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In a bank reconciliation, a deposit outstanding is

added to the bank balance

The Sarbanes-Oxley Act applies to

companies that are required to file with the SEC.

The key provisions of the Sarbanes-Oxley Act include

restricting activities of auditors to prevent conflicts of interest, requiring documentation and assessing effectiveness of internal controls, requiring that corporate executives certify financial statements.

In a bank reconciliation, an outstanding check is ______.

deducted from the bank balance

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

timing

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

Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

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

Fraud

The Public Company Accounting Reform and Investor Protection Act of 2002 is known as the

Sarbanes-Oxley Act.

The asset that is most easily stolen and susceptible to fraud is _______.

cash

The asset that is most susceptible to employee 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

he bank will show a customer's deposit on bank statements as a ______.

credit, because a deposit is a liability from the bank's point of view

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

deposits outstanding.

Which of the following are preventive controls?

physical controls, separation of duties

Separation of duties and E-commerce controls are examples of ______ controls.

preventive

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

Fraud

Who has final responsibility for internal controls?

Management

What would cause a bank statement not to agree with the cash balance in the accounting records?

The bank made an error in recording a deposit made by the company, deposits outstanding that have been recorded on the company's records, but not on the bank's, the bank paid interest that the company has not recorded, the company made an error in recording a deposit.

Two types of control activities are

preventive and detective controls.

Internal control consists of plans to

provide accurate and reliable accounting information, safeguard company assets.

A bank statement may not agree with the amount of cash recorded by the company in the cash account because of _____ differences and errors

timing

A bank reconciliation compares the company's cash records with the bank statement and discovers differences in those amounts due to

timing differences and errors.

Which of the following are provisions included in the Sarbanes-Oxley Act?

Require auditors to retain work papers for 7 years, require that audit firms are hired by the audit committee of the board of directors.

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

Securities and Exchange Commission Act of 1934.

Who is responsible for providing an opinion on management's assessment of internal control?

The company's auditors

Lindell sells $100 of goods to a customer. The customer pays with a personal check. Recording this transaction will include a

debit to cash

A non-sufficient funds check requiring an adjustment to the cash balance was written:

to the company preparing the bank reconciliation

True or false: The entry for a sale to customers is different depending on whether the customer pays with cash or a check.

False

What is the primary purpose of a bank reconciliation?

To ensure the bank balance per reconciliation is equal to the company balance per reconciliation

In a bank reconciliation, interest revenue earned on a company's bank account is:

added to the company's cash balance

Largo Corp. discovered $2,000 for an NSF check in its bank reconciliation. When the cash account is updated for items that affect the company's cash balance, the entry will include

credit Cash, $2,000.

The bank will show a customer's withdrawal as a _____.

debit, because a withdrawal decreases its liability from the bank's point of view

The Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing an internal control system

The Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing fraud-proof accounting system.

he Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing fraud-proof accounting system.

The two types of control procedures are preventive and

detective

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

internal controls

This month's bank statement shows that the bank incorrectly credited ABC Corp.'s account for a $600 deposit that should have been credited to XYZ Corp.'s account. How would this item be treated on ABC's bank reconciliation?

it would be deducted from the bank balance.


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