Final

Question 1

What would the controller look at to see the amount of cash that went into the bank, and who would provide him with the back up?

Answer 1

He would look at the bank deposit amount from the treasurer

Question 2

What would the controller look at to see what was recorded by the company and who would provide him with the data?

Answer 2

A debit to cash from the accounting department

Question 3

What do companies do to avoid internal control weakness?

Answer 3

Separate the duties of purchasing goods, receiving goods, approving payments for goods.

Question 4

What is internal control?

Answer 4

The organizational plan and all related measures designed to encourage employees to follow company policy, promote operational efficiency, safeguard assets, and ensure accurate and reliable accounting records.

Question 5

What requires the system of internal controls to be tested by external auditors?

Answer 5

The Sarbanes-Oxley Act

Question 6

If cash received over the counter is controlled by a sales clerk who rings up the sale and places the cash in the register, should the sales clerk also match the total recorded by the register to each day as cash sales?

Answer 6

No, the sales clerk should not have access to the cash register total as the clerk could change the record

Question 7

How should a petty cash account be maintained?

Answer 7

At its designated balance

Question 8

Petty cash accounts are part of what type of system?

Answer 8

Imprest

Question 9

At any point in time a petty cash box must contain

Answer 9

Cash and petty cash tickets that total the amount of the imprest balance.

Question 10

How do you calculate percentage of total value?

Answer 10

Asset Market value ÷ total market value ×100

Question 11

How do you calculate depreciation using the straight-line method?

Answer 11

(Cost - sign residual value) ÷ useful life (in years)

Question 12

How do you calculate depreciation per unit using unit per production?

Answer 12

(Cost – residual value) ×(current year production ÷ total estimated production)

Question 13

How do you calculate depreciation expense using units of production method?

Answer 13

The depreciation per unit × current year usage

Question 14

How do you calculate depreciation using double declining balance method?

Answer 14

(Cost – accumulated depreciation) ×2×(1÷ useful life)

Question 15

Two or more people working together to circumvent internal controls and defraud a company

Answer 15

Collusion

Question 16

What 3 things must a petty cash account have?

Answer 16

Custodian
Designate specific amount to be kept
Support all payments with a ticket

Question 17

When is a petty cash account created?

Answer 17

When the company writes a check for the designated amount, payable to petty cash

Question 18

At any point in time the petty cash box contains cash and tickets that total amount of the imprest balance.

Answer 18

Imprest system

Question 19

A document explaining reasons for the difference between a depositors cash records and the depositors cash balance in its bank account

Answer 19

Bank reconciliation

Question 20

What are the two records of a business’s cash?

Answer 20

Cash account in the ledger

Bank statement

Question 21

Explain the bank side of bank reconciliation

Answer 21

Deposits in transit
Outstanding checks
Bank errors

Question 22

Explain the book side of bank reconciliation

Answer 22

Bank collections
Electronic funds transfers
Service charge
Interest revenue on a checking account 
NSF checks
Book errors

Question 23

Assets of a permanent nature used in the operations of the business and not held as inventory

Answer 23

Plant asset

Question 24

Characteristics of account receivables

Answer 24

Source is pre established credit
No grace period
No collateral

Question 25

Characters of notes receivables

Answer 25

Source is promissory note (contract) | Has interest and collateral

Question 26

What is a bad debt expense?

Answer 26

Uncollected accounts receivable

Question 27

What are the two approaches for accounting for bad debt?

Answer 27

Direct write off method and allowance method

Question 28

We must use allowance method because

Answer 28

GAAP says it satisfies matching principle

Question 29

Allowance for bad debt

Answer 29

Contra account to accounts receivables

Question 30

What cost to include as the cost of a plant asset?

Answer 30

All cost necessary to acquire and prepare the plant asset for intended use

Question 31

Cost included as cost of

Answer 31

Land, bldg, equip, and land improvements

Question 32

When do you account for P,P,&E?

Answer 32

When acquired Depreciation Disposal

Question 33

Name some plant assets

Answer 33

``` Bldg Land Office equipment Machinery/heavy equipment Furniture Transportation vehicles Signage Parking lot Special utilities ```

Question 34

Raze

Answer 34

Remove

Question 35

Land costs

Answer 35

``` Purchase price Settlement cost Remove old structure Grading Clearing Delinquent property tax ```

Question 36

Costs of equipment

Answer 36

Purchase price Transportation costs Installation cost Modification cost

Question 37

Costs of new construction

Answer 37

Contract price | Construction period interest

Question 38

Three ways to dispose of a plant asset

Answer 38

Abandon Sell Exchange

Question 39

Total market value =

Answer 39

Asset market value + asset market value

Question 40

Percentage of total value =

Answer 40

Asset market value/ total market value

Question 41

Net book value =

Answer 41

Assets cost - accumulated depreciation

Question 42

A net book value should never

Answer 42

Fall below the residual value

Question 43

The expected value of an asset at the end of its useful life

Answer 43

Residual value

Question 44

Accounting for payroll involves

Answer 44

Employee gross earnings With holdings from gross earnings Employer payroll taxes

Question 45

What earnings are taxable to employee

Answer 45

Salary Hourly wage Commission Bonuses

Question 46

What earnings aren’t taxable to the employee

Answer 46

Health, dental, employer paid retirement plan

Question 47

Social security max

Answer 47

128700

Question 48

Only__________ pays unemployment tax.

Answer 48

Employers

Question 49

Only _____________ pay federal income tax.

Answer 49

Employees

Question 50

Sales tax payable is a current liability because

Answer 50

The retailer must pay the state in less than a year

Question 51

Sale tax is _____ an expense of a business. It is a _______ _______.

Answer 51

Not | Current liability