and has different degrees of reliability. Following are some statements that compare various types of evidence. a. A bank confirmation versus observation of the segregation of duties between cash receipts and recording payment in the accounts receivable subsidiary ledger b. An auditor recalculation of depreciation versus examination of raw material requisitions c. A bank statement included in the entity’s records versus shipping documents d. Physical examination of share certificates
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AYB340 COMPANY ACCOUNTING TOPIC 1 - SOLUTIONS TO TUTORIAL QUESTIONS CASE STUDIES Case Study 1 - Accounting Policies The board of directors has resolved to change the accounting policy for treatment of advertising expenditure. Previously‚ advertising expenditure has been expensed as incurred. Following extensive market research‚ the board has taken the view that benefits from advertising expenditure in the form of product awareness and increased sales will be received by the company
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CHOICE QUESTIONS 1. In recording transactions‚ (a) The word debit means to increase and the word credit means to decrease. (b) Assets‚ expenses‚ and owners’ drawing accounts are debited for increases. (c) Liabilities‚ revenue‚ and owners’ drawing accounts are debited for increases. (d) Assets‚ expenses‚ and owners’ capital accounts are debited for increases. (e) None of the above 2. Which of the following combinations of trial balance totals does not indicate a transposition error? (a) $65‚470
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Prepaid insurance 1‚760 Interest income on investment 1‚226 Equipment at cost 24‚000 - Accumulated depreciation 12‚240 Premises 100‚000 Account Receivables 18‚530 Account Payables 23‚004 Prepaid rates 16‚000 Bank 277‚486 Loan (repayable in 2017) 200‚000 929‚270
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quarter ’s sales is likely to be converted into cash in that quarter and what proportion is likely to be carried over to the next quarter as accounts receivable" (Allen‚ Brealey‚ & Myers 2005). Lawrence having a positive cash balance would have help in the event of emergencies as well as unplanned outflow of money. Cash flow comes from collections on accounts receivable (Allen‚ Brealey‚ & Myers 2005). Examine the effects of credit policy on cash conversion cycle and revenue: Commitment Lawrence had a
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Category Financial Statement(s) Cash…………………………………………… A BS Accounts payable…………….……………….. L BS Common stock………………………………… OE BS Depreciation expense………………………….. E IS Net sales……………………………………….. R IS Income tax expense……………………………. E IS Short term investments………………………... A BS Gain on sale of land……………………………. G IS Retained earnings……………………………… OE BS Dividends payable…………………………….. L BS Accounts receivable…………………………… A BS Short term debt………………………………… L BS E2.2.
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following measures strengthens internal control over cash receipts except: a. Factoring accounts receivable. b. Preparation of a daily listing of all checks received through the mail. c. The deposit of cash receipts in the bank on a daily basis. d. The use of cash registers. 4. Quinn Company’s bank statement at January 31 shows a balance of $13‚360‚ while the ledger account for Cash in Quinn’s ledger shows a balance of $12‚890 at the same date. The only reconciling
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furnishing of 400 paid in note payable 12. Business sold 5 computer on account receivable 1750 13. Business again invested cash of $20000 in business 14. Business received gas bill of $200 15. Business draw of $500 cash for personal use 16. Business purchased land of 10000 on cash 17. Business pay account payable which he purchased computer systems on 6 sep 18. Business pay salary to employee of 200 19. Business pay account payable which received gas bill 200 20. Business sold 35 computer 12500
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__________________________ Date: _____________ 1.|An account is a part of the financial information system and is described by all except which one of the following?| A)|An account has a debit and credit side.| B)|An account is a source document.| C)|An account consists of three parts.| D)|An account has a title.| 2.|Which statement about an account is true?| A)|In its simplest form‚ an account consists of two parts.| B)|An account is an individual accounting record of increases and decreases
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find any red flags that may support these allegations by looking at the "as reported" financials of Sunbeam? There are some red flags that support these allegations: 1. Unusual increase in Accounts Receivable in relations to sales increase - relaxing credit or channel loading. In 1997‚ the receivables increased %38.5 ($82M) to 295.55M. From Barron’s article‚ the company extensively use of “bill and Hold” sales. 2. Unusual increase in Inventory in relations to sales increase. In 1997‚ the
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