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7-1 Fraud, Internal Control, and Cash 111.Which of the following would be deducted from the balance per bank on a bank reconciliation? a.Outstanding checks. b.Deposits in transit. c.Notes collected by the bank. d.Service charges. 112.              Which of the following would be added to the balance per bank on a bank reconciliation? a.Outstanding checks. b.Deposits in transit. c.Notes collected by the.
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7-1 Fraud, Internal Control, and Cash 121.For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation? a.Check for $63 recorded as $36. b.Deposit of $600 recorded by bank as $60. c.A returned $300 check recorded by bank as $30. d.Check for $75 recorded as $57. 122.For.
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8-1 Reporting and Analyzing Receivables 11.The allowance method of accounting for bad debts violates the matching principle. 12.When using the allowance method bad debt expense is recorded when an individual customer defaults. 13.Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected. 14.If a company uses the.
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7-1 Fraud, Internal Control, and Cash Ex. *236 On September 1, 2014, Watkins Company establishes a petty cash fund by issuing a check for $250 to Mike Martz, the custodian of the petty cash fund. On September 30, 2014, Mike Martz submitted the following paid petty cash vouchers for replenishment of the petty.
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7-1 Fraud, Internal Control, and Cash 181.A company’s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: April$ 200,000 May  120,000 June              300,000 The cash.
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7-1 Fraud, Internal Control, and Cash SHORT-ANSWER ESSAY QUESTIONS S-A E 257 Fraud experts often say that there are three primary factors that contribute to employee fraud. Identify the three factors and explain what is meant by each. S-A E 258 (a)Explain the control principle of independent internal verification? (b)What practices are important in applying this principle? S-A.
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8-1 Reporting and Analyzing Receivables 101.Allowance for Doubtful Accounts on the balance sheet a.is offset against total current assets. b.increases the cash realizable value of accounts receivable. c.appears under the heading "Other Assets." d.is deducted from accounts receivable. 102.When an account is written off using the allowance method, the a.cash realizable value of total accounts receivable will increase. b.net.
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7-1 Fraud, Internal Control, and Cash 191.A debit balance in Cash Over and Short is reported as a a.contra asset. b.miscellaneous asset. c.miscellaneous expense. d.miscellaneous revenue. *192.              A $100 petty cash fund has cash of $10 and receipts of $80. The journal entry to replenish the account would include a credit to a.Cash for $90. b.Petty Cash for $90. c.Cash.
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8-1 Reporting and Analyzing Receivables 41.The basic formula for computing interest on an interest-bearing note is face value of note x annual interest rate x time in terms of one year = interest. 42.When a note is written to settle an open account no entry is necessary. 43.A dishonored note is a note that.
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7-1 Fraud, Internal Control, and Cash Ex. 218 The bank statement for Cates Company indicates a balance of $1,730 on June 30. The cash balance per books had a balance of $799 on this date. The following information pertains to the bank transactions for the company. Deposit of $760, representing cash receipts of June.
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7-1 Fraud, Internal Control, and Cash Ex. 234 The management of Morton Company estimates that credit sales for August, September, October, and November will be $180,000, $200,000, $230,000, and $160,000, respectively. Experience has shown that collections are made as follows: In month of sale25% In first month after sale60% In second month after sale10% Instructions Determine the collections.
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7-1 Fraud, Internal Control, and Cash Ex. 214 Using the following information, prepare a bank reconciliation for Hintz Company for July 31, 2014. The bank statement balance is $3,506. The cash account balance is $3,930 Outstanding checks totaled $1,285. Deposits in transit are $1,670. The bank service charge is $30. A check for $98 for supplies was recorded as.
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8-1 Reporting and Analyzing Receivables MULTIPLE CHOICE QUESTIONS 56.Interest is usually associated with a.accounts receivable. b.notes receivable. c.doubtful accounts. d.bad debts. 57.The receivable that is usually evidenced by a formal instrument of credit is a(n) a.trade receivable. b.note receivable. c.accounts receivable. d.income tax receivable. 58.Which of the following receivables would not be classified as an "other receivable”? a.Advance to an employee b.Refundable income tax c.Notes receivable d.Interest.
