ACC 210 Chapter 4 NCSU

A company's plans to safeguard company assets and enhance the reliability and accuracy of accounting information are referred to as

internal controls

The most common source of occupational fraud is:

misuse of company resources

Which of the following are common controls over cash receipts?

opening mail daily and making a detailed list of checks received having two different employees take custody of the checks and make the deposit

Which of the following items are not included in cash?

Accounts receivable from customers

In a bank reconciliation, which of the following will require a journal entry by the company?

Adjustments to the balance per books for items discovered on the bank reconciliation that were not yet recorded on the books

Which of the following are detective controls

Audits Performance reviews Reconciliations

The framework for designing an internal control system is provided by the

COSO

Which of the following items are included in cash?

Checks from customers Currency and coins Balance in checking accounts

When adjusting the company's cash account balance in a bank reconciliation, which item must be added to the cash account balance?

Collections of funds by the bank

True or false: Variability in operating cash flows is unimportant as long as the total cash flows over a three-year period is sufficiently positive.

False

Which of the following items will require a journal entry following a bank reconciliation?

Notes collected by the bank NSF checks

Effective internal control over cash requires segregation of duties. Which of the following duties should be segregated?

Opening the mail and deposit of checks in the bank Depositing checks into the bank and recording receipts in the accounting records

Which of the following are preventive controls?

Physical controls Separation of duties

Which of the following steps are necessary to reconcile the bank balance and the cash account balance.

Record items that reconcile the company's cash balance Adjust bank's cash balance Adjust the company's cash balance

Which of the following are errors in accounting for cash?

Recording a check for $168 for $186 in the cash account. The bank processing a check for $210 as $120. Recording a cash collection of $4,000 but depositing $3,000 into the bank.

When adjusting the company's cash account balance in a bank reconciliation, which items reduce the company's cash account balance?

Service charges Charges for NSF checks

Smith's operating cash flows in millions were $100, $150, $80 during the past three years; while Jones' operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of operating cash flows, which company would likely be perceived as riskier?

Smith

The ending balance in cash is reported in which financial statement(s)?

The balance sheet and statement of cash flows

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

The bank paid interest that the company has not recorded. The company made an error in recording a deposit. Deposits outstanding that have been recorded on the company's records, but not on the bank's. The bank made an error in recording a deposit made by the company.

What is the primary purpose of a bank reconciliation?

To ensure the bank balance per reconciliation is equal to the company balance per reconciliation

Cash receipts that have been recorded in the company's accounting records but are not yet recorded by the bank are

deposits outstanding

The asset that is most easily stolen and susceptible to fraud is

cash

A bank reconciliation reconciles the bank statement with the company's

cash account in the balance sheet.

Cash disbursements that have been recorded in the company's accounting records but are not yet recorded by the bank are called

checks outstanding.

Because cash is assumed to be available for spending, it is typically reported on the balance sheet as a(n)

current asset

The Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing an internal control system.

A periodic performance review is an example of a(n) ____ control.

detective

The two types of control procedures are preventive and

detective

The amount of cash in the balance sheet reflects the

ending cash on the balance sheet date.

Differences between the bank statement balance and the cash account balance in the accounting records are primarily caused by timing differences and

errors

The two most common sources of occupational fraud are:

financial statement manipulation misuse of company resources

The use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employer's resources is called occupational

fraud

When a person intentionally deceives another person or company for personal gain, this is referred to as

fraud

A petty cash fund is used for

small amounts of cash needed for low-cost items.

Separation of duties and E-commerce controls are examples of ______ controls.

preventive

One of the most important internal controls for cash is the bank

reconciliation

Preparation of a bank ____ helps maintain control of cash accounts.

reconciliation

Internal control consists of plans to

safeguard company assets. provide accurate and reliable accounting information.

Margot, a prospective investor, wants to know how much cash Ziegler Inc. has on December 31. Margot can find the information in Ziegler's

statement of cash flows balance sheet

If a company records a transaction before the bank records the same transaction, this is called a/an ______ difference.

timing

A non-sufficient funds check requiring an adjustment to the cash balance was written:

to the company preparing the bank reconciliation