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              31.Cash equivalents are highly liquid investments that can be converted into a specific amount of cash.               32.Cash equivalents include money market accounts, commercial paper, and U.S. treasury bills held for ninety days or less.               33.Cash restricted in use should be separately reported on the balance sheet.               34.Sound internal control.
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Ex. 229 The cash records of Landis Company show the following four situations. 1.The June 30 bank reconciliation indicated that deposits in transit total $1,080. During July the general ledger account Cash shows deposits of $23,620, but the bank statement indicates that only $23,400 in deposits were received during the month. 2.The June.
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Ex. 222 The cash balance per books for Wellmeyer Company on November 30, 2012, is $10,740.93. The following checks and receipts were recorded for the month of December 2012:            Checks                 Receipts      No. Amount No. Amount   Amount Date 17$372.9622$   578.84$   843.8612/5 18780.62231,687.50941.5412/21 19157.0024 921.30808.5812/27 20587.5025246.03967.0012/31 21234.15 In addition, the bank statement for the month of December is presented below: Balance .
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              80.Which of the following would not be included in the definition of cash? a.Money on deposit in a bank. b.Coins. c.NSF checks. d.Petty cash.               81.At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation.
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Ex. 234 The management of Morton Company estimates that credit sales for August, September, October, and November will be $180,000, $210,000, $230,000, and $160,000, respectively. Experience has shown that collections are made as follows: In month of sale25% In first month after sale60% In second month after sale10% Instructions Determine the collections from customers in October.
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180.The following credit sales are budgeted by Milford Company: May              $238,000 June              350,000 July              490,000 August              420,000 The company’s past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The.
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TRUE-FALSE STATEMENTS               1.The most important element of the fraud triangle is rationalization.               2.Employees sometimes commit fraud because of personal financial problems caused by too much debt.               3.The safeguarding of assets is an objective of a company's system of internal control.               4.When one individual is responsible for all related activities, the.
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140.What causes the balance on the bank statement to differ from the cash balance in the general ledger? a.Time lags. b.Errors by the bank. c.Errors by the company. d.All of the above. 141.Of the following employees, who should prepare the bank reconciliation? a.Anne, the bookkeeper, because she is aware of all transactions that affected cash. b.Michael, the.
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Ex. *237 The petty cash fund of $200 for Tomkins Company appeared as follows on December 31, 2012 Cash$55.60 Petty cash vouchers Freight-in$58.40 Postage40.00 Balloons for a special occasion17.00 Meals25.00 Instructions 1.Briefly describe when the petty cash fund should be replenished. Because there is cash on hand, is there a need to replenish the fund at year end on.
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*Ex. 217 Grayson Company sells many products. Gizmo is one of its popular items. Below is an analysis of the inventory purchases and sales of Gizmo for the month of March. Grayson Company uses the perpetual inventory system.           Purchases           Sales         UnitsUnit CostUnitsSelling Price/Unit 3/1Beginning inventory100$55 3/3Purchase60$60 3/4Sales60$120 3/10Purchase200$65 3/16Sales90$130 3/19Sales80$130 3/25Sales50$130 3/30Purchase40$75 Instructions (a)Using the FIFO assumption, calculate the amount charged to cost.
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BRIEF Exercises Be. 201 Below are descriptions of internal control problems. In the space to the left of each item, enter the code letter of the one best internal control principle that is related to the problem described. Internal Control Principles A.Establishment of responsibility B.Segregation of duties C.Physical control devices D.Documentation procedures E.Independent internal verification F.Human resource controls ____              1.The.
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Ex. 220 Grier Food Store used the following information in recording its bank reconciliation for the month of April. Balance per books April 30$    905 Balance per bank statement April 30$11,300 (1)Checks written in April but still outstanding $7,300. (2)Checks written in March but still outstanding $2,800. (3)Deposits of April 30 not yet recorded by.
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100.Which one of the following would not cause a bank to debit a depositor's account? a.Bank service charge. b.Collection of a note receivable. c.Wiring of funds to other locations. d.Checks marked NSF. 101.A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account that is a.a contra asset.
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              11.It is unlikely that a company would want to bond its employees who handle cash or inventory.               12.An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other.               13.A good system of.
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              90.Which of the following is not a suggested procedure to establish internal control over cash disbursements? a.Anyone can sign the checks. b.Different individuals approve and make the payments. c.Blank checks are stored with limited access. d.The bank statement is reconciled monthly.               91.The use of prenumbered checks is an example of a.documentation procedures. b.independent internal verification. c.establishment.
