16) Part A: Enter the March transactions and adjustments in the accounting equation below.
1. March 1 Collected $6,000 of its accounts receivable from February sales.
2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1.
3. March 1 Borrowed $16,000 on a 4-month, 6% note payable.
4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no
salvage value.
5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February.
6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6
each.
7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder.
8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s
Tams paid $600 for 3 months of insurance coverage that began February 1.
9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for
two months’ rent.
10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful
life.
11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month.
Part B: Complete the financial statement. Part C: Complete the financial statement.
Part D: Complete the financial statement.
Part E:
Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31,
2011 and write in the one financial statement where the line item is found:
Part G: Use the transactions and financial statements to answer the following:
Learning Objective 3-6
1) Which of the following risks is NOT associated with financial information?
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) loss of product quality
2) A computerized accounting system requires users to type in a password before they are
allowed to enter data in the system. This control is primarily designed to ________.
A) prevent errors in recording and updating the financial accounting information
B) prevent unauthorized access to the financial accounting records
C) prevent loss of the data in the financial accounting records
D) eliminate the risk of incorrect acceptance
3) A computerized accounting system stores duplicate accounting data in a secure, remote
location. This control is primarily designed to prevent ________.
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) incorrect acceptance of material items
4) A computerized accounting system will not allow anyone to enter data that puts the
accounting equation out of balance. This control is primarily designed to prevent ________.
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) the risk of incorrect acceptance
5) An electronic cash register in a department store will not allow anyone to enter a sales
transaction without an authorization code. This control is primarily designed to prevent
________.
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) incorrect acceptance of material items
6) At a fast-food restaurant, employees punch separate keys for each item on the menu that a
customer orders. This control is primarily designed to prevent ________.
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) incorrect acceptance of material items
7) A company’s computer system is housed on a separate floor of the company’s corporate
headquarters. Employees must enter their thumbprints on an electronic lock before the elevator
will take them to this floor. This control is primarily designed to prevent ________.
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) incorrect acceptance of material items
8) An accounting clerk compares a bill received from a supplier with the packing slip that
accompanied the shipment from the supplier. This control is primarily designed to prevent
________.
A) errors in recording and updating the financial accounting information
B) unauthorized access to the financial accounting records
C) loss of the data in the financial accounting records
D) incorrect acceptance of material items
9) Accounting software guarantees that all transactions have been recorded properly.
10) Computerized accounting systems make sure that the accounting equation is in balance.
11) A computerized accounting system is completely safe from fraud.
12) A company should keep a copy of the data in its accounting information system at a remote
location.
13) A company should never allow copies of its accounting data to be stored outside of the
company.
14) Passwords and user IDs are controls that limit access to a company’s computer information
system.