HONRNGREN'S ACCT.+MYACCTLAB/ETEXT
11th Edition
ISBN: 9781323537909
Author: MILLER-NOBLES
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.1CTEI
To determine
Ethical Issue
In the present case, BDA is a charitable organization and has an agreement with the FN bank to overdraw its cash balance only when the donations are running low. Previously BDA managed its fund wisely and rarely used the privilege. Since the time when J became the president of BDA, office equipment was acquired and huge money was spent for the fundraising. In this process BDA has a negative bank balance of approximately $10,000.
To find out: The ethical issue in this situation and approve/disapprove the management of J.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Your student club recently volunteered to go door-to-door collecting cash donations on behalf ofa local charity. The charity’s accountant went berserk when you said you wrote receipts only fordonors who asked for one.Required:Identify the control principle that you violated and explain how that violation could allow fraud tooccur. What controls might be appropriate to use in the future?
On February 15, 2019, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han-dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2019, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?”At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation prepared by the cashierYou discover that the $1,200 unrecorded bank credit represents a note collected by the bank on…
While assistant treasurer of Travco Corporation, Frank Mitchell caused two checks, each payable to a fictitious company, to be drawn on Travco’s account with Brown City Savings Bank. In each case, Mitchell indorsed the check in his own name and then cashed it at Citizens Federal Savings & Loan Association of Port Huron. Both checks were cleared through normal banking channels and charged against Travco’s account with Brown City. Travco subsequently discovered the embezzlement, and after Citizens denied its demand for reimbursement, Travco brought a suit against Citizens. Is the indorsement effective? Explain.
Chapter 2 Solutions
HONRNGREN'S ACCT.+MYACCTLAB/ETEXT
Ch. 2 - The detailed record of the changes in a particular...Ch. 2 - Which of the following accounts is a liability? a....Ch. 2 - The left side of an account is used to record...Ch. 2 - Which of the following statements is correct? a....Ch. 2 - Prob. 5QCCh. 2 - Prob. 6QCCh. 2 - Posting a 2,500 purchase of office supplies on...Ch. 2 - Prob. 8QCCh. 2 - Which sequence correctly summarizes the accounting...Ch. 2 - Nathville Laundry reported assets of 800 and...
Ch. 2 - Identify the three categories of the accounting...Ch. 2 - What is the purpose of the chart of accounts?...Ch. 2 - What does a ledger show? Whats the difference...Ch. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - When are credits increases? When are credits...Ch. 2 - Prob. 8RQCh. 2 - What are source documents? Provide examples of...Ch. 2 - Prob. 10RQCh. 2 - Explain the five steps in journalizing and posting...Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - What is the purpose of the trial balance?Ch. 2 - Prob. 15RQCh. 2 - If total debits equal total credits on the trial...Ch. 2 - What is the calculation for the debt ratio?...Ch. 2 - Identifying accounts Consider the following...Ch. 2 - Identifying increases and decreases in accounts...Ch. 2 - Identifying normal balances For each account,...Ch. 2 - Prob. 2.4SECh. 2 - Journalizing transactions Arkansas Sales...Ch. 2 - Prob. 2.6SECh. 2 - Prob. 2.7SECh. 2 - Preparing a trial balance Henderson Floor...Ch. 2 - Calculating debt ratio Vacuum Magic Carpet Care...Ch. 2 - Using accounting vocabulary March the accounting...Ch. 2 - Creating a chart of accounts Raymond Autobody Shop...Ch. 2 - Identifying accounts, increases in accounts, and...Ch. 2 - Identifying increases and decreases in accounts...Ch. 2 - Identifying source documents For each transaction,...Ch. 2 - Analyzing and journalizing transactions As the...Ch. 2 - Use the following information to answer Exercises...Ch. 2 - Use the following information to answer Exercises...Ch. 2 - Use the following information to answer Exercises...Ch. 2 - Use the following information to answer Exercises...Ch. 2 - Analyzing transactions from T-accounts The first...Ch. 2 - Journalizing transactions from T-accounts In...Ch. 2 - Preparing a trial balance The accounts of Aker...Ch. 2 - Preparing a trial balance from T-accounts The...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Prob. 2.25ECh. 2 - Prob. 2.26ECh. 2 - Correcting errors in a trial balance The following...Ch. 2 - Prob. 2.28ECh. 2 - Problems Group A Journalizing transactions,...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Correcting errors in a trial balance The trial...Ch. 2 - Preparing financial statements from the trial...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Journalizing transactions, posting journal entries...Ch. 2 - Prob. 2.38BPCh. 2 - Prob. 2.39BPCh. 2 - Prob. 2.40BPCh. 2 - Journalizing transactions, posting to T-accounts,...Ch. 2 - Journalizing transactions, posting to T-accounts,...Ch. 2 - Your friend, Dean McChesney, requested that you...Ch. 2 - Prob. 2.1CTEICh. 2 - Roy Akins was the accounting manager at Zelco, a...Ch. 2 - Prob. 2.1CTFSCCh. 2 - In 35 words or fewer, explain the difference...
