Southern New Hampshire University
Midterm Exam 1) Would it be okay if your AR Clerk, who handles receipts, also reconciles the bank statement at the end of the month? Why or why not? No, this would not be a good practice at all. While this commonplace in small business, there needs to be a separation of duties to minimize the risk of fraudulent activity. When there is a segregation of duties in place, this helps ensure that proper internal controls are in place as well.
following is not an external environment factor?
a. Economic b. Technical C. Social d. Tone at the Top
3) Name two methods that are commonly used to speed up the collection of receivables. A. Automated Clearinghouse (ACH) Payments -- Payments received are processed by the bank within 1-2 business days and funds are posted to the accounts based on the established funds availability scheduled published by the bank. This also helps eliminate receiving delayed payments due to mail carrier issues and reduces the possibility of a checking bouncing. B. Discounts Offerings -- Early Payment of Paid in Full -- When consumers are offered a discount for paying someone either early or in full, they will do it. It may be as little as either one or two percent, but the majority of people will make the early or paid in full payment to save the small percentage.
4) Match the description of the controls with the financial area the control would pertain to. (some matching items may be used more than once)
Question Items
A - All check stock must be locked up when not in use. A - CASH B - Review all employee advances with the payroll and payables staff at least once per month.C- PREPAID EXPENSE C - Require approval of bad debt writeoffs.E - DEBT D - Audit shipment terms. F - INVENTORY E - Require approval of bad-debt writeoff. E - DEBT F- Review Uncashed Checks. A - CASH G- Audit the receiving dock. F - INVENTORY H - Compare capital investment projections to actual results.D -- FIXED ASSETS I - Require supervisory approval of all borrowings and repayments. E - DEBT J - Require approva| of credits. B - ACCOUNTS REVEIVABLE K- Perform a physical inventory of plant equipment every three months. D -- FIXED ASSETS
ACC 340 Midterm
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Southern New Hampshire University
Matching Items
Answer Items A. Cash B. Accounts Receivable C. Prepaid Expenses D. Fixed Assets E. Debt F. Inventory
5) $100,000. The number of units the company needs to sell to break even is
a. 33,333 b. 40,000 C. 50,000 d. 25,000
6) SG&A in a medium to large sized company would typically include the costs of all of the following departments except:
a. Accounting Department b. Legal Department C. Overhead d. Marketing Department
7) Name and define two methods of valuing inventory. Name several pros and cons of each. FIFO -- The oldest inventory is the inventory that is sold first . Pr