ACCT Ch. 5 learnsmart
Why might a bank statement and the company records differ?
- customer checks that bounced (NSF) - not all checks written cleared the bank - deposits were made at the end of the bank statement date in an ATM
in a bank reconciliation, the the EFT received by the bank from a customer's note receivable owed to the company is...
added to the book balance
While preparing the bank reconciliation for March, the accountant for ABC company discovered that a $694 check in payment of an account payable had been incorrectly entered in the journal as $649. Which of the following is true?
an adjusting entry must be made to debit Accounts payable and credit Cash for $45
a ________ ________ is initiated by an EFT instructing a bank to transfer pay to employee's bank accounts
direct deposit
a principle of internal control - provide documents to show activities that have occurred
document procedures
EFT stands for _______ ________ _________
electronic fund transfer
____________ __ ______ is essential for safeguarding assets
segregation of duties
deposits in _________ are added to the b_____k side of the bank reconciliation
transit / bank
a process for approving and documenting all purchases made on account
voucher system
which of the following items on a bank reconciliation need to be recorded so that a company's records are up to date?
- EFT received from customers discovered on the bank statement - customer's checks rejected by the bank as NSF - Interest Revenue
Which of the following duties should not be the responsibility of one who has access to cash?
- record cash collected in the journal - perform bank reconciliations
(T/F) The person who has custody of an asset should also account for the asset. The person who performs both duties will best know what the balance should be for the accounting records.
FALSE
(T/F) Outstanding checks have been written but have not yet been cleared by the bank.
True
the three categories of employee fraud are _______, ________ and ________.
asset misappropriation, financial statement fraud and corruption
an internal report prepared to compare the company's cash record with the bank statement
bank reconciliation
an insurance policy that partially reimburses a company for losses caused by employee fraud
bonding
NSF checks from customers should be subtracted from the company's ______ balance on a bank reconciliation
book
in a bank reconciliation, interest revenue on the bank account balance is added to the b____ balance.
book
in a bank reconciliation, an outstanding check is...
deducted from the bank balance
a principle of internal control - assign each task to only one employee to determine who is at fault for error or theft
establish responsibilities
Among the new requirements of SOX, those who willfully misrepresent financial results...
face stiff fines and possible jail sentence
the three components of the fraud triangle that exists when fraud occurs
incentive, opportunity, rationalization
Which of the following is not a significant objective of the Sarbanes-Oxley (SOX) Act?
increase rationalization
a principle of internal control - check others' work
independently verify
A system of ________ _________ consists of actions taken to promote efficient and effective operations, protect assets, enhance accounting information and adhere to laws and regulations.
internal control
NSF stands for...
non-sufficient funds
a principle of internal control - do not provide access to assets or info unless it is needed for a task
restrict access
a principle of internal control - do not make one employee responsible for all parts of a process
segregate duties