Knowledge Booster
Similar questions
- Harold Jones, the financial aid officer at a small university, manages all aspects of the financial aid program. Jones receives requests for aid from students, determines whether the students meet the aid criteria, authorizes aid payments, notifies the applicants that their request has been either approved or denied, writes the financial aid checks on the account he controls, and requires that the students come to his office to receive the checks in person. For years, Jones has used his position of authority to perpetrate the following fraud.Jones encourages students who clearly will not qualify to apply for financial aid. Although the students do not expect aid, they apply on the off chance that it will be awarded. Jones modifies the financial information in the students’ applications so that it falls within the established guidelines for aid. He then approves aid and writes aid checks payable to the students. The students, however, are informed that aid was denied. Because the…arrow_forwardOn February 15, 2022, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han- dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2022, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?” At your request, Kate shows you the following (unaudited) January 31, 2022, bank reconciliation prepared by the cashier: KATE’S CARDS Bank Reconciliation January 31, 2022 Ending balance from bank statement . . . $…arrow_forwardGoldie and Kate operate a small clothing store that has annual revenues of about $100,000. The company has established the following procedures related to cash disbursements: The petty cash fund consists of $10,000. Employees place a receipt in the fund when making expenditures from it and obtain the necessary cash. For any expenditure not made with the petty cash fund, the employee writes a check. Employees are not required to obtain permission to write a check but are asked to use good judgment. Any check written for more than $5,000can be signed only by Goldie or Kate. Required:Discuss Goldie and Kate’s internal control procedures related to cash disbursements, noting both weaknesses and strengths.arrow_forward
- ABC Company established a petty cash fund for small expenses of the offices of the main building which amounts to P25,000. To track the fund usage, the cash custodian uses petty cash vouchers (PCV) and places the fund inside a cash box. Employees’ vale and check accommodation (with P1,000 maximum) are allowed disbursements out of the fund. If the fund depletes to P2,000, the custodian is authorized to replenish the fund by preparing a summary of disbursements. At the end of the first month, the internal auditor conducted a surprise cash count with the presence of the petty cash custodian. The auditor found the following items inside the petty cash box: Coins – 45.00; Bills – 2,800; PCV with expense receipts totaled 5,800; employee’s check amounting to 1,000; separated bills amounting P2,500 stapled together with a note which indicates “for department’s summer outing”; employee’s IOUs/ vale sheets totaling 225; a note from Kaging Store worded ‘deposit’ P30 for 3 liters of soft drinks.…arrow_forwardThe Staal Corporation is trying to decide whether to switch to a bank that will accommodate electronic funds transfers from Staal's customers. Staal's financial manager believes the new system would decrease its collection float by as much as five days. The new bank would require a compensating balance of $2,000,000, whereas its present bank has no compensating balance requirement. Staal’s average daily collections are $800,000, and it can earn 8% on its short-term investments. Should Staal make the switch? (Assume the compensating balance at the new bank will be deposited in a non-interest earning account.)arrow_forwardDuring the preparation of the bank reconciliation for Apache Grading Co., Sarah Ferrari, the assistant controller, discovered that Rocky Spring Bank incorrectly recorded a $610 check written by Apache Grading Co. as $160. Sarah has decided not to notify the bank but wait for the bank to detect the error. Sarah plans to record the $450 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Sarah is behaving in a professional manner.arrow_forward
