Accounting 5.5

Mod 5.3a: When Company A was reconciling its March 20X8 bank statement, it noticed that the bank had charged it a $12 account maintenance fee because it did not maintain a minimum balance during March. Company A researched the charge and concluded that it was appropriate. How will this $12 charge affect Company A's March 31, 20X8 bank reconciliation?

$12 will be deducted from the cash per books.

Mod 5.3a: During April 20X8 the bank collected on a $3,000 note receivable on behalf of your company and informed you of such collection via the monthly bank statement dated April 30, 20X8. Up until you received the statement, you were unaware that such collection had occurred. How will this $3,000 collection affect the April 20X8 bank reconciliation?

$3,000 will be added to the cash per books.

Mod 5.3a: During January 20X5, a company made a $5,000 overnight deposit into the night drop box at its bank BUT FORGOT to record such deposit in its cash general ledger account. When the company went to reconcile its cash general ledger account to its corresponding bank statement, it noticed that the $5,000 deposit did clear the bank in January 20X5. How will this information affect the company's January bank reconciliation?

$5,000 will be added to the cash per books.

Mod 5.3a: During January 20X5, a company made a $5,000 overnight deposit into the night drop box at its bank and recorded such deposit in its cash general ledger account. When the company went to reconcile its cash general ledger account to its corresponding bank statement, it noticed that the $5,000 deposit had not yet cleared the bank. How will this information affect the company's January bank reconciliation?

$5,000 will be added to the company's cash per bank.

Mod 5.3a: During March 20X8 a company wrote and sent out a $50 check against its Walls Fergo Bank account. During March 20X8, the check cleared the Walls Fergo Bank account. However, when the company recorded the check, it mistakenly recorded it as a deduction from its Bank of Amerillo account. How should the company handle this error when it performs its Walls Fergo Bank account reconciliation for March 20X8?

$50 will be deducted from the cash per books.

Mod 5.3a: During March 20X8 the Company erroneously recorded a $50 deduction in its bank account with Walls Fergo Bank, when it should have recorded the $50 deduction from its Bank of Amerillo account. How should the company handle this error in its Bank of Amerillo account reconciliation for March 20X8 assuming that the check properly cleared the Bank of Amerillo during March 20X8?

$50 will be deducted from the cash per books.

Mod 5.3a: During January 20X5, a company wrote out a $500 check, sent it and recorded it in its cash ledger account. The company's monthly bank statement dated January 31, 20X5 made no mention of the $500 check because it hadn't yet cleared the bank. How will this information affect the company's January 31, 20X5 bank reconciliation?

$500 will be deducted from the cash per bank.

Mod 5.3a: During January 20X5, a company wrote out a $500 check, sent it out BUT forgot to record the payment in its cash general ledger account. When the company went to reconcile the company's cash general ledger account to its corresponding bank statement, it noticed that the $500 check did in fact clear the bank. How will this information affect the company's bank reconciliation?

$500 will be deducted from the cash per books.

Mod 5.3a: Imagine you just sat down to reconcile your 12/31/X8 bank statement on which you noticed a $90 charge related to a non sufficient funds (NSF) check. How should this $90 NSF check be handled in your bank reconciliation?

$90 will be deducted from the cash balance per books.

Mod 5.1: Choose all of the situations below that would be classified as an error:

-A data input clerk transposed two numbers, rather than entering 25, s/he entered 52. -An employee miscounted the number of units shipped to a customer. -An employee inadvertently recorded 100 hours on his time card when it should have only been 10 hours.

Mod 5.1: Choose all of the situations below that would be classified as irregularities:

-The human resources manager purposely hired his sister for a job for which she was totally unqualified. -The chief financial officer sent out investment statements to customers to mislead them into believing that their portfolios were worth much more than they really were. -The accounts receivable clerk sent out invoices to big corporations requesting payment for services that were never provided with the intent to hide a previous theft.

Mod 5.1: In order to eliminate the risk of fraud, what is the minimum number of factors in the fraud triangle that you would need to eliminate?

