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Exam 7: Fraud, Internal Control, and Cash

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Question 21

Multiple Choice

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Postage stamps on hand are considered to be

A) cash.
B) petty cash.
C) cash equivalents.
D) a prepaid expense.

E) A) and B)
F) B) and C)

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Question 22

True/False

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A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement.

A) True
B) False

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Question 23

Multiple Choice

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When two or more people get together for the purpose of circumventing prescribed controls, it is called

The safeguarding of assets is an objective of a company's system of internal control.

Winter Gloves Company had checks outstanding totaling $12,800 on its May bank reconciliation. In June, Winter Gloves Company issued checks totaling $79,800. The July bank statement shows that $71,400 in checks cleared the bank in July. A check from one of Winter Gloves Company's customers in the amount of $2,000 was also returned marked "NSF." The amount of outstanding checks on Winter Gloves Company's July bank reconciliation should be

What percentage of companies worldwide have experienced fraud in a recent two-year period?

All of the following are parties to a check except the

An application of good internal control over cash disbursements is

Compensating balances are a restriction on the use of a company's cash and should be

A petty cash fund should be replenished

A system of internal control

In the month of November, Kinsey Company Inc. wrote checks in the amount of $27,750. In December, checks in the amount of $37,974 were written. In November, $25,404 of these checks were presented to the bank for payment, and $32,649 were presented in December. What is the amount of outstanding checks at the end of December?

The petty cash fund eliminates the need for a bank checking account.

GAAP, compared to IFRS, tends to be more

Checks from customers who pay their accounts promptly are called outstanding checks.

Jukebox Company had checks outstanding totaling $10,800 on its June bank reconciliation. In July, Jukebox Company issued checks totaling $77,800. The July bank statement shows that $76,600 in checks cleared the bank in July. A check from one of Jukebox Company's customers in the amount of $1,000 was also returned marked "NSF." The amount of outstanding checks on Jukebox Company's July bank reconciliation should be

In the month of May, Kijak Company Inc. wrote checks in the amount of $56,000. In June, checks in the amount of $76,000 were written. In May, $50,000 of these checks were presented to the bank for payment, and $66,000 in June. What is the amount of outstanding checks at the end of June?

Cash register overages are deposited in the petty cash fund and cash shortages are made-up from the petty cash fund.

Two individuals at a retail store work the same cash register. You evaluate this situation as

Storing cash in a company safe is an application of which internal control principle?