acctg-201 chapter 4

the asset that is most susceptible to employee fraud is

cash.

preparation of a bank ___ helps maintain control of cash accounts

reconciliation

one of the most important controls is the bank

reconciliation or recon

Internal control consists of plans to

- provide accurate and reliable accounting information - safeguard company assets

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

- NSF checks - notes collected by the bank

which of the following items are included in cash?

- balance in checking accounts - checks from customers - currency and coins

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

- balance sheet - statement of cash flows

which of the following are common controls over cash receipts?

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

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 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 for items not in bank statement - adjust the company's cash balance for items not in company records

internal control consists of plans to

- safeguard company assets - provide accurate and reliable accounting information

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

list the steps for a bank reconciliation in the correct order.

1. adjust the bank's cash balance for items not on bank statement 2. adjust the company's cash balance for items not in company records 3. update the company's cash account by recording items identified in the previous step

The public company accounting reform and investor protection act of 2002 is known as the

Sarbanes-Oxley Act

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

which of the following items are not included in cash?

accounts receivable from customers

in a bank statement, 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 recorded on the books

a small amount of cash on hand to pay for minor purchases is commonly referred to as a(n) ___ ___ fund.

blank 1: petty blank 2: cash

the asset that is most easily stolen and susceptible to fraud is ___.

cash

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

checks outstanding

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

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

committee of sponsoring organizations (COSO) of the treadway commission

the sarbanes-oxley act applies to

companies that are required to file with the SEC.

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

deposits outstanding

The committee of sponsoring organizations (COSO) of the treadway commission provided a framework for

designing an internal control system

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

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

fraud or fraudulence

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

fraud or fraudulence

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

internal controls

the acronym NSF stands for

nonsufficient funds

a petty cash fund is used for

small amounts of cash needed for low-cost items.

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

the balance sheet and statement of cash flows

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

timing

a(n) ___ difference in cash occurs when a company records a transaction either before or after the bank records the same transaction.

timing or time