1

Mod 5.3b: You have been given the following information for ABC Co. as of and for the month ended 12/31/X8:12/31/X8 Cash balance per bank $987; 12/31/X8 Cash balance per books $1,176 Reconciling items: Your company made and recorded a deposit of $204 but the bank has not recorded it yet. Your company wrote and sent out Check #843 for $31 but forgot to record it AND it has not yet cleared the bank. The bank collected and recorded the receipt of $27 on a note receivable, that you have not yet recorded in your books. The bank charged a fee of $12 that you have not yet recorded in your books. Per the information above, compute and enter in the box below, ABC Co.'s adjusted cash balance as of 12/31/X8.

1,160 (with margin: 0) To solve this starting with cash per bank of $987 + $204 deposit in transit - Outstanding Check #843 for $31 = Adjusted ending cash balance per bank. To solve this starting with cash per books of $1,176 DEDUCT unrecorded check #843 for $31 + unrecorded deposit related to the note receivable of $27 DEDUCT bank fee of $12 = Adjusted ending cash balance per bank.

Mod 5.3b: Background: You have been given the following information for ABC Co. as of and for the month ended12/31/X8 Cash balance per bank $1020; 12/31/X8 Cash balance per books $1221 Reconciling items: Your company wrote and sent out Check #709 for $28 but forgot to record it AND it has not yet cleared the bank. Your company made and recorded a deposit of $221 but the bank has not recorded it yet. The bank collected and recorded the receipt of $48 on a note receivable, that you have not yet recorded in your books. The bank charged a fee of $28 that you have not yet recorded in your books. Required: Per the information above, compute ABC Co.'s adjusted cash balance as of 12/31/X8.

1,213 (with margin: 0) You can solve this by either solving for the adjusted bank or the adjusted book balances because when the bank statement is properly reconciled and the bank and books are adjusted the ending cash balance is the same. Here is how to solve for adjusted bank: Start with the unadjusted bank balance of $1,020 DEDUCT the $28 outstanding check #709 ADD the Deposit in Transit of $221 and you have the Adjusted ending cash balance per bank of $1,213. Here is how to solve for adjusted books: Start with the unadjusted books balance of $1,221 DEDUCT the $28 unrecorded check #709 ADD the unrecorded deposit of $48 DEDUCT the $28 bank charge and you have the Adjusted ending cash balance per bank of $1,213.

Mod 5.3b: Background: DEF hired you to perform its monthly bank reconciliation for January 20X7. Its 1/31/X7 pre-adjusted cash balances are as follows: Cash per bank $969; Cash per books $1,410 Based on your review of the company's cash disbursements and receipts journals and the January 20X7 bank statement, you found the following reconciling items: The company's bank collected and recorded the receipt of $40 on a note receivable, but the company has not recorded it yet. The company forgot to record Check #546 for $24 that it sent out in January BUT the check did clear the bank in January X7. The company's bank recorded a $37 service fee that has not yet been recorded in the company's books. The company made and recorded a deposit of $420 BUT it has not yet cleared the company's bank account. Required: Per the information above, compute DEF Co.'s adjusted cash balance as of 1/31/X7.

1,389 (with margin: 0) You can solve this by either solving for the adjusted bank or the adjusted book balances because when the bank statement is properly reconciled and the bank and books are adjusted the ending cash balance is the same. Here is how to solve for adjusted bank: Start with the unadjusted bank balance of $969 ADD the Deposit in Transit of $420 and you have the Adjusted ending cash balance per bank of $1,406. Here is how to solve for adjusted books: Start with the unadjusted books balance of $1,410 ADD the unrecorded deposit related to the collected note receivable of $40 DEDUCT the $24 unrecorded check #546 DEDUCT the $37 service fee and you have the Adjusted ending cash balance per bank of $1,406.

