Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.
The following are the some of the internal control procedures:
- Competent personnel, rotating duties, and mandatory vacations
- Separating responsibilities for related operations
- Separating operations, custody of assets, and accounting
- Proofs and security measures
To state: the response to the change in policy
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Chapter 8 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
- Customer loans are classified on a Depository Institution (DI)'s balance sheet as Select one: A. liabilities, because the customer may default on the loan. B. assets, because the DI earns servicing fees on the loan. C. assets, because the DI's major asset is its client base. D. assets, because DIs originate and monitor loan portfolios. E. liabilities, because the DI must transfer funds to the borrower at the initiation of the loan.arrow_forwardThe government provides deposit insurance which protects Multiple Choice the deposits that people have at federally chartered banks. the deposits of banks in their Federal Reserve accounts. depositors for up to $250,000 should a bank fail. large corporate deposit accounts in excess of the $250,000 deductible.arrow_forwardOne of our banks has three loan officers -- one officer handles home and personal loans, one officer handles commercial or business loans, and one officer handles agricultural loans. This practice is a form of credit risk management known as: A. Screening B. Restrictive covenants C. Specialization in lendingarrow_forward
- Which of the items below are typically ASSETS for a commercial bank?(Select all that apply; three of the answers below are correct) reference: chapters 11 & 12 Customer Deposits (such as checking & savings accounts) Investment Securities (such as treasury bonds & money market securities) Vault Cash & Deposits at the Federal Reserve Customer Loans (such as mortgages or small business loans) Borrowed Funds (such as short-term borrowing from other banks, or from the Federal Reserve)arrow_forwardBank Reconciliation Activity The accounting records and bank statement of Entity A shows the following information: (The attached picture) Additional Information:a. The payments of P2,000 and P50,000 shown on the bank statement pertain to the cost of checkbook requested from the bank and the monthly amortization of a bank loan,respectively. The loan payment includes payment for interest of P8,000. b. Deposits shown on the bank statement but not on the cash ledger represent collections of accounts receivable. Requirements:1. Prepare the bank reconciliation.2. Prepare the journal entries to record the adjusting entries on the books of Entity A.arrow_forwardWhich of the following is an accurate description of a dual banking system? Government protection from losses may occur if a bank becomes insolvent or fails. There exists a system in which bank charters are granted by both the government and private licensing organizations. The government grants charters to banks. Government permission is needed to establish and operate a depository institution. Which of the following most accurately explains why the bank chartering system of the United States is known as the reason for a dual banking system? Society cannot allow just anyone to open a bank because banks have a lot of proprietary information. The government grants charters to banks. There exists a system in which bank charters are granted by both the government and private licensing organizations. Banks do not disclose to whom they have made loans and for how much.arrow_forward
- Match up the following statements and answers. An answer may be used more than once. Whose liabilities are bank notes held by the general public? Choose... Whose assets are reserves with the central bank? Choose... For households a home mortgage is a Choose... for commercial banks a home mortgage is a Choose... for commercial banks a deposit held by the general public Choose... is a for a corporation a bank loan is a Choose... an example of a household's tangible assets is a Choose... if I borrow money using my house as collateral this is a v Choose... mortgage, an asset of a commercial bank the central bank liability house asset mortgage, a liability of a commercial bank commercial banksarrow_forwardUsing two T-accounts (balance sheets listing assets and liabilities), one for the central bank and the other for a commercial bank (or the banking system as a whole), illustrate the changes in these accounts as a result of the following central bank operations: a The central bank buys $100 value of government bonds from an insurance company with payment in cash. b. The central bank buys $100 value of government bonds from an insurance company with payment by a check drawn on itself. c. The central bank sells $200 value of government bonds to a commercial bank with payment in bank reserves. d. The central bank lowers the discount rate by a large percentage.arrow_forwardBanking may be subdivided into at least three categories of banks. Match the definitions with the appropriate name. 1. I. A bank that specializes in retail or consumer banking in a local market 2. II. A bank that engages in a complete array of wholesale commercial banking activities and usually also provides retail banking services 3. III. A bank that is located in a financial center and relies on nondeposit or borrowed sources of funds for a significant portion of its liabilities O Money center bank, super-regional bank; community bank O Super-regional bank, money center bank, community bank O Community bank; super-regional bank; money center bank Community bank; money center bank; super-regional bank Money center bank; community bank; super-regional bankarrow_forward
- 1. What check was written, forwarded to the payee but not yet presented to the bank for payment? Choices: NSF check Stale check Local check Outstanding check 2. Who is the primary recipient of government spending and funding of programs and projects in the country? Choices: Private Companies Government Officials Government Employees General Publicarrow_forwardWhich of the items below are typically LIABILITIES for a commercial bank?(Select all that apply; two of the answers below are correct.) Reference: Chapters 11 & 12 Investment Securities (such as treasury bonds & money market securities) Vault Cash & Deposits at the Federal Reserve Customer Deposits (such as checking or savings accounts) Borrowed Funds (such as short-term borrowing from other banks, or from the Federal Reserve) Customer Loans (such as mortgages or small business loans)arrow_forwardChoose the function and service of a bank in which Bank Purchases and sells securities, shares and debentures on behalf of their customers. a. Miscellaneous Functions of the banks b. Discounting of Bills of Exchange c. Investment of Funds d. Agency Functionsarrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning