the bill

some managers commit fraud because they are under great pressure to report a high net income to meet

-shareholders expectations -loan covenant requirements -financial analysts earnings forecasts

what would cause a bank statement not to agree with cash balance in the accounting records?

-the bank error in recording a deposit made by the company -the bank paid interest that the company has not recorded -deposits outstanding that have been recorded on the company records,but not the banks -the company made an error in recording a deposit

business opportunities create incentives for fraud for which of the law following reasons

-to attract business partners -to increase equity financing -to satisfy loan covenants

control environment

...

monitoring activities

....

control activities

.....

risk assessment

.....

the bank will show a customers deposit on bank statements as a

credit, because a deposit is a liability from the banks point of view

direct deposit

initiated by an EFT instructing a bank to transfer pay due employees into the employees bank accounts

This months bank statement shows interest earned of $45. How would this item be treated on the bank reconciliation?

it would be added to the bank balance

restricted cash is reported

separately as an asset on the balance sheet

deposits in ______ are added to the _____ side of the bank reconciliation

transit, bank