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MULTIPLE CHOICE 1.The document that captures the total amount of time that individual workers spend on each production job is called a a.time card b.job ticket c.personnel action form d.labor distribution form 2.An important reconciliation in the payroll system is a.general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable b.personnel.
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8.The clerk who opens the mail routinely steals remittances. Describe a specific internal control procedure that would prevent or detect this fraud. 9.A customer payment of $247 was correctly posted in the general ledger but was recorded as $274 in the customer’s account receivable. Describe a specific internal control procedure that.
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21.The personnel action form provides authorization control by a.preventing paychecks for terminated employees b.verifying pay rates for employees c.informing payroll of new hires d.all of the above 22.Accounting records that provide the audit trail for payroll include all of the following except a.time cards b.job tickets c.payroll register d.accounts payable register 23.Personnel actions forms are used to do all of.
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36.Business ethics involves a.how managers decide on what is right in conducting business b.how managers achieve what they decide is right for the business c.both a and b d.none of the above 37.All of the following are conditions for fraud except a.false representation b.injury or loss c.intent d.material reliance 38.The four principal types of fraud include all of the following.
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11.A three way match involves a purchase order, a purchase requisition, and an invoice. 12.Authorization for a cash disbursement occurs in the cash disbursement department upon receipt of the supplier’s invoice. 13.An automated cash disbursements system can yield better cash management since payments are made on time. 14.Permitting warehouse staff to maintain the.
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TRUE/FALSE 1.The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to those who share the risks. 2.The ethical principle of informed consent suggests that the decision should be implemented so as to minimize all of the risks and to avoid any unnecessary risks. 3.Employees should be.
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TRUE/FALSE 1.Time cards are used by cost accounting to allocate direct labor charges to work in process. 2.The personnel department authorizes changes in employee pay rates. 3.Most payroll systems for mid-size firms use real-time data processing. 4.To improve internal control, paychecks should be distributed by the employee's supervisor. 5.Employee paychecks should be drawn against a.
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APPENDIX QUESTION 22.Contrast procedures for preparing backups in a sequential file environment and direct access file environment. 23.Explain how a hashing structure works and why it is quicker than using an index. Give an example. If it so much faster, why isn't it used exclusively? 24.Explain the following three types of pointers: physical.
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21.The cash disbursement clerk performs all of the following tasks except a.reviews the supporting documents for completeness and accuracy b.prepares checks c.signs checks d.marks the supporting documents paid 22.When a cash disbursement in payment of an accounts payable is recorded a.the liability account is increased b.the income statement is changed c.the cash account is unchanged d.the liability account is.
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5.According to common law, there are five conditions that must be present for an act to be deemed fraudulent. Name and explain each. 6.Management fraud is regarded as more serious than employee fraud. Three special characteristics have been discussed for management fraud. What are they? Explain. 7.Four principal types of corruption are.
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11.Customers should be billed for backorders when a.the customer purchase order is received b.the backordered goods are shipped c.the original goods are shipped d.customers are not billed for backorders because a backorder is a lost sale 12.Usually specific authorization is required for all of the following except a.sales on account which exceed the credit limit b.sales of.
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11.Where does the responsibility lie for reconciling the labor distribution summary and the payroll disbursement voucher? a.cash disbursements b.cost accounting c.personnel d.general ledger 12.Which of the following statements is not true? a.Routine payroll processing begins with the submission of time cards. b.Payroll clerks must verify the hours reported on the time cards. c.Payroll reconciles personnel action forms with.
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ESSAY 1.Differentiate between a purchase requisition and a purchase order. 2.What general ledger journal entries are triggered by the purchases system? From which departments do these journal entries arise? 3.The Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it.
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4.Why should employee paychecks be drawn against a special checking account? 5.Why should employees clocking on and off the job be supervised. 6.What is a personnel action form? 7.In a manufacturing firm, employees typically fill out two different documents regarding their time worked. What are they? Why are there two? 8.List two types of.
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9.Supervision is extremely important in the receiving department. Two main reasons were given. What were they? Why are these important? 10.Why do companies devote resources to a purchasing department? Could not individual departments make their own purchases more efficiently? 11.What are the key authorization issues in purchasing and cash disbursements? 12.What are the.
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18.What function does the receiving department serve in the revenue cycle? 19.What are the three rules that ensure that no single employee or department processes a transaction in its entirety. 20.What is automation and why is it used? 21.What is the objective of re-engineering? 22.What are the key segregation of duties related to computer.
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16.A physical inventory count is an example of a a.preventive control b.detective control c.corrective control d.feedforward control 17.The bank reconciliation uncovered a transposition error in the books. This is an example of a a.preventive control b.detective control c.corrective control d.none of the above 18.In balancing the risks and benefits that are part of every ethical decision, managers receive guidance from.