Mod 5.3b: Background: DEF hired you to perform its monthly bank reconciliation for January 20X7. Its 1/31/X7 pre-adjusted cash balances are as follows: Cash per bank $993; Cash per books $1,427 Based on your review of the company's cash disbursements and receipts journals and the January 20X7 bank statement, you found the following reconciling items: The company's bank collected and recorded the receipt of $40 on a note receivable, but the company has not recorded it yet. The company forgot to record Check #546 for $24 that it sent out in January. The check has not yet cleared its bank. The company's bank recorded a $37 service fee that has not yet been recorded in the company's books. The company made and recorded a deposit of $437 BUT it has not yet cleared the company's bank account. Required: Per the information above, compute DEF Co.'s adjusted cash balance as of 1/31/X7.

1,406 (with margin: 0) You can solve this by either solving for the adjusted bank or the adjusted book balances because when the bank statement is properly reconciled and the bank and books are adjusted the ending cash balance is the same. Here is how to solve for adjusted bank: Start with the unadjusted bank balance of $993 ADD the Deposit in Transit of $437 DEDUCT the $24 outstanding check #546 and you have the Adjusted ending cash balance per bank of $1,406. Here is how to solve for adjusted books: Start with the unadjusted books balance of $1,427 DEDUCT the $24 unrecorded check #546 ADD the unrecorded deposit related to the collected note receivable of $40 DEDUCT the $37 service fee and you have the Adjusted ending cash balance per bank of $1,406.

Mod 5.3b: Background: You have been given the following information for ABC Co. as of and for the month ended 12/31/X8:12/31/X8 Cash balance per bank $1,000; 12/31/X8 Cash balance per books $1,000 Reconciling items: Your company made a deposit of $469 BUT forgot to record it AND your bank has not yet recorded it. Your company wrote and sent out Check #697 for $32 but you forgot to record it AND it has not yet cleared the bank. Required: Per the information above, compute ABC Co.'s adjusted cash balance as of 12/31/X8.

1,437 (with margin: 0) You can solve this by either solving for the adjusted bank or the adjusted book balances because when the bank statement is properly reconciled and the bank and books are adjusted the ending cash balance is the same. Here is how to solve for adjusted bank: Start with the unadjusted bank balance of $1,000 ADD the Deposit in Transit of $469 DEDUCT the outstanding check #697 in the amount of $32 and you have the Adjusted ending cash balance per bank of $1,437. Here is how to solve for adjusted books: Start with the unadjusted books balance of $1,000 ADD unrecorded deposit of $469 DEDUCT the unrecorded check for $32 and you have the Adjusted ending cash balance per bank of $1,437.

Mod 5.3b: You just received a company's bank statement for the month ended March 31, X8. Per the company's books, its unreconciled ending cash balance was $104. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences. In all cases, the bank properly recorded these items: The bank recorded a $1 service fee that the company has not yet recorded. The bank collected on a $6 note receivable that the company has not yet recorded. The bank returned a $3 non sufficient funds check (NSF check) with the bank statement. What is the company's adjusted ending cash balance as of March 31, X8.

106

od 5.3b: You just received a company's bank statement for the month ended March 31, X8. Per the company's books, its unreconciled ending cash balance was $105. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences. In all cases, the bank properly recorded these items: The bank recorded a $2 service fee that the company has not yet recorded. The bank collected on a $10 note receivable that the company has not yet recorded. The bank returned a $2 non sufficient funds check (NSF check) with the bank statement. What is the company's adjusted ending cash balance as of March 31, X8.

111 To compute the adjusted ending cash per books, start with the unadjusted ending cash per books DEDUCT the unrecorded service fee ADD the unrecorded deposit related to the notes receivable the bank collected on the company's behalf DEDUCT the NSF Check = Adjusting Ending Cash Balance.

Mod 5.3b: You just received a company's bank statement for the month ended March 31, X8. Per the company's books, its unreconciled ending cash balance was $166. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences. In all cases, the bank properly recorded these items: The bank recorded a $4 service fee that the company has not yet recorded. The bank collected on a $7 note receivable that the company has not yet recorded. The bank returned a $3 non sufficient funds check (NSF check) with the bank statement. What is the company's adjusted ending cash balance as of March 31, X8.

