ACCT test 3

Outstanding checks from a company's point of view

A check written by the company but not yet presented to the bank for payment

Having one employee prepare company checks and sign those checks is

A violation of proper segregation of duties

In the reconciliation of a bank statement, deposits in transit should be

Added to the unadjusted bank statement balance

What best describes the act of collusion

An intentional act of two or more employees to accomplish theft of company assets

If a company uses the allowance method to account for doubtful accounts when will the company's equity decrease

At the end of the accounting period when an adjusting entry for bad debts is recorded—- this was not on there but something about the allowance method was

Accurate description of the allowance for bad debts

Contra account

Cash collected and recorded by a company but not yet reflected in a bank statement are known as

Deposits in transit

According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and maintaining a system of internal control over the company's financial reporting

Management of the company

What is the distinguishing characteristic between accounts receivable and notes receivable

Notes receivable generally specify an interest rate and maturity date at which any interest and principle must be repaid

An internal control activity that separates responsibilities so that no one person handles all the tasks of a particular activity

Segregation of duties

If a company erroneously records a $500 deposit as $50 in its records, what might occur when reconciling its bank statement

The company must increase the balance per its records by $450

During 2012 the accounts receivable turnover ratio for upward company increased from 10 to 15 times per year. What is the most likely explanation for the change

The company's credit department has followed up with customers whose account balances are past due in order to generate quicker collections

If a company uses the direct write-off method of accounting for bad debts it will record

Bad debt expense only when an account is determined to be uncollected