Question 1

The three elements that are almost always present when a fraud occurs are pressure, rationalization and concealment.

Accepted Answer

Research has shown that three elements are almost always present when a fraud
occurs. These elements are often referred to as the fraud triangle and include (1) a perceived pressure, (2) some way to rationalize the fraudulent act, and (3) a perceived opportunity.

Question 2

It is efficient, less costly, to pay small bills each day with cash available from a petty cash fund.

Accepted Answer

Most businesses find it inconvenient and expensive to write checks for small expenditures. Instead, these businesses establish a petty cash fund. A petty cash fund is a small amount of cash that is placed in a secure location on a business's premises to be used to pay for small expenditures such as postage, delivery service charges, and minor purchases of supplies.

Question 3

The following journal entry is necessary upon discovery of a "NSF" check during a bank reconciliation:

Accepted Answer

An NSF check, is a check from an individual or company that had an insufficient cash balance in the bank when the holder of the check presented it to the bank for payment. The original entry recorded when the check was received from the customer was a debit to Cash and a credit to Accounts Receivable. This entry needs to be reversed with a debit to Accounts Receivable and a credit to Cash.

Question 4

At May 31, Michaelis Company has outstanding checks totaling $19,600. The bank reconciliation for May should show these checks as a(n):

Accepted Answer

Outstanding checks are checks not yet recorded by the bank. They must be deducted from the balance per the bank statement to reconcile to the ending balance in the cash account in the general ledger.

Question 5

Which of the following bank reconciliation items should not be added to or subtracted from the bank statement balance to determine the reconciled cash balance?

Accepted Answer

A bank service charge should not be added to or subtracted from the bank statement balance to determine the reconciled cash balance, because it is already reflected in the bank statement balance.

Question 6

Which of the following items would you add to the Flitter Company's bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:

Accepted Answer

To arrive at the reconciled cash balance in a bank reconciliation, you would add deposits in transit and any corrections to the bank statement balance.

Question 7

Which of the following would you add to the balance per general ledger to arrive at the reconciled cash balance in a bank reconciliation?

Accepted Answer

A collection of a note by bank would be added to the balance per general ledger, to arrive at the reconciled cash balance, in a bank reconciliation, because it has not yet been recorded in the general ledger.

Question 8

Which of the following would you deduct from the bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:

Accepted Answer

To arrive at the reconciled cash balance in a bank reconciliation, you would deduct outstanding checks from the bank statement balance, since they have not yet been recorded by the bank.

Question 9

In reconciling the January bank statement, the vice president discovered that the bookkeeper had recorded a check written for $681 as $816 in the cash disbursements journal. For the bank reconciliation, the $135 error should be:

Accepted Answer

In order to reconcile to the bank statement, the $135 error should be added to the general ledger cash account balance, since $135 less was disbursed, than was recorded.

Question 10

In reconciling the September bank statement, the vice president discovered that the bookkeeper had recorded a check written for $438 as $483 in the cash disbursements journal. For the bank reconciliation, the $45 error should be:

Accepted Answer

In order to reconcile to the bank statement, the $45 error should be added to the general ledger cash account balance, since $45 less was disbursed, than was recorded.

Question 11

Watkis Company received its February bank statement, which included a memo indicating that the check of Sarah Company for $652 had been returned as "NSF." Watkis' bank reconciliation should list this check as a(n):

Accepted Answer

In order to reconcile to the bank statement, the $652 non-sufficient-funds (NSF) check should be subtracted from the general ledger cash account balance, since $652 less was added to the bank account balance, than was recorded in the general ledger.

Question 12

The following information pertains to Mateo Company:

Mateo should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Accepted Answer

$21,525 balance per bank statement + $2,700 deposits in transit - $1,965 outstanding checks = $22,260.
$22,620 balance per general ledger - $60 service charge - $300 NSF check = $22,260.

Question 13

The following information pertains to Julianna Company:

Julianna should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Accepted Answer

$28,700 balance per bank statement + $3,600 deposits in transit - $2,620 outstanding checks = $29,680.
$30,160 balance per general ledger - $80 service charge - $400 NSF check = $29,680.

Question 14

The following information pertains to the Juniper Company:

Juniper should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Accepted Answer

$23,250 balance per bank statement + $1,125 deposits in transit - $2,955 outstanding checks = $21,420.
$22,005 balance per books - $75 service charge - $510 NSF check = $21,420.

Question 15

The following information pertains to the Simran Company:

Simran should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Accepted Answer

$31,000 balance per bank statement + $1,500 deposits in transit - $3,940 outstanding checks = $28,560.
$29,340 balance per books - $100 service charge - $680 NSF check = $28,560.

