When You Examine Canceled Checks Returned in the Bank Statement

question 26

Essay

When you examine canceled checks returned in the bank statement by a client's bank,how could you tell whether the amount on a check had been skillfully increased (perhaps from $75.00 to $7,500 in the amount box,and altered in the written line from "Seventy-five dollars" to "Seventy-five hundred dollars")after the check was cleared by the bank? (An employee might do this to "support" a $7,500 cash disbursement journal entry.)

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, with holders possibly entitled to vote on corporate matters and receive dividends.

Equipment

Tangible assets used in operations, such as machinery, computers, and furniture, which are expected to be used over several years.

Note Payable

A written promise to pay a specific sum of money on a future date or dates, typically with interest.

Journal Entry

A record in accounting that notes the debit and credit effects of a financial transaction.