B. On a bank reconciliation, the amount of an unrecorded bank service charge should be: 132. Internal control procedures for cash receipts require that: 116. In order to deter employees and/or members from committing a dishonest or fraudulent act the controls must be thorough and comprehensive. All collections for sales are to be received immediately upon making the sales. “Internal controls” are financial management practices that are systematically used to prevent misuse and misappropriation of assets, such as occur through theft or embezzlement. Monitors company and employee performance. Control access to check stock, accounting systems, and cash – Unused check stock should be locked up. Collusion is a form of fraud where individuals collaborate to thwart separation of duties: A voucher is an external document used to accumulate information to control cash disbursements and to ensure that a transaction is properly recorded: A properly designed internal control system is a key part of systems design, analysis, and performance, Retaining excess cash for unexpected expenditures. A set of procedures and approvals designed to control cash disbursements and the acceptance of obligations is referred to as a(n): 112. The current balance in the account includes $45 petty cash payment in receipts and $165 in currency. Revenues collected by the departments are not used to cash personal checks, third party checks or to make change. An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n): 129. Controls are significantly different across the globe. Outstanding checks refer to checks that have been: 131. If a check correctly written and paid by the bank for $794 is incorrectly recorded in the company's books for $749, how should this error be treated on the bank reconciliation? Businesses that take in significant amounts of cash are vulnerable to theft, robbery and fraud. If the cash over and short account has a credit balance at the end of the period, the amount is reported as miscellaneous revenue. In preparing the September 30 bank reconciliation, the company should: 134. Refer to the Credit/Debit Card Merchant Requirements Policy. Martha Company has an established petty cash fund in the amount of $500. Steps for bank reconciliation review • Examine canceled checks for known vendors • Examine bank statement and outstanding check list for checks issued out of sequence • Examine bank statement for incoming and outgoing wire transfer activity • Compare cash ins and outs to expectations • Initial and date the review and save it B) In-store cash sales should be recorded on a cash register at the time of each sale. To prevent any misconduct that will lead to fraud, companies establish an internal control system over departments, including the credit sales and cash receipts activities. Cash equivalents are short-term highly liquid investments assets that are readily converted to a known cash amount, and have maturities of one year, Maintaining adequate records is an important internal control principle, Used to record the income effects of errors in making and/or processing petty cash transactions. Follow cash receipt internal controls for debit/credit card transactions. Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. Refer to the internal control checklist to determine if adequate cash control systems are in place. As you implement controls be mindful that all of the controls systems are dependent upon people. ... a company must document its internal control procedures and have an auditor attest to their effectiveness. The principles of internal control include: Technologically advanced accounting systems rarely need monitoring for errors because computers always process transactions correctly. The inherent vulnerability of cash and negotiable instruments such as checks and credit cards require healthy internal controls. Example of inadequate monitoring of internal controls The use of wire transfers has increased significantly over the years, … Have the internal audit staff periodically trace a selection of cash receipts to customer invoices to verify proper cash application. The correct procedure is to: 127. Cash and cash equivalents control procedures. The proper entry to account for this excess is: Managers place a high priority an internal control systems assist managers in all of the following except: Internal control systems are subject to limitations that usually arise from either human error/human fraud or the cost-benefit principle.

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