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170.The following information was taken from Hobson Company cash budget for the month of June Beginning cash balance              $120,000 Cash receipts              116,000 Cash disbursements              136,000 If the company has a policy of maintaining end-of-the-month cash balance of $100,000, the amount the company would have to borrow is a.$40,000. b.$20,000. c.$0 d.$60,000. 171.The following information was taken from Molina Company.
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Ex. 214 Using the following information, prepare a bank reconciliation for Hintz Company for July 31, 2012. The bank statement balance is $3,506. The cash account balance is $4,130 Outstanding checks totaled $1,085. Deposits in transit are $1,670. The bank service charge is $30. A check for $98 for supplies was recorded as $89 in the ledger. Ex..
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11.LIFO can be used a.under neither GAAP nor IFRS. b.under IFRS but not GAAP. c.under GAAP but not IFRS. d.under both GAAP and IFRS. 12.The requirement that companies use the same cost flow assumption of all goods of a similar nature is found in GAAPIFRS a.YesNo b.YesYes c.NoNo d.NoYes 13.IFRS defines market for lower-of-cost-or market as a.net realizable value. b.estimated selling price in.
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COMPLETION STATEMENTS               224.In a manufacturing company, goods that are ready to be sold to customers are referred to as ________________, whereas in a merchandising company they are generally referred to as _______________.               225.In a manufacturing company, there are three categories of inventory: they are _____________________, _________________, and _________________.               226.When the.
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S-A E 242 Glenda Carson is studying for the next accounting midterm examination. What should Glenda know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method? S-A E 243 What is the LIFO reserve? What are the consequences of ignoring a.
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130.Nilson Company gathered the following reconciling information in preparing its August bank reconciliation: Cash balance per books, 8/31              $7,000 Deposits in transit              300 Notes receivable and interest collected by bank              1,700 Bank charge for check printing              40 Outstanding checks              4,000 NSF check              340 The adjusted cash balance per books on August 31 is a.$8,320. b.$8,020. c.$4,620. d.$4,920. 131.Karlin Company gathered the following.
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150.If a check correctly written and paid by the bank for $471 is incorrectly recorded on the company’s books for $417, the appropriate treatment on the bank reconciliation would be to a.add $54 to the book’s balance. b.subtract $54 from the book’s balance. c.deduct $54 from the bank’s balance. d.deduct $471 from the book’s.
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Ex. 216 Using the following information, prepare a bank reconciliation for Hammond Company for June 30, 2012. a.The bank statement balance is $7,650. b.The cash account balance is $6,422 c.Outstanding checks totaled $1,450. d.Deposits in transit are $900. e.The bank service charge is $22. f.Collection of note by bank, $700. Ex. 217 The Hartman Boat Company's bank statement for.
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*Ex. 219 Carter Company reported these income statement data for a 2-year period.     2012      2011  Sales $250,000 $210,000 Beginning inventory 40,000 30,000 Cost of goods purchased   202,000   173,000 Cost of goods available for sale 242,000 203,000 Ending inventory     50,000     40,000 Cost of goods sold   192,000   163,000 Gross profit $  58,000 $  47,000 Carter Company uses a periodic inventory system. The inventories at January 1, 2011, and December.
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120.For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation? a.Check for $43 recorded as $34. b.Deposit of $500 recorded by bank as $50. c.A returned $200 check recorded by bank as $20. d.Check for $35 recorded as $53. 121.For which of the following.
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Ex. 226 Listed below are items that may be useful in preparing the March 2010, bank reconciliation for the Carrinton Machine Works. Using the code letters below, insert in the space before each item the letter where the amount would be located or otherwise treated in the bank reconciliation process. CodeLocated or Treated AAdd.
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110.Whicch of the following would not be subtracted from the balance per books on a bank reconciliation? a.Outstanding checks. b.NSF checks. c.Check printing charge. d.Service charges.               111.Which of the following would be deducted from the balance per bank on a bank reconciliation? a.Outstanding checks. b.Deposits in transit. c.Notes collected by the bank. d.Service charges.               112.Which of the following.
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Ex. 218 Plato Company reports the following for the month of June.   Date  Explanation Units Unit Cost Total Cost June   1 Inventory 225 $5 $1,125         12 Purchase 525 6   3,150         23 Purchase 750 7   5,250         30 Inventory 300 Instructions (a)Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 570.