166

Mod 5.3b: You just received a company's bank statement for the month ended March 31, X8. Per the company's books, its unreconciled ending cash balance was $182. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences. In all cases, the bank properly recorded these items: The bank recorded a $5 service fee that the company has not yet recorded. The bank collected on a $5 note receivable that the company has not yet recorded. The bank returned a $4 non sufficient funds check (NSF check) with the bank statement. What is the company's adjusted ending cash balance as of March 31, X8.

178 To compute the adjusted ending cash per books, start with the unadjusted ending cash per books DEDUCT the unrecorded service fee ADD the unrecorded deposit related to the notes receivable the bank collected on the company's behalf DEDUCT the NSF Check = Adjusting Ending Cash Balance.

Mod 5.3b: You just received a company's bank statement for the month ended March 31, X8. On the bank statement it showed an ending balance of $264. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences, ALL of which appear to have been properly accounted for by the company: Check #2 for $6 was recorded as a cash disbursement in the company's books, but it hasn't cleared the bank yet. The bank showed that Check #6 cleared the bank in the amount of $452, but per the company's books the check was recorded as only $425. The company's books showed a deposit made on March 30, X8 for $4 but it hasn't cleared the bank yet. What is the company's adjusted ending cash balance as of March 31, X8.

289 Adjusted ending cash is computed as follows: Start with the unadjusted "Ending Balance Per Bank Amount $" then deduct the Outstanding Check Disbursement ADD BACK $452 for the wrong amount that the bank deducted, then DEDUCT the correct $425 amount then ADD the Deposit in transit. Another way to deal with the incorrectly recorded $452 check would be to simply ADD back the difference between the wrong deduction of $452 and the right deduction of $425, thus adding a net of $27 represent the impact of having transposed the last two digits.

Mod 5.3b: You just received a company's bank statement for the month ended March 31, X8. Per the company's books, its unreconciled ending cash balance was $816. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences. In all cases, the bank properly recorded these items: Bank recorded a $4 service fee that the company has not yet recorded. The bank collected on a $9 note receivable that the company has not yet recorded. The bank correctly cleared check #7 in the amount of $300, but the company incorrectly had it recorded as $30. What is the company's adjusted ending cash balance as of March 31, X8.

551

Mod 5.3b: You just received a company's bank statement for the month ended March 31, X8. Per the company's books, its unreconciled ending cash balance was $892. In addition, based on a comparison of the transactions on the bank statement and the company's books, including its cash disbursement journal and its cash receipts journal, you noted the following differences. In all cases, the bank properly recorded these items: Bank recorded a $2 service fee that the company has not yet recorded. The bank collected on a $7 note receivable that the company has not yet recorded. The bank correctly cleared check #3 in the amount of $300, but the company incorrectly had it recorded as $30. What is the company's adjusted ending cash balance as of March 31, X8.

627 Correct. In this question, we will start with the ending cash per books to arrive at the adjusted ending cash per books. Start with the unreconciled ending cash balance DEDUCT the unrecorded service fee ADD the collected note receivable amount ADD back the incorrect $30 check amount DEDUCT the correct $300 check amount.

Mod 5.2: Match the item on the left with its summarized description on the right.

Effectiveness of operations-the company achieves its organizational objectives. Efficiency of operations- the company uses the least amount of resources to achieve its organizational objectives. Reliability of internal and external financial and non-financial reporting-The information provided to users both in and outside of the company is reliable Compliance with laws and regulations-the company ensures it follows the applicable rules to which it is subject

Mod 5.4: SAP, Oracle/Peoplesoft, and NetSuite are examples of:

Enterprise Resources Planning (ERP) systems

Mod 5.1: In the context of this course, match the term on the left with the best matching description on the right.

Internal control-helps provide reasonable assurance that the company's objectives are being achieved. Fraud triangle-the factors, the absence of which, would significantly reduce fraud. Errors-Inadvertent mistakes that go contrary to established company policies. Irregularities-situations in which the normal, or appropriate procedure, is purposely not followed. Fraud-the intentional deception of another to benefit oneself or cause damage to another.

