ACCT test 3
Outstanding checks from a company's point of view
A check written by the company but not yet presented to the bank for payment
Having one employee prepare company checks and sign those checks is
A violation of proper segregation of duties
In the reconciliation of a bank statement, deposits in transit should be
Added to the unadjusted bank statement balance
What best describes the act of collusion
An intentional act of two or more employees to accomplish theft of company assets
If a company uses the allowance method to account for doubtful accounts when will the company's equity decrease
At the end of the accounting period when an adjusting entry for bad debts is recorded—- this was not on there but something about the allowance method was
Accurate description of the allowance for bad debts
Contra account
Cash collected and recorded by a company but not yet reflected in a bank statement are known as
Deposits in transit
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
Management of the company
What is the distinguishing characteristic between accounts receivable and notes receivable
Notes receivable generally specify an interest rate and maturity date at which any interest and principle must be repaid
An internal control activity that separates responsibilities so that no one person handles all the tasks of a particular activity
Segregation of duties
If a company erroneously records a $500 deposit as $50 in its records, what might occur when reconciling its bank statement
The company must increase the balance per its records by $450
During 2012 the accounts receivable turnover ratio for upward company increased from 10 to 15 times per year. What is the most likely explanation for the change
The company's credit department has followed up with customers whose account balances are past due in order to generate quicker collections
If a company uses the direct write-off method of accounting for bad debts it will record
Bad debt expense only when an account is determined to be uncollected
