ACCT 2100 EXAM 2

An element that is often present when there is fraud: 3 Times on the triangle of fraud

1. financial pressures 2. opportunity 3. rationalization all the above

Check register showing 1000. Bank statment service charge 10. Interest income 5. Customer pays 500.

1000 - 10 + 5 + 400 = 1495

B 1600 A 6400 S -7299 E 800

7200

Land 20,000 = 10% building 150,000 75% equipment 30,000 15% --------------------------- 200,000 = 150,000

75% of 150,000 is 112500 = new building value

Bank deposit on 3/31, does not show up on march statement

Add that to the bank balance

Outstanding check definition

An outstanding check is one that has been administered but not deposited.

a/r = 950 RE = 950 Sales =1000 Expense= 50 NI= 950

Answer = 950

If we are preparing a bank reconciliation, this focuses on an adjustment to the bank balance. This is something that the bank didn't know about and we did

Answer: deposit in transit or outstanding check Wrong: insufficient funds causing a check to bounce, interest on funds in our bank account, if one of customers pays to receivable to the bank directly ask them to deposit it to our account.

What is not a generally recognized control procedure

Answers: Reduced expenses, develop a great marketing plan, maximize profit Not the answers: Required employee to take vacations, credit checks and background criminal checks, separation of duties

When a customer cuts us a check for accounts receivable, we increase cash and reduce the receivable. Then the bank calls us and tells us that the customer's check bounced. What do we do

Decrease cash and increase recievable

What advantage comes from offering credit to customers

Increase sales

The amount of accounts receivable that we actually expect to ccollect

Net realizable value

Which of the following is not the purpose of an internal control system

Reduce expenses, develop a great marketing plan, maximize profit Not the answer: Safeguard assets, protect from employees taking

Which of the following is an internal procedure to safeguard assets

Timely deposits of cash receipts into a checking account. Separation of duties. Reconciliation of the bank statement. All of these.

expense recognition of an intangible asset

amortization

300 @ $1.2 400 @ $1.4

avg = $1.3

cost of equipment?

cost, discount, shipping = cost of equipment

FIFO = higher net income, higher ending inverntory LIFO= lower net income, lower ending inventory wt avg = avg net income avg ending inventory

fifo = lowest cost of goods sold lifo - highest cost of goods sold wt avg = avg cost of goods sold

at the end of the period, we want to estimate the amount of receivables we will not collect.

indicator s of allowance for doubtful accounts, the older a receivable is the less chance of collecting it, looking at history and using the relevant percentages, talking to similar companies about doubtful accounts. all of the above.

long-term operationalasset has no physical substance

intangible asset

What is the most effective way to reduce opportunities for ethical or criminal misconduct?

internal controls - any answer that includes something related to reducing opportunities for misconduct

23 which of the following is a long term asset

land, building, autos, equipment,

21 Which of the following is not an advantage of getting a credit car

late fees or interest rate