Acct 211 Homework 3 Quiz 1. All of the following statements regarding internal control procedures are true except: Internal control procedures are designed to ensure reliable financial reports. Internal control procedures are designed to safeguards company assets. Internal control procedures direct operations toward common goals. Internal control procedures include methods to achieve compliance with laws and regulation. Internal control procedures are not affected by the cost-benefit principle. 2. The control principle for accounting information systems requires that the: Benefits from an activity outweigh the costs of the activity. System report useful, understandable, timely, and pertinent information for effective decision making. System must have internal controls. System adapts to changes in the company, business environment, and needs of decision makers. System conforms to a company’s activities, personnel, and structure. 3. The basic components of an accounting information system include all of the following except: Source documents. Warehouses. Information processors. Information storage. Input devices. ? 4. Information processors: Include information storage. Interpret, transform, and summarize information for use in analysis and reporting. Are components of an accounting system that keep data in accessible form. Are the means to take information out of an accounting system and make it available to users. Include scanners. 5. An accounts payable ledger is: A subsidiary ledger that contains an account for each supplier (creditor). A list of the balances of all the accounts in the accounts receivable ledger that is added to show the total amount of accounts receivable outstanding. A book of original entry that is designed and used for recording only a specific type of transaction. The ledger that contains the financial statement accounts of a business. A subsidiary ledger that contains a separate account for each party that grants both short-term and long-term credit on account to the company. 6. The use of an Accounts Payable controlling account: Reduces the number of accounts in the subsidiary ledger. Reduces the total number of accounts maintained. Reduces the number of entries in the general journals. Reduces the number of accounts in the general ledger. Increases the number of columns in the journals. 7. Enterprise-resource planning software: Refers to programs that help manage a company’s vital operations. Is another name for spreadsheet programs. Uses batch processing of business information. Is substantially declining in use. Is another name for database programs. 8. A business segment: Requires only internal reporting. Is a part of a company that is separately identified by its products, services, or geographic market. Requires special journals. Requires subsidiary ledgers. Cannot report its results separately. 9. The main difference in the sales journal under the perpetual and periodic inventory system is: The column to record cost of goods sold and inventory amounts sold that is used under the perpetual system but not the periodic. The sales tax receivable column that is used under the perpetual system but not the periodic. The sales tax payable column that is used under the perpetual system but not the periodic. The accounts receivable column that is used under the perpetual system but not the periodic. The column for recording cash that is used under the perpetual system but not the periodic. 10. A company had cash sales of $24,000 (cost is $13,000). Identify the journal the transaction would be recorded in. Cash disbursements journal. Sales journal. Cash receipts journal. Purchase journal. General journal. 11. Cash equivalents: Include savings accounts. Include checking accounts. Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes. Include time deposits. Have no immediate value. 12. The number of days’ sales uncollected: Measures how much time is likely to pass before the current amount of accounts receivable is received in cash. Can be used for comparisons to other companies in the same industry. Can be used for comparisons between current and prior periods. Reflects the liquidity of receivables. All of the options are correct. 13. An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled: Cash Lost. Bank Reconciliation. Petty Cash. Cash Over and Short. Cash Receivable. 14. The entry to record reimbursement of the petty cash fund for postage expense should include: A debit to Postage Expense. A debit to Petty Cash. A debit to Cash. A debit to Cash Short and Over. A debit to Supplies. 15. When a petty cash fund is in use: Expenses paid with petty cash are recorded when the fund is replenished. Petty Cash is debited when funds are replenished. Petty Cash is credited when funds are replenished. Expenses are not recorded. Cash is debited when funds are replenished. 16. An analysis that explains any differences between the checking account balance according to the depositor’s records and the balance reported on the bank statement is a(n): Internal audit. Bank reconciliation. Bank audit. Trial reconciliation. Analysis of debits and credits. 17. The internal document prepared by a department manager that informs the purchasing department of its needs that lists the merchandise needed and requests that it be purchased is the Purchase requisition. Purchase order. Invoice. Receiving report. Invoice approval. 18. The document, also known as the check authorization, that is a checklist of steps necessary for approving an invoice for recording and payment is the Purchase requisition. Purchase order. Invoice. Receiving report. Invoice approval. 19. Reasons that internal controls are crucial to companies that convert from U.S. GAAP to IFRS include all of the following except: Possible misstatement of financial information. Possible fraud. Controls are significantly different across the globe. Ineffective communication of the change to investors, creditors, and others. Management’s inability to certify the effectiveness of the controls. 20. Effective cash management involves applying all of the following cash management principles except: Encourage collection of receivables, offer discounts for payments received early. Keep only necessary levels of assets. Plan expenditures. Retaining excess cash available for unexpected expenditures. Delay payment of liabilities until the last possible day. 21. Accounts receivable information for specific customers is important because it reveals: How much each customer has purchased on credit. How much each customer has paid. How much each customer still owes. The basis for sending bills to customers. All of the options are valid reasons. 22. Sellers allow customers to use credit cards: To avoid having to evaluate a customer’s credit standing for each sale. To lessen the risk of extending credit to customers who cannot pay. To speed up receipt of cash from the credit sale. To increase total sales volume. All of the options are reasons for credit card use. 23. The accounting principle that requires financial statements (including notes) to report all relevant information about the operations and financial condition of a company is called: Relevance. Full disclosure. Evaluation. Materiality. Matching. 24. The maturity date of a note receivable: Is the day of the credit sale. Is the day the note was signed. Is the day the note is due to be repaid. Is the date of the first payment. Is the last day of the month. 25. The buyer who purchases and takes ownership of another company’s accounts receivable is called a: Payer. Pledger. Factor. Payee. Pledgee. 26. The accounts receivable turnover is calculated by: 27. The matching principle prescribes: 28. The materiality constraint: 29. When the maker of a note honors a note this indicates that the note is: 30. All of the following statements regarding valuation of receivables under U.S. GAAP and IFRS are true except: “
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