Question 16

Cyprus, Inc.'s June bank statement shows a June 30 balance of $27,150. Prior to reconciliation, its books show a cash balance of $27,630. The information below pertains to Cyprus:

The reconciled cash balance at June 30 on the bank reconciliation should be:

Accepted Answer

$27,150 balance per bank statement + $2,100 deposits in transit - $1,440 outstanding checks + $750 bank error correction = $28,560.
$27,630 balance per books - $60 service charge + $270 company error correction + $720 collection of note receivable and interest income = $28,560.

Question 17

Athens, Inc.'s June bank statement shows a June 30 balance of $36,200. Prior to reconciliation, its books show a cash balance of $36,840. The information below pertains to Athens:

The reconciled cash balance at June 30 on the bank reconciliation should be:

Accepted Answer

$36,200 balance per bank statement + $2,800 deposits in transit - $1,920 outstanding checks + $1,000 bank error correction = $38,080.
$36,840 balance per books - $80 service charge + $360 company error correction + $960 collection of note receivable and interest income = $38,080.

Question 18

Marathon, Inc.'s April bank statement shows an April 30 balance of $15,360. Prior to reconciliation, its books show a cash balance of $16,530. The information below pertains to Marathon, Inc.

The reconciled cash balance at April 30 on the bank reconciliation should be:

Accepted Answer

$15,360 balance per bank statement + $2,400 deposits in transit - $1,395 outstanding checks + $345 bank error correction = $16,710.
$16,530 balance per books - $30 service charge - $540 company error correction + $750 collection of note receivable and interest income = $16,710.

Question 19

Keyser, Inc.'s April bank statement shows an April 30 balance of $20,480. Prior to reconciliation, its books show a cash balance of $22,040. The information below pertains to Keyser, Inc.

The reconciled cash balance at April 30 on the bank reconciliation should be:

Accepted Answer

$20,480 balance per bank statement + $3,200 deposits in transit - $1,860 outstanding checks + $460 bank error correction = $22,280.
$22,040 balance per books - $40 service charge - $720 company error correction + $1,000 collection of note receivable and interest income = $22,280.

Question 20

In preparing its bank reconciliation at March 31, Valley Company has the following information:

What is the proper cash balance at March 31 for balance sheet purposes?

Accepted Answer

$111,150 balance per bank statement + $17,250 deposits in transit - $17,250 outstanding checks - $750 bank error correction = $110,400.
$114,000 balance per books - $150 service charge - $3,450 NSF check = $110,400.

Quiz 7: Internal Control and Cash

The three elements that are almost always present when a fraud occurs are pressure, rationalization and concealment.

It is efficient, less costly, to pay small bills each day with cash available from a petty cash fund.

The following journal entry is necessary upon discovery of a "NSF" check during a bank reconciliation:

At May 31, Michaelis Company has outstanding checks totaling $19,600. The bank reconciliation for May should show these checks as a(n) :

Which of the following bank reconciliation items should not be added to or subtracted from the bank statement balance to determine the reconciled cash balance?

Which of the following items would you add to the Flitter Company's bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:

Which of the following would you add to the balance per general ledger to arrive at the reconciled cash balance in a bank reconciliation?

Which of the following would you deduct from the bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:

In reconciling the January bank statement, the vice president discovered that the bookkeeper had recorded a check written for $681 as $816 in the cash disbursements journal. For the bank reconciliation, the $135 error should be:

In reconciling the September bank statement, the vice president discovered that the bookkeeper had recorded a check written for $438 as $483 in the cash disbursements journal. For the bank reconciliation, the $45 error should be:

Watkis Company received its February bank statement, which included a memo indicating that the check of Sarah Company for $652 had been returned as "NSF." Watkis' bank reconciliation should list this check as a(n) :

The following information pertains to Mateo Company: Mateo should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

The following information pertains to Julianna Company: Julianna should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

The following information pertains to the Juniper Company: Juniper should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

The following information pertains to the Simran Company: Simran should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Cyprus, Inc.'s June bank statement shows a June 30 balance of $27,150. Prior to reconciliation, its books show a cash balance of $27,630. The information below pertains to Cyprus: The reconciled cash balance at June 30 on the bank reconciliation should be:

Athens, Inc.'s June bank statement shows a June 30 balance of $36,200. Prior to reconciliation, its books show a cash balance of $36,840. The information below pertains to Athens: The reconciled cash balance at June 30 on the bank reconciliation should be:

Marathon, Inc.'s April bank statement shows an April 30 balance of $15,360. Prior to reconciliation, its books show a cash balance of $16,530. The information below pertains to Marathon, Inc. The reconciled cash balance at April 30 on the bank reconciliation should be:

Keyser, Inc.'s April bank statement shows an April 30 balance of $20,480. Prior to reconciliation, its books show a cash balance of $22,040. The information below pertains to Keyser, Inc. The reconciled cash balance at April 30 on the bank reconciliation should be:

In preparing its bank reconciliation at March 31, Valley Company has the following information: What is the proper cash balance at March 31 for balance sheet purposes?