- Read the following scenario about Strang Corporation and identify the substantive procedures that the CPA (Elaine Stanley) should perform to determine whether lapping exists. Do not discuss deficiencies in the system of internal control. During the year, Strang Corporation began to encounter cash flow difficulties, and a cursory review by management revealed receivable collection problems. Strang’s management engaged Elaine Stan ley, CPA, to perform a special investigation. Stanley studied the billing and collection cycle and noted the following: The accounting department employs one bookkeeper who receives and opens all incoming mail. This bookkeeper is also responsible for depositing receipts, filing daily remittance advices, recording receipts in the cash receipts journal, and posting receipts in the individual customer accounts and the general ledger accounts. There are no cash sales. The bookkeeper prepares and controls the mailing of monthly statements to customers. The concentration of functions and the receivable collection problems caused Stanley to suspect that a systematic theft of customers’ payments through a delayed posting of remittances (lapping of accounts receivable) is present.arrow_forwardAssume you serve on the board of a local golf and country club. In preparation for renegotiating the club’s bank loans, the president indicates that the club needs to increase its operating cash flows before the end of the current year. The club’s treasurer reassures the president and other board members that he knows a couple of ways to boost the club’s operating cash flows. First, he says, the club can sell some of its accounts receivable to a collections company that is willing to pay the club $97,000 up front for the right to collect $1 00,000 of the overdue accounts. That will immediately boost operating cash flows. Second, he indicates that the club paid about $200,000 last month to relocate the 18th fairway and green closer to the clubhouse. The treasurer indicates that although these costs have been reported as expenses in the club’s own monthly financial statements, he feels an argument can be made for reporting them as part of land and land improvements (a long-lived asset)…arrow_forwardThe operations of Dugas Bank are being evaluated by the Bangko Sentral ng Pilipinas. During the investigation, the BSP has determined that numerous loans made by top management were unwise and have seriously endangered the future of the bank. Which of the following statements is true? * The accounting entity assumption is sacrificed. The consent of the separate entity which is the bank was violated by top management. Basing on this information, if these decisions highly affect the ability of the bank to operate, financial accountants would need to determine whether the going concern assumption would still be used in the preparation of the financial statements. The Bangko Sentral ng Pilipinas undertook an external audit of the bank. The principle of periodicity assumption was violated. Past and current actions by the top management affect the future of the bank.arrow_forward
- Taylor, a CPA, has been engaged to audit the financial statements of University Books, Incorporated. University Books maintains a large cash fund exclusively for the purpose of buying used books from students for cash. The cash fund is active all year because the nearby university offers a large variety of courses with varying starting and completion dates throughout the year. Receipts are prepared for each purchase. Reimbursement vouchers periodically are submitted to replenish the fund. Required:Construct an internal control questionnaire to be used in evaluating the internal control over University Books’ repurchasing process using the revolving cash fund. The internal control questionnaire should elicit a yes or no response to each question. Do not discuss the internal controls over books that are purchased from publishers.arrow_forwardCambria Bank is holding $9 million in reserves, $12 million in government bonds and $10 million in low risk mortgage loans. Out of the $30 million in customers' deposits, Cambria holds $15 million in the form of certificates of deposit. Determine the bank's net worth. Identify the criteria for classifying a bank as healthy or unhealthy and determine which applies to Cambria Bank in these circumstances.arrow_forwardHenry Mills is responsible for preparing checks, recording cash disbursements, and preparing bank reconciliations for Signet Corporation. While reconciling the October bank statement, Mills noticed that several checks totaling $9,370 had been outstanding for more than one year. Concluding that these checks would never be presented for payments, Mills prepared a check for $9,370 payable to himself, forged the treasurer’s signature, and cashed the check. Mills made no entry in the accounts for this disbursement and attempted to conceal the theft by destroying the forged check and omitting the long-outstanding checks from subsequent bank reconciliations. Required: a. Identify the weaknesses in Signet Corporation’s internal control. b. Explain several audit procedures that might disclose the fraudulent disbursement.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Business Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage