Financial chapter 4

1. A company had the following sales transactions. 1. Total debit card sales = $200,000 2. Total credit card sales = $400,000 3. Total cash sales = $800,000 4. Total check sales = $100,000 There is a charge of 2% on all credit card transactions. Calculate total CASH recorded for these sales

$1,492,000

A company's general ledger shows a cash balance of $5,000. Comparing the company's cash records with the monthly bank statement reveals several additional cash transactions such as checks outstanding of $2,840, NSF charges of $110, and interest earned of $15, bank error $89, and bank service charge $20. Calculate the correct balance of cash

$4,885

A company provides services on account during the current year totaling $400,000. By the end of the year, $350,000 of this amount was received (collected). In addition, $75,000 was received (collected) on account from customers for services provided in the prior year. Determine the amount of operating cash flows the company will report as received from customers in the current year.

50,000

1. The following information is about the cash balances for Mooner Sooner Inc., at the end of 20XC: Bank balance: $8,000Checks outstanding: $5,800Note collected by the bank: $1,500Service fee: $20Deposits outstanding: $4,000NSF check (bad check) returned for $300What is the correct cash balance for Mooner Sooner Inc.?

6,200

After preparing a bank reconciliation, the collection of a note by the bank on a company's behalf would be recorded with

A credit to notes receivable

Which of the following would not be recorded as a cash sale?

Customers who buy on account

McGregor Company allows customers to pay with credit cards. The credit card company charges McGregor 3% of the sale. When a customer uses a credit card to pay McGregor $100 for merchandise provided, McGregor would:

Debit service fee expense $3.00

True or False. The amount of cash reported in a company's balance sheet includes the balance of accounts receivable if cash collection is highly likely in the near future.

False, accounts receivable are a separately reported asset on the balance sheet.

True or False. A company's cash is reported in two financial statements - income statement and statement of cash flows

False, cash is reported on the balance sheet and statement of cash flows (not the income statement).

True or False. Interest earned on a bank account is an example of a cash transaction recorded by the company and then later by the bank after notification.

False, interest earned is initially recorded by the ban

True or False. Separation of duties refers to auditors not being allowed to perform both audit and non-audit services for the same client.

False, separation of duties is where individuals who have physical responsibility for assets should not also have access to accounting records.

True or False. The Sarbanes-Oxley Act is also known as Generally Accepted Accounting Principles.

False, the Sarbanes-Oxley Act is also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly referred to as SOX.

1. Consider the following transactions. For each, indicate the type of cash flow involved based on the classification in the statement of cash flows. If a transaction does not involve cash, write "NO CASH"

O,F,NC,NC,F,O,NC,O

1. A company's beginning cash balance was $14,800 and they had the following transactions during the year: 1. Pay for rent for the next two years, $8,000. 2. Purchase office supplies on account, $2,400. 3. Purchase equipment, paying $12,000 cash and issuing a note payable for $4,000. 4. Borrow from the bank, $6,000. 5. Pay employee salaries, $7,200. 6. Pay $2,000 on account related to transaction 2 above. 7. Pay dividends to stockholders, $2,800. 8. Sell land for $10,000 that was purchased in a prior year for $7,500. 9. Collect cash from customers for services provided, $25,700. Calculate cash flows from operating activities, investing activities, and financing activities

O=8,500 I=(2000) F=3200

1. What is the link between the balance sheet and the statement of cash flows?

The balance sheet reports the final balance of cash at the end of the reporting period. The statement of cash flows reports inflows and outflows of cash during the reporting period. The beginning balance of cash plus net cash flows reported in the statement of cash flows equals the ending balance of cash reported in the balance sheet.

True or False. A bank reconciliation matches the balance of cash in the bank account with the balance of cash in the company's own records.

True

True or False. Checks outstanding are checks the company has written that have not been subtracted from the bank's record of the company's balance (checks that have not cleared the bank).

True

True or False. Common types of financial statement fraud include creating fictitious revenue from a phantom customer, improperly valuing assets, and mismatching revenues and expenses.

True

True or False. Only transactions involving cash affect a company's cash flows

True

True or False. The amount of cash reported in a company's balance sheet includes currency, coins, and balances in savings and checking accounts, as well as items acceptable for deposit in these accounts, such as checks received from customers

True

True or False. The control environment refers to the overall top-to-bottom attitude of the company with respect to internal controls.

True

True or False. Whether a customer uses cash, a check, or a debit/credit card to make a purchase, the company records the transaction as a cash sale.

True

Which employees are responsible for a company's effective internal controls?

all employees