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8-1 Reporting and Analyzing Receivables 21.The Allowance for Doubtful Accounts is a liability account. 22.Cash realizable value is determined by subtracting Allowance for Doubtful Accounts from Net Sales. 23.If bad debt losses are significant, the direct write-off method is acceptable for financial reporting purposes. 24.Bad debt losses are a cost of selling on credit. 25.The allowance.
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8-1 Reporting and Analyzing Receivables CHAPTER 8 REPORTING AND ANALYZING RECEIVABLES TRUE-FALSE STATEMENTS 1.Trade receivables occur when two companies trade or exchange notes receivables. 2.Trade receivables can be an account receivable or a note receivable. 3.Other receivables include non-trade receivables such as loans to company officers. 4.Advances to employees are referred to as accounts receivable. 5.Both accounts receivable and.
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8-1 Reporting and Analyzing Receivables 31.Under the allowance method, the cash realizable value of receivables is the same both before and after an account has been written off. 32.An aging schedule is prepared only for old accounts receivables that have been past due for more than one year. 33.When an account receivable that was.
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7-1 Fraud, Internal Control, and Cash COMPLETION STATEMENTS               239.Internal control consists of the related methods and measures adopted within a business to ____________ its assets and enhance the ______________ and ______________ of its accounting records.               240.The principle of internal control that prevents one individual from being responsible for all the related activities.
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7-1 Fraud, Internal Control, and Cash Ex.  223 Seaver Company received a notice with its bank statement that the bank had collected a note receivable for $18,000 plus $600 of interest. The bank had credited these amounts to Seaver's account less a collection fee of $30. Seaver Company had already accrued the interest.
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7-1 Fraud, Internal Control, and Cash Ex. 226 Listed below are items that may be useful in preparing the March 2014, bank reconciliation for the Carrinton Machine Works. Using the code letters below, insert in the space before each item the letter where the amount would be located or otherwise treated in the bank.
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7-1 Fraud, Internal Control, and Cash S-A E 265(Ethics) Samson Instruments is a rapidly growing manufacturer of medical devices. As a result of its growth, the company's management recently modified several of its procedures and practices to improve internal control. Some employees are upset with the changes. They have complained that all these.
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7-1 Fraud, Internal Control, and Cash S-A E 261 Important objectives of a system of internal controls are to safeguard assets and to enhance the accuracy and reliability of the accounting records. Briefly discuss how (1) cost-benefit considerations, (2) the human element, and (3) the size of the business affect the implementation of.
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7-1 Fraud, Internal Control, and Cash 161.Management of cash is the responsibility of the company a.accountant. b.president. c.treasurer. d.vice-president. 162.Which of the following is not a basic principle of cash management? a.Increase the speed of collection on receivables. b.Maintain idle cash. c.Keep inventory levels low. d.Delay payment of liabilities. 163.Which of the following is not a basic principle of cash management? a.Increase collection.
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7-1 Fraud, Internal Control, and Cash Be. 205 Identify whether each of the following items would be (a) added to the book balance, or (b) deducted from the book balance in a bank reconciliation.  1. EFT transfer to a supplier. 2. Bank service charge. 3. Check printing charge. 4. Error recording check # 214 which was written.
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8-1 Reporting and Analyzing Receivables 121.In 2014 the Golic Co. had net credit sales of $600,000. On January 1, 2014, the Allowance for Doubtful Accounts had a credit balance of $15,000. During 2014, $24,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the.
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7-1 Fraud, Internal Control, and Cash Ex. 216 Using the following information, prepare a bank reconciliation for Hammond Company for June 30, 2014. a.The bank statement balance is $7,650. b.The cash account balance is $6,422 c.Outstanding checks totaled $1,650. d.Deposits in transit are $900. e.The bank service charge is $22. f.Collection of note by bank, $500. Ex. 217 The Hartman Boat.
