Chapter 8 McGraw Connet Learning

Identify the factors that cause the bank statement balance to differ from the depositor's book balance by matching each to its definition on the right.

outstanding check-A check written by the depositor that has not yet been received by the bank for payment deposit in transit-Deposit made and recorded by the depositor, but not yet recorded on the bank statement NSF check- A check written by a customer who does not have enough money in his account to cover the check Bank charges-Service fees charged by the bank

The triple threat of fraud involves:

pressure opportunity rationalization

Which statement below describes the internal control procedure of insuring assets and bonding key employees?

Insuring assets against casualty and bonding employees who handle cash, reduces risk of loss.

Determine which of the items on a bank statement and would cause a decrease in the account's balance. (Check all that apply.)

Checks written by the account owner Monthly service fees charged by the bank ATM withdrawals A customer's uncollectible deposit

Match the banking term on the left with its definition on the right.

Deposit ticket-Lists currency, coins and checks deposited into an account Check-A document signed by the depositor instructing the bank to pay a specified amount of money Bank account-deposit money for safe keeping Remittance advice- explains reason for payment Electronic funds transfer- Electronic transfer of cash from one party to another.

Determine which of the items below would show up on a monthly bank statement. (Check all that apply.)

Deposits and other increases to the account during the period Withdrawals and other decreases to the account during the period Beginning-of-period balance in the account End-of-period balance in the account

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below. (Check all that apply.)

Handling cash is separate from recordkeeping of cash. Cash receipts are promptly deposited in a bank. Cash payments are made by check.

Internal control policies and procedures have limitations that arise from many elements. Match the limitation on the left with its definition on the right.

Human Error=Can occur from carelessness, misjudgment or confusion Human fraud=nvolves intent by people to defeat internal controls for personal gain Cost-benefit principle=Dictates that the costs of internal controls must not exceed their benefits Internal control environment=Management must convey commitment to internal control policies and procedures

Choose the items below that would be added to the book balance on a bank reconciliation. (Check all that apply.)

Interest earned on the depositor's account Note collected by the bank for the depositor

Which of the answers below correctly describe the Cash Over and Short account? (Check all that apply.)

It records the effects of cash overages and cash shortages. A debit balance reflects an expense. It is an income statement account.

Summarize the internal control procedure of maintaining adequate records by selecting the correct answers below. (Check all that apply.)

Reliable records are a source of information that managers use to monitor activities. Keeping detailed records makes it unlikely that assets are lost or stolen without detection.

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.)

Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry. Technology has reduced the number of processing errors. Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft.

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.)

Technology has reduced the number of processing errors. Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft. Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry.

Given the choices below, choose the examples of internal controls designed to control cash payments (Check all that apply.)

Use of a voucher system. All payments should be made by check. Use of a petty cash system. Only authorized individuals should be allowed to sign checks.

There are several reasons why the petty cash fund would experience a shortage or an overage. Determine which of the actions below would result in a shortage or an overage in the petty cash fund.

The petty cashier failed to get a receipt for payment.

All of the following describe blockchain:

blockchain is continuously and simultaneously updated and verified blockchain makes it more difficult for the ledger to be modified without a detailed record of changes

A good internal control to protect cash is to make cash payments using

checks

Auditors focus more on testing the ____ of a company's blockchain processes and technology than on verifying the ___ of its output.

effectiveness/accuracy

Each of the following are types of technological impacts related to internal control:

reduced processing errors separation of duties new evidence of processing more extensive testing of records

The internal control of ______________________Correct Unavailable of duties means that the responsibility for a transaction should be divided between two or more individuals.

separation or segregation

Review the following statements and select the ones which accurately describe a Petty Cash fund. Select all answers which apply.

t is established to pay for small payments like low-cost supplies and shipping fees, etc. It is an asset reported on the balance sheet.