AC 210 Chapter 5 Learnsmart

bank

deposits in transit are added to the ___________ side of the bank reconciliation

corruption, asset misappropriation, financial statement fraud

employee fraud is often grouped into these 3 categories:

purchase order

ensures the order is placed with an approved supplier at approved prices

purchase requisition

ensures the request is made by someone who is approved to order goods or services of the type and amount requested

nothing

if a bank reconciliation included a deposit in transit of $670, the company's journal entry for this reconciling item would include _____________

cash shortage is debited

if the cash collected is less than the amount per the cash register, then ________________________________

added to the book balance

in a bank reconciliation, interest revenue earned on the bank account balance is ______________

supplier invoice

is used to ensure that the appropriate amount is paid for goods received

receiving report

is used to verify amounts ordered agree with the suppliers actual shipments

operations

objective is to ensure the efficient and effective completion of work and the protection of assets

compliance

objective is to focus on adhering to laws and regulations

reporting

objective is to produce reliable and timely accounting information

restricting access

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

control environment

refers to helping people in the organization to understand the importance of internal control

risk assessment

refers to the continuous evaluation of the potential for fraid

information and communication

refers to the documentation of actions that provide effective internal controls

monitoring activities

refers to the evaluation of internal controls to determine if they are working as intended

control activities

refers to the work responsibilities and duties completed to reduce risks to an acceptable level

opportunity

____________ is one of the 3 components of the fraud triangle that relates to taking advantage of weak internal controls

voucher

a _____________ system is a process for approving and documenting all purchases and payments made on account

deduction from the book balance

a bank service charge should be a _______________________________________________ on a bank reconciliationim

debit

a bank will show a customer's withdrawal as a _________

liability

a deposit is a _____________ from the bank's point of view

not held at the bank

a difference between an imprest payroll account and petty cash is, petty cash is _________________

imprest

an ____________ system controls the amount paid to others by limiting the total amount of money available for making payments

segregate duties

cashiers at a supermarket have to talk to a manager before approving price changes at the register. Which internal control principle is being followed?

outstanding

checks that have been written but have not yet cleared the bank

reconciling

comparing two sets of records is called ___________

incentive, opportunity, and rationalization

the 3 components of the fraud triangle are:

deduction from the bank balance

the bank credited your account for a deposit that should have been deposited into another customer's bank account, not yours. This bank error should be a __________________________________ on a bank reconciliation

credit

the bank will show a customers deposit on bank statements as a ________________

credit cash, debit petty cash

the entry to record putting money into a petty cash fund includes what _______________, ________________

expense accounts, cash

the entry to record the replenishment of the petty cash fun involves debiting __________________, and crediting _________________

purchase requisition

the purchasing system begins with an authorized employee completing a manual or electronic _____________________ which is then reviewed and approved by a supervisor before an order is placed with a supplier

receiving report

this document indicates the date, quantity, and condition of the goods. it is then sent to the accounting department to notify the purchase can be recorded

deducted from the bank balance

this months bank statement shows that the bank incorrectly credited ABC company's account for a $100 deposit that should have been credited to XYZ company;'s account. How would this item be treated on ABC's bank reconciliation?

true

true or false: committing financial fraud can result in stiff penalties, including fines and jail sentences

SOX Act

what act aims to reduce fraud by: -reducing opportunities -counteract incentives -encourage honesty in employees

outstanding checks

what is subtracted from the bank balance on a bank reconciliation?

petty cash

what is used to avoid the time and cost of writing checks for business expenses that are small amounts and is controlled by limiting the amount in it and subjecting it to surprise audits

needs to be replenished

when are petty cash payments recorded in the accounting systems ledger?