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MULTIPLE CHOICE QUESTIONS               40.Which of the following is not one of the main factors that contribute to fraudulent activity? a.Opportunity. b.Incompatible duties. c.Financial pressure. d.Rationalization.               41.All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act of 2002 except: a.independent outside auditors must attest to the level of internal control. b.companies must.
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IFRS QUESTIONS 1.The requirements for accounting for and reporting of inventories under IFRS, compared to GAAP, tend to be more a.detailed. b.rules-based. c.principles-based. d.full of disclosure requirements. 2.The major IFRS requirements related to accounting for and reporting inventories are a.the same as GAAP. b.the same as GAAP with a couple of exceptions. c.completely different fom GAAP. d.not comparable to GAAP. 3.Inventory.
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*Ex. 221 Condensed income statements for Swift Corporation are shown below for two years. 20112012 Sales $75,000$90,000 Cost of Goods Sold 45,000 54,000 Gross Profit $30,000$36,000 Operating Expense 15,000 15,000 Net Income$15,000$21,000 Compute the corrected net income for 2011 and 2012 assuming that the inventory as of the end of 2011 was mistakenly.
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              21.For efficiency of operations and better control over cash, a company should maintain only one bank account.               22.Checks received in the mail should be immediately stamped "NSF" to prevent unauthorized cashing of the check.               23.The treasurer should prepare and sign a check only after authorization to issue a check.
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              70.If employees are bonded a.it means that they are not allowed to handle cash. b.they have worked for the company for at least 10 years. c.they have been insured against misappropriation of assets. d.it is impossible for them to steal from the company.               71.In a small business, the lack of certain separations of.
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Ex. 220 For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code:O=  item is overstated U=  item is understated NA=  item is not affected Items Stockholders’Cost ofNet EventsAssetsEquityGoods SoldIncome 1.The ending inventory in.
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Ex. 231 Holcomb Company expects to have a cash balance of $43,000 on January 1, 2012. These are the relevant monthly budget data for the first two months of 2010. 1. Collections from customers: January $85,000, February $132,000 2. Payments to suppliers: January $40,000, February $55,000 3. Wages: January $34,000, February $40,000. Wages are.
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MATCHING 235.Match the items below by entering the appropriate code letter in the space provided. A.Merchandise InventoryF.First-in, first-out (FIFO) method B.Work in processG.Last-in, first-out (LIFO) method C.FOB shipping pointH.Average cost method D.FOB destinationI.LIFO reserve E.Specific identification methodJ.Inventory turnover ratio ____              1.The difference between inventory reported using LIFO and inventory using FIFO. ____              2.Tracks the actual physical flow for.
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160.Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management? a.Increasing the speed of receivables collection. b.Planning the timing of major expenditures. c.Keeping inventory levels low. d.Delaying the payment of liabilities. 161.Management.
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Ex.  233 Palmer Company has budgeted sales revenues as follows:    June    July    August Credit sales$35,000$26,000$28,000 Cash sales  18,000  51,000  39,000 Total sales$53,000$77,000$67,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on.
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SHORT-ANSWER ESSAY QUESTIONS S-A E 236 The periodic and the perpetual inventory systems are two methods that companies use to account for inventories. Briefly describe the major features of each system and explain why a physical inventory is necessary under both systems. S-A E 237 What is the primary basis of accounting for inventories?.
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              60.The principle of establishing responsibility does not include a.one person being responsible for one task. b.authorization of transactions. c.independent internal verification. d.approval of transactions.               61.The control principle related to not having the same person authorize and pay for goods is known as a.establishment of responsibility. b.independent internal verification. c.separation of duties. d.rotation of duties.               62.Two individuals at.
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Be. 206 Identify which of the following reconciling items would require an adjusting entry to be made by Costello Company. 1. Deposits in transit totaled $2,000. 2. A check written to the company for $350 by Grover Company was returned NSF. 3. The bank charged the company $46 for printing checks. 4. Outstanding checks totaled.
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*190.The entry to replenish a petty cash fund includes a credit to a.Petty Cash. b.Cash. c.Freight-in. d.Postage Expense.               *191.A debit balance in Cash Over and Short is reported as a a.contra asset. b.miscellaneous asset. c.miscellaneous expense. d.miscellaneous revenue. *192.A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account would.
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              50.Under the concept of establishment of responsibility, how many people should have the ultimate responsibility? a.Everyone in the organization. b.An individual and his/her supervisor. c.Only one individual. d.The CEO.               51.Internal controls are not designed to safeguard assets from a.natural disasters. b.employee theft. c.robbery. d.unauthorized use.               52.Having one person responsible for the related activities of ordering merchandise, receiving.
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