Establishment of responsibility
Permitting only designated personnel, such as cashiers to handle cash receipts is an application of the principle of:
Segregation of duties.
At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash receipts?
Cash.
The journal entry to replenish a petty cash fund includes a credit to:
Postdated checks.
Which one of the following items would not be considered cash?
Cash Equivalents
Short-term, highly liquid investments that are readily convertible to known amounts of cash and are very close to maturity are reported as:
claims that are expected to be collected in cash.
Receivables are:
necessitates the recording of an estimated amount for bad debts.
The expense recognition principle
All cash receipts should be recorded promptly.
Which of the following is not an internal control activity for cash?
61
Windsor Corporation sells its goods on terms of 2/10, n/30. It has an accounts receivable turnover of 6. What is its average collection period (days)?
Periodicity Assumption
Accountants divide the economic life of a business into artificial time periods
fiscal year
An accounting time period that is one year long is called a
Prepaid expenses
Expenses paid in cash and recorded as assets before they are used or consumed.
Unearned revenues
Cash received before service are performed.
Accrued revenues
Revenues for services performed but not yet received in cash or recorded
Accrued expenses
Expenses incurred but not yet paid in cash or recorded.
Trial Balance
Each account is analyzed to determine whether it is complete and up-to-date.
Companies record revenue only when they receive cash, and record expense only when they pay out cash.
Which one of these statements about the accrual basis of accounting is false?
Adjusting entries are made to ensure that:
expenses are recognized in the period in which they are incurred, revenues are recorded in the period in which the performance obligation is satisfied, balance sheet and income statement accounts have correct balances at the end of an accounting period
The adjusted trial balance lists the account balances segregated by assets and liabilities.
Which of the following statements is incorrect concerning the adjusted trial balance?
IFRS
uses accrual accounting.
IFRS uses the cash basis of accounting.
Which of the following statements is false?
results in companies recording transactions that change a company's financial statements in the period in which events occur.
Accrual-basis accounting
Petty Cash Funds
a cash fund used to pay relatively small amounts