Explain the purpose and format of the statement of cash flows. Also describe its
relevance to decision makers.
____________ are short-term, highly liquid investment assets that are readily
convertible to a known amount of cash.
List the three important guidelines that should be followed in the budgeting process.
Explain the difference between the retail inventory method and gross profit inventory
method for valuing inventory.
In the two-stage cost allocation, ______________________ costs are allocated to
operating departments, and the operating department costs are allocated to
________________.
A company uses a job order cost accounting system and applies overhead on the basis
of direct labor cost. At the end of a recent period, the company’s Goods in Process
Inventory account appeared as follows:
Fill in the blanks for the following:
(1) The total cost of the direct materials, direct labor, and factory overhead applied in
the December 31 goods in process inventory is $_______________________.
(2) The company’s overhead application rate is __________________%
(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had
$________ of direct materials cost.
(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had
$________ of factory overhead cost.
Hasbro had $2,816 million in sales and $555 million in ending accounts receivable for
the current period. For the same period, Mattel reported $4,885 million in sales and
$491 million in ending accounts receivable. Calculate the days’ sales uncollected for
both companies as of the end of the current period. Which company is doing a better
job in managing the collection of its receivables?
A __________________ occurs when expenses exceed revenues.
If the _______________ is responsible for paying the freight, ownership of
merchandise inventory passes when goods are loaded on the transport vehicle.
___________________________ means that partners can commit or bind the
partnership to any contract within the scope of the partnership business.
Times interest earned is computed by dividing _______________ by interest expense.
The internal document prepared by a department manager used to inform the
purchasing department of its needs is called the ________________________.
When a partner invests in a partnership, his/her capital account is __________ for the
invested amount.
For each of the independent cases below, identify the principle of internal control that is
violated, and recommend what should be done to remedy the violation.
1) In order to save money, Regal Company has decided to drop its property insurance
on assets; and stop bonding the cashiers who handle about $10,000 in cash each day.
2) Halton Company records each sale on a preprinted invoice. Since sometimes
invoices are damaged in the process of being prepared, the invoices are not
prenumbered, but the sales clerk writes the next number onto each invoice.
3) Marion Company is a very small business. Bob Lepley, one of the two office clerks,
opens the mail each day and removes the cash receipts that come in the mail. Bob then
records the receipts in the cash records and the customer’s account and deposits the cash
in the bank.
4) Gerald McNichols, the owner of McNichols Company prides himself on hiring only
the most competent employees. McNichols believes that since these employees are
highly competent and to show that he trusts them completely, he feels there is no need
for anyone to check up on the employees’ performance.
5) Service Products is a small business with only 3 accounting employees. Each
employee is well-trained and so can perform any of the accounting tasks, including
handling cash receipts and cash disbursements, and preparing the bank reconciliation.
The difference between total debits and total credits for an account, including any
beginning balance is the ________________________.
The total amount of cash and other assets the corporation receives from its stockholders
in exchange for common stock is called __________________________.