Accounting 1: Exam 2

the account Cash Overage is which type of account

A miscellaneous revenue account

which of the following is a service company A. general motors B. H&R block C. the gap D. pro

B.

Assigning sequential numbers to cash sales, so that the accounting staff can ensure that every sale has been recorded is required by the internal control principle of:

documenting procedures

Cashiers at a supermarket have to talk to a manager before approving price changes at the register. Which internal control principle is being followed?

establish responsibilities

An attempt to deceive others for personal gain is known as:

fraud

all other things being equal a company is better off when its receivable turnover ratio is

high and its days to collect measure is low

Fraud Triangle

incentive, opportunity, rationalization

comparing the cash in the register with the cash count sheet is required by the internal control principle of

independently verifying

perpetual inventory system

inventory system that maintains a continual record of inventory purchased and sold

restrict access

limiting access to only those who need it to fulfill assigned responsibilities

Intel makes microchips from raw materials acquired from suppliers. Intel is a:

manufacturer

carrying insufficient quantities of inventory on hand

may result in lost sales

the receivable turnover ratio

measures how many times, on average, the process of selling and collecting is repeated during the period

Gross profit equals

net sales - cost of goods sold

days to collet measures

number of days it takes to collect accounts receivable

document procedures

prepare documents to show activities that have occurred

an account used in periodic inventory system that is not used in the perpetual inventory system is

purchases

which method will result in the same cost of goods sold amount whether it is computed using the periodic inventory system or the perpetual inventory system.

FIFO

periodic inventory system

Inventory system that periodically adjusts for purchases and sales of inventory at the end of the reporting period based on a physical count of inventory on hand

primary goals of inventory management

Maintain a sufficient quantity of inventory to meet customers' needs Ensure quality meets customers' expectations and company standards Minimize the costs of acquiring and carrying the inventory

Intrest Receivable

asset

establish responsibility

assign each task to only one employee

an example of the internal control principle of establishing responsibility is

assigning each cash drawer to only one person

independently verify

check others work

to make it easier for financial statement users to compare account balances from one period to the next, companies report

consistent financial statements

A strong system or internal ______ reduces the ______ to commit fraud

controls opportunity

categories of employee fraud

corruption, asset misappropriation, financial statement fraud

Assigning responsibility

so that a employee can't make a mistake or commit a dishonest act without being discovered

a company buys footwear and clothing from manufactures, which it resells to discount stores in a large urban area. This company is an example of

wholesale merchandising company