Chapter 5 Learn

Controls; opportunity

A weak system of internal __ provides the __ to commit fraud

The accounting department counts the cash, prepares the deposit slip and deposits the cash in the bank

Which of the following is not an internal control for checks received through the mail?

Outstanding Checks

Which of the following is subtracted from the bank balance on a bank reconciliation?

Deposit in transit

Which of the reconciling items does not require a journal entry?

Rationalization, Incentive, Opportunity

Components of the fraud triangle:

Direct

A ___ deposit is initiated by an EFT instructing a bank to transfer pay due employees into the employees' bank accounts

Fraud

An attempt to deceive others for personal gain

Decreases the risk of fraud

Anonymous information about questionable accounting matters sent to the audit committee through tip lines:

Documenting Procedures

Assigning sequential numbers to cash sales, so that the accounting staff can ensure that every sale has been recorded is required by the internal control principle of:

True

Committing financial fraud can result in stiff penalties, including fines and jail sentences T/F

Transit, bank

Deposits in ___ are added to the ___ side of the bank reconciliation

Give a cash register receipt to every customer Restrict access to the cash register

Good internal control over cash requires cashiers to __

Independent Verification

If a company hires an auditor to check that the work done by others within the company is supported by documentation, this is part of the internal control procedure of:

$27 deduction from the book balance

If the company's accountant mistakenly recorded a $58 deposit as $85, the error would be shown on the bank reconciliation as a:

False

Internal controls prevent and detect all errors and fraud T/F

Restricting Access

Physically locking up assets and electronically securing access to other assets and information is required by the internal control principle of:

Corporate executives, auditors, internal controls

The Sarbanes-Oxley Act provides increased regulations for:

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

The bank will show a customers deposit on bank statements as a:

Cleared

When a check is presented to a bank for payment and the amount is deducted from the payer's account the check is said to have ___ the bank

Conceal Fraud

Which is not a significant objective of the Sarbanes-Oxley Act