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? It is not okay for an AR clerk to reconcile bank statements at the end of the month. This would allow for the possibility of fraud. The clerk could easily hide or throw away a receipt and take the money personally. When there is separation of the two steps it prevents the possibility of stealing the money through verification of a separate person.
2) The company's environment has two aspects. One is the external environment. Which of the following is not an external environment factor?
Economic b. Technical C. Social d.Tone at the Top - answer
3) Name two methods that are commonly used to speed up the collection of receivables.
Automatic clearing house payment and offer on discount of early payment are two common methods used to speed up the collection of receivables. ACH payments are electronic payments that eliminate the physical checks and mailing. Offer on discount of early payments eliminate a portion of the amount due at the end of the pay period.
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) B - Review all employee advances with the payroll and payables staff at least once per month.(C) C - Require approval of bad debt write-offs. (E) D - Audit shipment terms. (F) E - Require approval of bad-debt write-off. (E) F- Review Uncashed Checks. (A) G- Audit the receiving dock. (F) H - Compare capital investment projections to actual results. (D) I - Require supervisory approval of all borrowings and repayments. (E) J - Require approval of credits. (B) K- Perform a physical inventory of plant equipment every three months. (D)
Matching Items
Answer Items
ACC 340 Midterm
1
Southern New Hampshire University
A. Cash B. Accounts Receivable C. Prepaid Expenses D. Fixed Assets E. Debt F. Inventory
5) The company sells widgets for $3 each. Variable costs are .50 cents per unit. Fixed costs are $100,000. The number of units the company needs to sell to break even is
a.
33,333 40,000 - answer 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:
Accounting Department b. Legal Department C. Overhead- answer d. Marketing Department
7) Name and define two methods of valuing inventory. Name several pros and cons of each.
LIFO (Last in-rst out) -- this method can be more di cult to keep inventory in check, however it is a tax break for companies.
FIFO (First inrst out) -- this method is easy to manage and keep up with, although it is easier to overstate the gross margin.
8) What is receiva