Mod 5.4: In order for a company to have an accounting information system, it MUST have (choose all that apply):

None of the noted items are requirements of an accounting information system.

Mod 5.4: QuickBooks, Sage 50 and Xero are all examples of:

Off-the-shelf accounting information systems.

Mod 5.1: In an attempt to reduce fraud, the company decided to double everyone's salary. Which piece of the fraud triangle is the company most likely trying to reduce?

Pressure/incentive

Mod 5.1: Imagine you are a manager of an ice cream store and have been asked by the owner to reduce the amount of ice-cream theft committed by employees. In general, which of the following approaches would you as management have the most control over, and will likely result in the quickest reduction of employee theft?

Reduce the opportunities that employees have to steal ice cream..

Mod 5.2: What type of internal control activity would an employee background check be classified as?

a preventive control activity

Mod 5.4: A mid-sized, multi-million dollar company should always choose to use a(n):

accounting information system that meets its needs.

Mod 5.2: The term "segregation of duties" ensures that which of the following duties are separated (choose the best possible answer):

authorization, recording and custody

Mod 5.3a: Bank reconciliations should be reviewed soon after being prepared. Which of the following groups is ultimately responsible to the owners to ensure such reviews are performed on a timely basis?

company management.

Mod 5.4: Assume someone on a small pacific island in Tonga were planning to set up a little corner grocery store and wanted to implement an accounting information system. Considering the cost versus benefit, which of the following would be the LEAST likely accounting information system that would be used by this new business?

enterprise resources planning (ERP) system

Mod 5.4: The general classification for the type of information that accounting information systems produce for external users is called:

financial accounting

Mod 5.1: Which of the following controls would have the most likely and direct impact on reducing data input errors by employees at a fast food restaurant? Example: Employee records 4 burgers when customer only wanted 1 burger.

have customers personally input their orders using a touch screen

Mod 5.1: What is the key factor that changes an error into an irregularity?

intent

Mod 5.4: Accounting information systems can be used to provide useful information to (choose all that apply):

internal and external management employees governmental entities

Mod 5.4: The general classification for the type of information that accounting information systems produce for internal users is called:

managerial accounting.

Mod 5.2: Match the internal control activity on the left with the type of internal control activity on the right.

physical locks on warehouses-preventive control activity bank reconciliations-detective control activity revision of training and operations manuals-corrective control activity

Mod 5.2: In general, when management creates a system of internal control which of the following types of internal control activities are usually the most cost effective for safeguarding assets?

preventive control activities

Mod 5.2: Match the item on the left with its description on the right as they relate to the safeguarding of assets:

preventive control activities-control activities that are designed to avoid the damage or loss of an asset detective control activities-control activities that are designed to discover when an asset is damaged or lost corrective control activities-control activities that are designed to rectify the damage or loss of an asset

Mod 5.2: What type of internal control activity would security cameras be classified as?

preventive control activity

Mod 5.2: Match the internal control activity on the left with an example of the internal control activity on the right.

preventive control activity-password protected access to asset storage areas detective control activity-Control totals (i.e cash per cash register tape is reconciled to cash received in the cash register bag) corrective control activity-data validity tests

Mod 5.2: Match the internal control activity on the left with an example of the internal control activity on the right.

preventive control activity-password protected access to asset storage areas detective control activity-control totals (i.e. cash per cash register tape is reconciled to cash received in the cash register bag) corrective control activity-data validity tests

Mod 5.2: Match the internal control example on the left with the type of internal control on the right.

segregation of duties-preventive control activity physical inventory counts-detective control activity data backups-Corrective control activity

Mod 5.2: Use the drop down lists next to each control description to identify its type of control activity:

surprise counts of cash on hand-Detective control activity employee training and required certifications-Preventive control fire insurance-Corrective control activity

Mod 5.4: What is the main drawback of using shoebox accounting information systems?

they only provide useful information once a year.