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Herbert Company deposited $25,000 in its bank on the same day as - but after - the bank prepared Herbert Company's bank statement. The deposit should appear on the bank reconciliation as a(n) __________ and is called a(n) __________.
A) addition to the bank balance; outstanding deposit
B) addition to the bank balance; deposit in transit
C) deduction to the bank balance; deposit in transit
D) deduction to the bank balance; outstanding deposit

B

When opening incoming mail, the mailroom employee should compare the amount of the check received with the amount shown on the:
A) sales invoice.
B) customer order form.
C) purchase order.
D) remittance advice.

D

Differences between the amount of cash reported on a company's bank statement and the balance in the company's cash account before the bank reconciliation are primarily due to:
A) errors in the accounting process by the company.
B) errors made by the bank.
C) differences between the cash basis and accrual basis of accounting.
D) the timing difference in recording transactions.

D

Requiring employees to take annual vacations is a part of which characteristic of internal control?
A) Assignment of responsibilities
B) Separation of duties
C) Proper authorization
D) Competent and reliable personnel

b

Requiring employees to take annual vacations is a part of which characteristic of internal control?
A) Assignment of responsibilities
B) Separation of duties
C) Proper authorization
D) Competent and reliable personnel

A

If the bank records a deposit of $1,500 as $150, the error should be shown on a bank reconciliation as a(n):
A) deduction from the book balance of $1,350.
B) deduction from the bank balance of $1,350.
C) addition to the bank balance of $1,350.
D) addition to the book balance of $1,350.

C

When a company receives cash by mail, the bank deposit for the cash receipts should be made by the:
A) mail room clerk.
B) certified public accountant.
C) controller.
D) treasurer.

D

The primary way that fraud is prevented and detected is through a proper system of:
A) checks and balances.
B) management directives.
C) internal control.
D) internal and external audits.

C

In a bank reconciliation, an EFT cash receipt is:
A) added to the bank balance.
B) added to the book balance.
C) deducted from the book balance.
D) deducted from the bank balance.

B

Clemens Co. had a beginning cash balance of $2,000. For the year, it estimates cash receipts of 105,900. It has a desired ending cash balance of $3,500 and anticipates no new financing. Clemens Co.'s estimated cash disbursements are:
A) $105,400.
B) $104,400.
C) $106,900.
D) $108,400.

B

In a bank reconciliation, items recorded by the company, but not yet been recorded by the bank, include:
A) interest.
B) outstanding checks.
C) NSF checks.
D) bank service charges.

B

An internal control system can be circumvented by:
A) collusion, encryption and management override.
B) collusion, management override and segregation of duties.
C) collusion, management override and human limitations.
D) nothing, if it is a good internal control system.

C

A bank charge of $40 for imprinting checks appears on the bank reconciliation as a(n) __________ to (or from) the __________ balance.
A) addition; bank
B) deduction; bank
C) addition; book
D) deduction; book

D

The two most common types of fraud impacting financial statements are:
A) fraudulent financial reporting and e-commerce fraud.
B) misappropriation of assets and embezzlement.
C) fraudulent financial reporting and misappropriation of assets.
D) cooking the books and fraudulent financial reporting.

C

Checks written by a company, but not yet paid by the bank, appear on the bank reconciliation as __________ and are called __________.
A) deductions from the bank balance; checks in transit
B) deductions from the bank balance; outstanding checks
C) additions to the bank balance; checks in transit
D) additions to the bank balance; check items

B

Three key duties should always be separated under a good system of internal controls:
A) asset handling, record keeping and transaction approval.
B) asset handling, hiring and safeguarding of assets.
C) asset handling, recordkeeping and safeguarding of assets.
D) record keeping, transaction analysis and transaction approval.

A

Wells Fargo collected $200 on behalf of its customer. The $200 should appear on the Wells Fargo reconciliation as:
A) added to the bank balance.
B) added to the book balance.
C) deducted from the book balance.
D) having no impact on the book balance.

B

Interest paid by the bank to a company's account should appear on the bank reconciliation as:
A) added to the bank balance.
B) added to the book balance.
C) deducted from the book balance.
D) having no impact on the book balance.

B

The company's ___________ have/has the primary responsibility for establishing and maintaining a company's system of internal control.
A) external auditors
B) internal auditors
C) top management
D) stockholders

C

If a bank statement included a bank collection and related interest revenue, the journal entry to record this reconciling item should include a:
A) debit to Cash.
B) credit to Cash.
C) debit to Note Receivable.
D) debit to Note Payable.

A

A system of handling cash receipts by mail whereby customers remit payments directly to the bank, rather than through the company's mail is a(n):
A) imprest system.
B) lock-box system.
C) phishing system.
D) online banking system.

B

The three main components of the fraud triangle are:
A) rationalization, opportunity and greed.
B) opportunity, motive and lack of ethics.
C) motive, opportunity and rationalization.
D) none of the above.

C

A bank statement included a NSF check from customer Sandy Fields for $2,100. The journal entry to
record this reconciling item should:
A) debit NSF and credit Cash for $2,100.
B) debit Cash and credit Accounts Receivable for $2,100.
C) debit Accounts Receivable and credit Cash for $2,100.
D) debit Cash and credit NSF for $2,100.

C

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