accSTUDY

What is one of the following situations reflects a weak internal control system?

A single employee is responsible for collecting and recording of cash.

Rent revenue is recorded for amounts owed by a tenant but not yet paid. What increases?

Adjustments will increase assets

What are the effects on the accounting equation when a company makes the adjustment to record bad debt expense using the allowance method?

Assets and owners' equity decrease.

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Assets decrease and stockholders' equity decreases.

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Assets increase and stockholders' equity increases

If a company uses the allowance method to account for bad debts, when will the company's owners' equity decrease?

At the end of the accounting period when an adjusting entry for bad debts is recorded

How would customer's NSF checks be dealt with in a bank reconciliation?

Deducted from company's book balance

the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset.

Depreciation

Which one of the following items would be added to the balance per books in a bank reconciliation?

Interest on customer note

Which one of the following is not a generally recognized internal control procedure?

Internal review by the audit committee of the board of directors

Which internal control procedure is followed when storage areas are secured with limited access?

Safeguarding assets and records

What is needed to calculate depreciation on plant and equipment?

The estimated life of the asset, its acquisition cost, and its estimated residual value

How would interest earned on a checking account be dealt with in a bank reconciliation?

added to company's book balance

Assets classified as property, plant, and equipment are reported at

each asset's original cost less depreciation since acquisition

Expenses originate from

using an asset or recognizing liabilities