CHAPTER 7 - CHAPTER 7 Internal Control and Cash Study...

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CHAPTER 7 Internal Control and Cash Study Objectives 1. Define fraud and internal control activities. 2. Identify the principles of internal control. 3. Explain the applications of internal control principles to cash receipts. 4. Explain the applications of internal control principles to cash disbursements. 5. Prepare a bank reconciliation. 6. Explain the reporting of cash. 7. Discuss the basic principles of cash management. 8. Identify the primary elements of a cash budget. 9. Explain the operation of a petty cash fund. Summary of Questions by Study Objectives and Bloom’s Taxonomy Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT Questions 1. 1 C 7. 2 C 13. 2 C 19. 4 C 24. 7 C 2. 1 C 8. 2 C 14. 6 AP 20. 4 K 25. 5 C 3. 1 C 9. 2 C 15. 3 C 21. 5 K 26. 6 C 4. 1 C 10. 2 C 16. 3 C 22. 5 C 27. 6 C 5. 1 K 11. 2 C 17. 3 C 23. 5 C 28. 9* C 6. 2 C 12. 2 C 18. 4 C Brief Exercises 1. 1 C 4. 3 C 7 4 C 10. 5 AP 13. 8 AP 2. 2 C 5. 3 AP 8. 5 C 11. 5 AP 14. 9* AP 3. 2 C 6. 4 C 9. 5 C 12. 6 C Do It Review Exercises 1. 2 C 2. 3 C 3. 5 K 4. 8 AP Exercises 1. 2 C 5. 2, 4 E 8. 5 AP 11. 5 AP 14. 8 AP 2. 2 C 6. 5 AP 9. 5 AP 12. 6 AP 15. 9* AP 3. 2, 3 E 7. 5 AP 10. 5 AP 13. 7 C 16. 9* AP 4. 2, 4 E Problems: Set A 1. 2, 3 C 3. 5 AP 5. 5 AP 7. 8 AP 8. 2, 3, 4, 5 E 2. 2, 3, 4 C 4. 5 AP 6. 8 AP Problems: Set B 1. 2, 4 C 3. 5 AP 5. 5 AP 7. 8 AP 8.
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2, 3, 4, 5 E 2. 2, 3 C 4. 5 AP 6. 8 AP
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ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Identify internal control weaknesses for cash receipts. Simple 20–30 2A Identify internal control weaknesses in cash receipts and cash disbursements. Simple 20–30 3A Prepare bank reconciliation and adjusting entries. Simple 20–30 4A Prepare bank reconciliation and adjusting entries from detailed data. Moderate 40–50 5A Prepare a bank reconciliation and adjusting entries. Moderate 30–40 6A Prepare a cash budget. Moderate 30–40 7A Prepare a cash budget. Moderate 30–40 8A Prepare comprehensive bank reconciliation with theft and internal control deficiencies. Complex 40–50 1B Identify internal control principles for cash disbursements. Simple 20–30 2B Identify internal control weaknesses in cash receipts. Simple 20–30 3B Prepare bank reconciliation and adjusting entries. Simple 20–30 4B Prepare bank reconciliation and adjusting entries from detailed data. Moderate 40–50 5B Prepare a bank reconciliation and adjusting entries. Moderate 30–40 6B Prepare a cash budget. Moderate 30–40 7B Prepare a cash budget. Moderate 30–40 8B Prepare comprehensive bank reconciliation with theft and internal control deficiencies. Complex 40–50
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ANSWERS TO QUESTIONS 1. Fraud is dishonest act by an employee that results in personal benefit to the employee at a cost to the employer. An example of fraud that might occur at a bank would be a computer operator embezzling funds by transferring a customer’s deposits into another account. 2.
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This note was uploaded on 01/18/2011 for the course FINANCE AC acct200 taught by Professor Hamdibilici during the Fall '10 term at CSU Long Beach.

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CHAPTER 7 - CHAPTER 7 Internal Control and Cash Study...

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