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7-1 Fraud, Internal Control, and Cash Be. 209 At August 31 Kiner Company has this bank information: cash balance per bank $9,450; outstanding checks $762; deposits in transit $1,700; and a bank service charge $20. Determine the adjusted cash balance per bank at August 31, 2014. Be. 210 Given the following information, determine the adjusted.
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7-1 Fraud, Internal Control, and Cash 101.A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is a.a contra asset account. b.a liability account. c.also an asset account. d.a stockholders' equity account. 102.              A deposit made by a company will appear on the bank statement as a a.debit. b.credit. c.debit.
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7-1 Fraud, Internal Control, and Cash Ex. 231 Holcomb Company expects to have a cash balance of $43,000 on January 1, 2014. These are the relevant monthly budget data for the first two months of 2014. 1. Collections from customers: January $85,000, February $132,000 2. Payments to suppliers: January $40,000, February $50,000 3. Wages: January $34,000,.
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7-1 Fraud, Internal Control, and Cash 131.Karlin Company gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30$13,200 Deposits in transit              1,800 Notes receivable and interest collected by bank              4,440 Bank charge for check printing150 Outstanding checks              9,000 NSF check              840 The adjusted cash balance per books on April 30 is a.$18,450. b.$17,640. c.$16,650. d.$18,330. 132.Clark Company developed.
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7-1 Fraud, Internal Control, and Cash Ex. 222 The cash balance per books for Wellmeyer Company on November 30, 2014, is $10,740.93. The following checks and receipts were recorded for the month of December 2014:           Checks               Receipts     No. Amount No. Amount   Amount Date 17$372.9622$   578.84$   843.8612/5 18780.62231,687.50941.5412/21 19157.0024 921.30808.5812/27 20587.5025246.031,367.0012/31 21234.15 In addition, the bank statement for the month of December.
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8-1 Reporting and Analyzing Receivables 141.A promissory note a.is not a formal credit instrument. b.may be used to settle an accounts receivable. c.has the party to whom the money is due as the maker. d.cannot be factored to another party. 142.Which of the following is not true regarding a promissory note? a.Promissory notes may not be transferred to.
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7-1 Fraud, Internal Control, and Cash Exercises Ex. 212 Jim Gant has worked for Dr. Ken Flood for several years. Jim demonstrates a loyalty that is rare among employees. He hasn't taken a vacation in the last three years. One of Jim's primary duties at the medical office is to open the mail and.
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8-1 Reporting and Analyzing Receivables 91.Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited a.when a credit sale is past due. b.at the end of each accounting period. c.whenever a pre-determined amount of credit sales have been made. d.when an account is determined to be uncollectible. 92.An alternative name for Bad.
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7-1 Fraud, Internal Control, and Cash Ex. 229 The cash records of Landis Company show the following four situations. 1.The June 30 bank reconciliation indicated that deposits in transit total $1,080. During July the general ledger account Cash shows deposits of $24,820, but the bank statement indicates that only $23,400 in deposits were received.
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8-1 Reporting and Analyzing Receivables 131.The following information is related to December 31, 2013 balances. •Accounts receivable$700,000 •Allowance for doubtful accounts (credit)   (60,000) •Cash realizable value  640,000 During 2014 sales on account were $195,000 and collections on account were $115,000. Also, during 2014 the company wrote off $11,000 in uncollectible accounts. An analysis of outstanding receivable.
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7-1 Fraud, Internal Control, and Cash               246.Internal control over cash disbursements is more effective when payments are made by ______________, rather than by ______________.               247.A disbursement system that uses wire, telephone, computers, etc., to transfer cash from one location to another is referred to as ______________.               248.A debit memorandum issued by.
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7-1 Fraud, Internal Control, and Cash BRIEF Exercises Be. 201 Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described. Internal Control Principles A.Establishment of responsibility B.Segregation of duties C.Physical control devices D.Documentation procedures E.Independent internal.
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7-1 Fraud, Internal Control, and Cash Ex. 221 Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. Code AAdd to cash balance per books BDeduct from cash balance per books CAdd to.
