Question
_____ In establishing a strong internal control system at Falcon Company, management is concerned with both accounting and administrative controls. An example of an administrative
_____ In establishing a strong internal control system at Falcon Company, management is
concerned with both accounting and administrative controls. An example of an administrative control would include:
a. the reconciliation of the bank statement each month.
b. ensuring the accuracy of the recording procedures for cash.
c. the establishment and use of management performance evaluations.
d. the maintenance of accurate inventory records regardless of the cost flow used.
_____ Freida is an accounting clerk for XYZ department store. Her husband, Fred, owns an
office supply business. Frieda paid her husbands business for supplies XYZ never ordered or received. Which of the following practices would allow Frieda to perpetuate this fraud?
a. Keeping pre-numbered checks under lock and key.
b. Requiring a single person to approve disbursements, sign checks, and reconcile the checking account.
c. Requiring one employee to approve supporting documents and a different employee to sign checks.
d. Marking supporting documents paid when checks are signed.
_____ The Woodrum, Dunn & Cline, Inc. bank statement, received from First Falcon Bank,
reported a bank balance of $20,100 at the end of June. An internal analysis
of this statement, and the companies accounting records, revealed the following:
- Determined that two deposits were in transit: $1,500 (in total)
- Bank debit memo for service charge: $16.50 (found on the bank statement)
- Determined that four outstanding checks existed: $750 (in total)
- Bank credit memo for interest earned: $20.00 (found on the bank statement)
After considering only proper reconciling items, the true bank cash balance at the end of June would be:
a. $20,100.00
b. $20,850.00
c. $21,570.00
d. $22,373.50
e. $22,370.00
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