SIMULATIONS

Question 1

Error/Fraud - Invoices for goods sold are posted to incorrect accounts

Answer 1

IC: Monthly stmts are mailed to all customers with outstanding balances,

Question 2

Error/Fraud - Goods ordered by customers are shipped but not billed to anyone

Answer 2

IC: Shipping documents are compared with sales invoices when goods are shipped

Question 3

Error/Fraud - Invoices are sent for shipped goods, but are not recorded in the sales Journal

Answer 3

IC: Daily sales summaries are compared with control totals of invoices

Question 4

Error/Fraud - invoices are sent for shipped goods and are recorded in the sales journal, but are not posted to any customer account

Answer 4

IC: Control amounts posted to the AR ledger are compared with control totals of invoices.

Question 5

Error/Fraud - Credit sales are made to individuals with unsatisfactory credit ratings

Answer 5

IC: customer orders are compared with an approved customer list.

Question 6

Error/Fraud - Goods are removed from inventory for authorized orders

Answer 6

IC: Approved sales orders are required for goods to be released from the warehouse

Question 7

Error/Fraud - Invoices are sent to allies in a fraudulent scheme and sales are recorded for fictitious transactions

Answer 7

IC: Sales invoices are compared with shipping documents and approved customer orders before invoices are mailed

Question 8

Error/Fraud - Customers’ checks are received for less than the customers’ full account balances but the customers full account balances are credited

Answer 8

IC: Total amounts posted to the AR ledger from remittance advices are compared with the validated bank deposit slip

Question 9

Error/Fraud - Customers checks are misappropriated before being forwarded to the casher for deposit

Answer 9

IC: Monthly statement are mailed to all customers with outstanding balances

Question 10

Error/Fraud - Customers’ checks are credited to incorrect customer accounts

Answer 10

IC: Montly stmts are mailed to all customers with outstanding balances

Question 11

Error/Fraud - Different customer accounts are each credited for the same cash receipt

Answer 11

IC: Total amounts posted to the AR ledger from remittance advices are compared with the validated bank deposit slip.

Question 12

Error/Fraud - Customers’ checks are properly credited to customer accounts and are properly deposited but errors are made in recording receipts in the cash receipts journal

Answer 12

IC: An employee other than the bookkeeper periodically prepares a bank reconciliation

Question 13

Error/Fraud - Customer checks are misappropriated after being forwarded to the cashier for deposit

Answer 13

IC: Total amounts posted to the AR ledger from remittance advices are compared with the validated bank deposit slip

Question 14

Error/Fraud - Invalid transactions granting credit for sales returns are recorded

Answer 14

IC: Goods returned for credit are approved by the supervisor of the sales dept

Question 15

Error/Fraud - goods shipped to customers do not agree with goods ordered by customers

Answer 15

IC: Shipping clerks compare goods received from the warehouse with the approved sales orders.