Cornett Exam 3

the buyer

At the end of the year inventory count., if goos in transit are shipped FOB shipping point, they should be included in the inventory of the?

Safeguarding

requires physical protection of of the asset through vaults etc

adequate documents and records

Company policy requires receiving reports to be made fore the deliveries by suppliers

Cost of goods sold will be overstated and Net Income will be understated

If a company understates its inventory at the end of the period, what are the effects on cost of goods sold and net income for the current year?

both the balance sheet and the income statement are affected

If the amount assigned to ending inventory is incorrect, then

Assets and liabilities increase

What are the effects on a retail store's accounting equation when it records the purchase of merchandise on account, assuming the use of a perpetual inventory system

Lower of Cost or Market

When the market value of inventory items has declined below their cost, which method would be the most appropriate in complying with GAAP?

Management of the company

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?

segregation of duties

allowing only certain employees to order goods and services for the company is an example of what control procedure

checks on recorded amounts

cash deposits are reconciled with cash register records at the end of every day

Control environment

collection of environmental factors that influence the effectiveness of control procedures

adjusted company balance

company cash balance + bank additions - bank deductions

Elements of internal control

control environment, risk assessment, control activities, information and communication, and monitoring

deposits in transit

deposits made by a company but not yet reflected in a bank statement are called

added to the adjustment bank statement balance

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

maintain supporting documentation for all payments made from the pert cash fund

it is important that the petty cash custodian

Control activities

the policies and procedures top management establishes to help insure that objectives are met

accounting controls

these are the policies and procedures that cover the identification, measurement, recording, and communication of economic information

bank reconciliation

when a bank recognizes something before a business or a business recognizes something before the bank

Rising Prices

Pollet Company started a business at the beginning of 2012. The company selected FIFO for its inventory costing method. Pollen's profits will be maximized in 2012 in a period of:

the cost of goods available for sales less ending inventory

The cost of goods sold is equal to

internal control structure

This includes the accounting system, all policies and procedures of the business, and the environment in which they operate

bank service charges

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records?

NSF check

a check returned by a bank because the issuer's cash account balance could not cover the check is called a

checks on recorded amounts

a physical count of inventory is required even though the company uses the perpetual inventory system. This is an example of which of the following internal control activities?

cash over and short

when amount deposited does not equal the total of cash register tapes. common source are errors in making change for cash sales

the seller

At the year end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of the

Segregation of duties

Company policy prevents accountants from handling cash

reducing the cost of hiring

Which of the following is not generally an internal control activity?

adjustment bank balance

bank balance + deposits in transit - outstanding checks

Cash controls

bank reconciliation, cash over and short, and petty cash funds

Safeguards over assets and records

every evening, a jewelry store removes all items of merchandise valued at over $100 from its display.

effective personnel policies

every new employee is required to spend two days in trying courses to learn company policies.

a violation of proper segregation of duties

having one employee prepare company checks and sign those checks relates to which internal control activity?

cash over and short

the account which records differences between amounts of cash deposited and amounts from the cash register tapes is called

par of the cost of net purchases

transportation-in is