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8-1 Reporting and Analyzing Receivables 61.Receivables are a.one of the most liquid assets and thus are always considered current assets. b.claims that are expected to be collected in cash. c.shown on the income statement at cash realizable value. d.always the result of revenue recognition. 62.Non-trade receivables should be reported separately from trade receivables. Why is this statement.
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7-1 Fraud, Internal Control, and Cash 141.Of the following employees, who should prepare the bank reconciliation? a.Anne, the bookkeeper, because she is aware of all transactions that affected cash. b.Michael, the treasurer, because he has control of the checkbook and has taken more accounting courses than any other employee. c.Mary, the cashier, because she does.
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8-1 Reporting and Analyzing Receivables 111.Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $30,000. If the balance of the Allowance for Doubtful Accounts is $4,000 credit before adjustment what is the amount of bad debt expense for that period? a.$30,000 b.$26,000 c.$34,000 d.$4,000 112.Using the percentage-of-receivables method for recording bad debt expense,.
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7-1 Fraud, Internal Control, and Cash IFRS QUESTIONS 1.The principles of internal control activities are used a.in the U.S. but not globally. b.internationally but not in the U.S. c.in the U.S. and Canada but not globally. d.globally. 2.Sarbanes Oxley applies to a.U.S companies but not international companies. b.international companies but not U.S. companies. c.U.S. and Canadian companies but not other international.
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7-1 Fraud, Internal Control, and Cash MATCHING 256.Match the items below by entering the appropriate code letter in the space provided. A.Prenumbered documentsG.Cash budget B.Custody of an asset should be kept H.Restricted cash separate from the record-keeping I.Invest idle cash for that assetJ.Canceled checks C.Television monitors, garment sensors K.NSF checks and burglar alarms are examplesL.Outstanding checks D.Bonding employeesM.Petty cash receipt E.CollusionN.Cash.
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7-1 Fraud, Internal Control, and Cash 151.A check written by the company for $275 is incorrectly recorded by a company as $257. On the bank reconciliation, the $18 error should be a.added to the balance per books. b.deducted from the balance per books. c.added to the balance per bank. d.deducted from the balance per bank. 152.In the.
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7-1 Fraud, Internal Control, and Cash 171.The following information was taken from Molina Company cash budget for the month of November: Beginning cash balance              $96,000 Cash receipts              116,000 Cash disbursements              160,000 If the company has a policy of maintaining an end-of-the-month cash balance of $80,000, the amount the company would have to borrow is a.$44,000. b.$0. c.$28,000. d.$80,000. 172.The following credit.
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7-1 Fraud, Internal Control, and Cash Ex. 220 Grier Food Store used the following information in recording its bank reconciliation for the month of April. Balance per books April 30$    905 Balance per bank statement April 30$11,300 (1)Checks written in April but still outstanding $6,300. (2)Checks written in March but still outstanding $2,800. (3)Deposits of April 30.
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7-1 Fraud, Internal Control, and Cash Ex. 219 The bank statement for Adcock Company indicates a balance of $830 on July 31. The cash balance per books had a balance of $390 on this date. The following information pertains to the bank transactions for the company. Deposit of $840, representing cash receipts of July.
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8-1 Reporting and Analyzing Receivables 81.The expense recognition principle relates to credit losses by stating that bad debt expense should be recorded a.in the same period as allowed for tax purposes. b.in the period of the sale. c.for an exact amount. d.in the period of the loss. 82.When the allowance method is used to account for.
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7-1 Fraud, Internal Control, and Cash Ex.  233 Palmer Company has budgeted sales revenues as follows:    June   July   August Credit sales$35,000$30,000$28,000 Cash sales  18,000  51,000  39,000 Total sales$53,000$81,000$67,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of.
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8-1 Reporting and Analyzing Receivables 71.Carson Company on July 15 sells merchandise on account to Tayler Co. for $2,000, terms 2/10, n/30. On July 20 Tayler Co. returns merchandise worth $800 to Carson Company. On July 24 payment is received from Tayler Co. for the balance due. What is the amount of.
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