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31.The data processing method that can shorten the cash cycle is a.batch, sequential file processing b.batch, direct access file processing c.real-time file processing d.none of the above 32.Which of the following is not a risk exposure in a microcomputer accounting system? a.reliance on paper documentation is increased b.functions that are segregated in a manual environment may be.
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5.What role does each of the following departments play in the sales order processing subsystem: sales, credit, and shipping? Be complete. 6.With regard to segregation of duties, rule one is that transaction authorization and transaction processing should be separated. What does this require in the revenue cycle? 7.With regard to segregation of.
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TRUE/FALSE 1.Purchasing decisions are authorized by inventory control. 2.The blind copy of the purchase order that goes to the receiving department contains no item descriptions. 3.Firms that wish to improve control over cash disbursements use a voucher system. 4.In a voucher system, the sum of all unpaid vouchers in the voucher register equals the.
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4.What are the five internal control components described in the SAS 78 / COSO framework 5.What are management responsibilities under section 302 and 404? 6.Identify to indicate whether each procedure is a preventive or detective control. a.authorizing a credit salePreventiveDetective b.preparing a bank reconciliationPreventiveDetective c.locking the warehousePreventiveDetective d.preparing a trial balancePreventiveDetective e.counting inventoryPreventiveDetective Use the internal control procedures.
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26.The decision to extend credit beyond the normal credit limit is an example of a.independent verification b.authorization c.segregation of functions d.supervision 27.When duties cannot be segregated, the most important internal control procedure is a.supervision b.independent verification c.access controls d.accounting records 28.An accounting system that maintains an adequate audit trail is implementing which internal control procedure? a.access controls b.segregation of functions c.independent verification d.accounting records 29.Employee.
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12.Describe an internal control that would prevent the payment of insurance premiums on an automobile that is no longer owned by the company. 13.Describe an internal control that would prevent the charging of depreciation expense to the maintenance department for a sweeper that is now located in and used by the.
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11.The external auditor is responsible for establishing and maintaining the internal control system. 12.Segregation of duties is an example of an internal control procedure. 13.Controls in a computer-based information system are identical to controls in a manual system. 14.Preventive controls are passive techniques designed to reduce fraud. 15.Ethical issues and legal issues are essentially.
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31.Firms can expect that proper use of a valid vendor file will result in all of the following benefits except a.purchasing agents will be discouraged from improperly ordering inventory from related parties b.purchases from fictitious vendors will be detected c.the most competitive price will be obtained d.the risk of purchasing agents receiving kickbacks and.
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ESSAY 1.When Clipper Mail Order Co. receives telephone and fax orders, the billing department prepares an invoice. The invoice is mailed immediately. A copy of the invoice serves as a shipping notice. The shipping department removes inventory from the warehouse and prepares the shipment. When the order is complete, the goods.
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31.Depreciation a.assures that assets are reported at fair market value b.is discretionary for many firms c.allocates the cost of an asset over its useful life d.is the responsibility of the department using the asset 32.The Fixed Asset System is similar to the expenditure cycle except a.fixed asset transactions are non-routine and require special authorization and controls b.fixed.
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11.Which document is least important in determining the financial value of a purchase? a.purchase requisition b.purchase order c.receiving report d.supplier’s invoice 12.In a merchandising firm, authorization for the payment of inventory is the responsibility of a.inventory control b.purchasing c.accounts payable d.cash disbursements 13.In a merchandising firm, authorization for the purchase of inventory is the responsibility of a.inventory control b.purchasing c.accounts payable d.cash disbursements 14.When purchasing.
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10.What type of error or fraud might happen if suppliers’ invoices are not compared to purchase orders or to receiving reports before payment? 11.What internal accounting control(s) would be the most effective in preventing a storekeeper from taking inventory home at night? When shortages become apparent, he claims the goods were.
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21.Internal controls for handling sales returns and allowances do not include a.computing bad debt expense using the percentage of credit sales b.verifying that the goods have been returned c.authorizing the credit memo by management d.using the original sales invoice to prepare the sales returns slip 22.The printer ran out of preprinted sales invoice forms and.
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21.While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies. 22.The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors. 23.Section 404 requires that corporate management (including the CEO).
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18.What are the key points of the “Issuer and Management Disclosure” of the Sarbanes-Oxley Act? 19.In this age of high technology and computer based information systems, why are accountants concerned about physical (human) controls? 20.How has the Sarbanes-Oxley Act had a significant impact on corporate governance? 21.Discuss the non accounting services that external.
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11.Ideally, payroll checks are written on a special bank account used only for payroll. 12.The supervisor is the best person to determine the existence of a “phantom employee” and should distribute paychecks. 13.Payroll processing can be automated easily because accounting for payroll is very simple. 14.Timekeeping is part of the personnel function. 15.Fixed asset.
