Accounting Procedures

Question 1

Only designated personnel are authorized to handle cash receipts and disbursements.

Answer 1

Establishment of responsibility

Question 2

Different individuals receive cash, record cash, and hold cash.

Answer 2

Segregation of duties

Question 3

Use remittance advice (mail receipts), cash register tapes and deposit slips.

Answer 3

Documentation procedures

Question 4

Store cash in safes and bank vaults. Limit access to storage areas, use cash registers.

Answer 4

Physical, mechanical, and electronic controls

Question 5

Supervisors count cash receipts daily, finance officer compares total cash receipts to bank deposits daily.

Answer 5

Independent Internal Verification

Question 6

Cash is the __ __ __ possessed by a business.

Answer 6

most delicate asset

Question 7

It is __ __ __ of being subject to fraud, theft, and robbery.

Answer 7

susceptible to temptation

Question 8

Keeping cash in a vault __ __ __of the business is __ __.

Answer 8

within the premises, very risky

Question 9

All Accounting Procedures for Cash

Answer 9

Establishment of responsibility
Segregation of duties
Documentation procedures
Physical, mechanical, and electronic controls
Deposit all cash receipts the following day
Maintain imprest system
Require employees to take annual leave.
Independent Internal Verification
Do monthly bank reconciliation

Question 10

It is a system in which all collections of the day are deposited intact on the next day.

Answer 10

Imprest system

Question 11

Under imprest system a __ __ __ is set up for paying small expenses.

Answer 11

Petty Cash Fund

Question 12

A form of a deposit in which the depositor is given a passbook or bankbook by the bank which must be presented every time deposits and withdrawals are made.

Answer 12

Savings Account

Question 13

A form of a deposit in a depositor is provided a checkbook by the bank. This checkbook contains pre-numbered checks that a depositor required to accomplish and signed whenever a withdrawal is made or whenever the depositor needs to pay for purchases.

Answer 13

Current or Checking Account

Question 14

amount of money due to a company or establishment from the customer for selling its goods or services.

Answer 14

Account receivable

Question 15

A purchase order (PO) is sent as an expression of the customer’s intent to buy your goods or services. Once the PO is approved, a sales order is created detailing the goods or services being sold to the customer, the quantity and price of the items, and other terms of the sales such as discounts, the delivery date and location, etc.

Answer 15

Receive Order

Question 16

A critical step to reduce exposure to bad debt, the credit worthiness of the customer is assessed. This process may vary depending on whether the customer is an existing or new client, however the end result will be either credit approval or denial, or the arrangement of alternative payment terms.

Answer 16

Approve Credit

Question 17

Serving as a definitive record of the purchase, the invoice details how much is due and payment due date, as well other considerations such as late payment fees and discounts. Invoices are typically delivered to the customer via email, electronic data interchange (EDI) or regular mail.

Answer 17

Timely and Accurate Sending of Invoices

Question 18

Collections need to be handled both expeditiously and carefully. For example, if payment is past due it is prudent to look internally first to ensure the invoice is error free, it was sent to the customer, and any discounts detailed within the sales order are reflected within the invoice. If the internal review of the invoice checks out, the collections outreach begins.

Answer 18

Manage Collections

Question 19

While a few of the reasons for non-payment were touched on in step 4, there are other reasons such as human error in the payment process, issues with the goods or services provided, discrepancies between the proposal and invoice, and communication issues.

Answer 19

Address Disputes

Question 20

Once all collection efforts have been exhausted, payment may be determined to be uncollectible. Decisions as to whether debt is uncollectible varies by industry, as well as the company’s internal financial policies.

Answer 20

Write Off Uncollectible Debt

Question 21

Two Methods for Writing Off Bad Debts

Answer 21

Direct Write Off Method
Allowance for Doubtful Accounts Method

Question 22

Involveswriting off a bad debt expense directly against the corresponding receivable account.

Answer 22

Direct Write Off Method

Question 23

Is considered a “contra asset,” because itreduces the amount of an asset, in this case the accounts receivable.

Answer 23

Allowance for Doubtful Accounts Method

Question 24

ACH or EFT

Answer 24

Debit, Credit, or virtual cards

Question 25

Wire transfer

Answer 25

Checks

Question 26

During the month end close process, the finance team reviews all recorded transactions and transfers the closing balance of all general ledger accounts into a report (trial balance). This step provides the information needed to create financial statements.

Answer 26

Handle Reporting

Question 27

Is the body of accounting that deals with valuing and accounting for changes in inventoried assets.

Answer 27

Inventory Accounting

Question 28

used to record sales of inventory to customers, reconcile inventory value after performing a physical inventory, and record other expenses related to the sale and operation of the inventory.

Answer 28

sales operating account

Question 29

used to record inventory value, reconcile inventory value after a physical inventory is performed, and transfer cost of goods sold to the inventory operating account.

Answer 29

Inventory Object Code

Question 30

tracks purchases and sales of the units’ inventory and allows units to calculate cost of goods sold, which must be transferred to the operating account.

Answer 30

Inventory Tracking System

Question 31

Limits access to inventory supply and implement procedures for receiving and shipping

Answer 31

Physical Inventory Controls

Question 32

the value of what you have sold

Answer 32

Cost of Goods Sold

Question 33

difference between sales and cost

Answer 33

Profit

Question 34

When goods are sold, properly record the transactions and ensure that the correct are billed and shipped to customers.

Answer 34

Record Transactions for Goods Sold

Question 35

an accounting method that requires a physical inventory count at specific intervals.

Answer 35

Periodic

Question 36

a system used to track and record stock levels, in which every purchase and sale of stock is logged automatically and immediately.

Answer 36

Perpetual

Question 37

process in accounting that businesses use to determine the value of unsold inventory stock when they are producing their financial accounts.

Answer 37

Inventory Valuation

Question 38

first items purchased are the first to leave the warehouse

Answer 38

FIFO (First In, First Out) Method,

Question 39

the last items that enter the store are the first ones to leave.

Answer 39

LIFO (Last In, First Out) Method

Question 40

The average cost per unit is calculated by dividing the total cost by the total number of units purchased during the year.

Answer 40

WAC (Weighted Average Cost) Method

Question 41

Assign costs to inventory using the actual cost of each item

Answer 41

Specific Identification Cost Method