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MULTIPLE CHOICE 1.Which item does not describe a world-class company? a.the goal of a world-class company is to delight its customers b.customers in a world-class company are external departments only c.world-class companies work in cross-functional teams d.a world-class company has a flat organizational structure 2.Which subsystem is not a part of the production system? a.directing the movement.
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6.One characteristic of employee fraud is that the fraud a.is perpetrated at a level to which internal controls do not apply b.involves misstating financial statements c.involves the direct conversion of cash or other assets to the employee’s personal benefit d.involves misappropriating assets in a series of complex transactions involving third parties 7.Forces which may permit.
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MULTIPLE CHOICE 1.The purpose of the purchase requisition is to a.order goods from vendors b.record receipt of goods from vendors c.authorize the purchasing department to order goods d.bill for goods delivered 2.The purpose of the receiving report is to a.order goods from vendors b.record receipt of goods from vendors c.authorize the purchasing department to order goods d.bill for goods delivered 3.All.
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ESSAY 1.The text describes six internal control activities. List four of them and provide a specific example of each one. 2.Contrast management fraud with employee fraud. 3.Discuss the importance of the Foreign Corrupt Practices Act of 1977 to the accounting profession. As a result of the Foreign Corrupt Practices Act of 1977, management devotes.
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11.A written customer purchase order is required to trigger the sales order system. 12.Inventory control has physical custody of inventory. 13.The principal source document in the sales order system is the sales order. 14.Sales orders should be prenumbered documents. 15.Integrated accounting systems automatically transfer data between modules. 16.If a customer submits a written purchase order,.
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5.Before authorizing payment for goods purchased, accounts payable reconciles three documents related to the purchase. Name them and explain what each indicates. What control area of SAS 78 is being addressed? 6.What are the steps taken in the cash disbursement system? 7.How does the procedure for determining inventory requirements differ between a.
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11.An operating characteristic of modern manufacturing firms is that labor is replaced with capital so that the firm can be more efficient and therefore more competitive. 12.Computer Integrated Manufacturing focuses on reducing the complexity of the physical manufacturing layout of the shop floor. 13.The only objective of the Just-In-Time philosophy is to.
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TRUE/FALSE 1.The philosophy of customer satisfaction permeates the world-class firm. 2.Reports generated by the cost accounting system include performance reports and budget reports. 3.The cost accounting system authorizes the release of raw materials into production. 4.Batch processing creates a homogeneous product through a continuous series of standard procedures. 5.The bill of materials specifies the types.
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12.Not permitting the computer programmer to enter the computer room is an example of _______________________________. 13.Sequentially numbering all sales invoices is an example of __________________________. 14.What are the five conditions necessary for an act to be considered fraudulent? 15.What is the objective of SAS 99? 16.Distinguish between exposure and risk. 17.Explain the characteristics of management.
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SHORT ANSWER 1.Which internally generated document should be compared to the supplier’s invoice to verify the price of an item? 2.Which internally generated document should be compared to the supplier’s invoice to verify the quantity being billed for? 3.List specific jobs that should be segregated in the purchases processing system. 4.List specific jobs that.
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TRUE/FALSE 1.The packing slip is also known as the shipping notice. 2.The bill of lading is a legal contract between the buyer and the seller. 3.Another name for the stock release form is the picking ticket. 4.Warehouse stock records are the formal accounting records for inventory. 5.The purpose of the invoice is to bill the.
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MULTIPLE CHOICE 1.The revenue cycle consists of a.one subsystem–order entry b.two subsystems–sales order processing and cash receipts c.two subsystems–order entry and inventory control d.three subsystems–sales order processing, credit authorization, and cash receipts 2.The reconciliation that occurs in the shipping department is intended to ensure that a.credit has been approved b.the customer is billed for the exact quantity shipped c.the.
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4.The Baccus Corp. manufactures medical equipment. This is a capital intensive industry and investments in fixed assets exceed $5 million a year. The minimum cost for production equipment is $75,000. When supervisors want new production machinery, they contact the plant manager. The plant manager approves or denies the request based.
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11.Since all fraud involves some form of financial misstatement, how is Fraudulent Statement fraud different? 12.Explain the problems associated with lack of auditor independence. 13.Explain the problems associated with lack of director independence 14.Explain the problems associated with Questionable Executive Compensation Schemes 15.Explain the problems associated with inappropriate accounting practices. 16.Explain the purpose of the.
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ESSAY 1.The Golf Club Company makes custom golf clubs. The manufacturing supervisor interviews people who have specialized manufacturing skills, and he informs payroll when an employee is hired. The employees use a time clock to record the hours they work. The employees are also required to keep a record of the.
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SHORT ANSWER 1.Distinguish between a packing slip, shipping notice, and a bill of lading. 2.State two specific functions or jobs that should be segregated in the sales processing system. 3.State two specific functions or jobs that should be segregated in the cash receipts system. 4.List two points in the sales processing system when authorization.
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