Question 1

On May 1, CGI Corporation declared cash dividends on its common stock. The divided was payable on May 15 to shareholders of record on May 5. Which of the following entries will CGI make on May 5 in its accounting information system?

Accepted Answer

On May 5, CGI Corporation does not make any accounting entry. The entry for declaring dividends is made on May 1, and the entry for paying dividends is made on May 15. May 5 is just the record date, which does not require a journal entry.

Question 2

Which of the following transactions is commonly associated with the financing process?

Accepted Answer

Both the issuance of equity securities and the issuance of debt securities are common transactions associated with the financing process. Issuing equity securities involves selling ownership stakes in the company to investors, while issuing debt securities involves borrowing money that will need to be repaid, typically with interest. Both of these methods can provide the company with the funds needed for financing its operations or expansion.

Question 3

Which of the following best pairs a financing process risk with an internal control that will address the risk?

Accepted Answer

A) Annual training ensures employees are well-informed and competent, reducing errors. B) A properly developed cash budget helps ensure funds are available for debt payments.

Question 4

One of the transactions commonly associated with the financing process is the distribution of dividends. Information needed to process that transaction includes:

Accepted Answer

Shareholder identification data is needed to ensure that dividends are distributed to the correct individuals, and the type of dividend determines the amount and timing of the payment. Therefore, both A and B are necessary pieces of information in order to process the distribution of dividends.

Question 5

CGI Corporation had 10,000 shares of $2 par common stock outstanding; the shares had been issued at $5 per share. At the end of March 2011, CGI declared a $3 cash dividend per share when the market price of the stock was $8 per share. Which of the following statements is most true?

Accepted Answer

The $3 cash dividend per share is not determined by the difference between issuance price, market value, or par value. Dividends are typically determined by the company's board of directors based on profitability and cash flow, not these differences.

Question 6

One of the transactions commonly associated with the financing process is the issuance of long-term debt. Which of the following pieces of information is least likely to be required to process such a transaction?

Accepted Answer

Shareholder approval would generally not be required for the issuance of long-term debt. Instead, the other pieces of information listed (coupon interest rate, market interest rate, and lender identification data) would be necessary for the financing transaction.

Question 7

As part of the financing business process, corporations may need to account for an initial public offering. How many different forms of a prospectus are parts of the IPO based on the seven steps listed in the text?

Accepted Answer

The answer of As part of the financing business process,...

Question 8

Factory workers at OMI Corporation are scheduled to work forty hours per week, but frequently work forty-five hours per week, leading to increased payroll costs for OMI. Which of the following statements is most true?

Accepted Answer

The answer of Factory workers at OMI Corporation are scheduled...

Question 9

CGI Corporation had 10,000 shares of $2 par common stock outstanding; the shares had been issued at $5 per share. At the end of March 2011, CGI declared a $3 cash dividend per share when the market price of the stock was $8 per share. After processing the dividend transaction, the balance in CGI's common stock account will be:

Accepted Answer

The balance in CGI's common stock account remains unchanged by the declaration and payment of a cash dividend. The account reflects the par value of the shares issued, which is 10,000 shares at $2 par, totaling $20,000. Cash dividends affect retained earnings and the cash account, not the common stock account.

Question 10

Which of the following best pairs a financing process risk with an internal control that will address the risk?

Accepted Answer

The answer of Which of the following best pairs a...

Question 11

The balance sheet of BYA Corporation reported bonds payable with a book value of $500,000 and total paid-in capital of $300,000. The balance sheet of LCA Corporation reported bonds payable with a book value of $600,000 and total paid-in capital of $250,000. Which of the following statements is most true?

Accepted Answer

The answer of The balance sheet of BYA Corporation reported...

Question 12

Transactions associated with the financing process include all of the following except:

Accepted Answer

The financing process involves obtaining funds from investors or creditors to finance the company's operations or growth. Transactions associated with this process would include purchases of treasury shares (A), issuance of equity securities (B), and periodic repayments of debt (D). Payroll for finance department employees (C) would be considered an operating expense, not part of the financing process.

Question 13

In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due to poor quality in a recent batch of raw materials, he used an average of four pounds. Which of the following internal controls would prevent the problem in the future?

Accepted Answer

Closer inspection of deliveries would help prevent poor quality raw materials from being used in manufacturing, thereby preventing the occurrence of using more raw material than necessary. Performance evaluations for Mike may or may not prevent this problem from happening again, as poor quality raw material was the main issue in this scenario. Therefore, option A would be the most effective control.

Question 14

Separation of duties can promote strong internal control in the conversion process. Which three duties should be separated?

Accepted Answer

Separation of duties in the conversion process should involve physical custody, authorization, and recordkeeping. Physical custody refers to the handling, storage, and movement of inventory and other assets. Authorization involves approving and initiating transactions and activities in the process. Recordkeeping relates to the creation and maintenance of records, documentation, and reports related to the conversion process. Separation of these duties helps prevent errors, fraud, or other weaknesses in the internal control system. The other options (B, C, D) do not relate to the conversion process or relevant duties within it.

Question 15

In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due to poor quality in a recent batch of raw materials, he used an average of four pounds. Mike's company is therefore exposed to ___ risk.

Accepted Answer

The poor quality of raw material used by Mike was due to human error as he did not follow the standard procedure of using three pounds and used four pounds instead.

Question 16

CGI Corporation was preparing to issue long-term debt securities. They planned to pay 10% interest semi-annually, although investments of similar risk were paying 12% at the time. Which of the following terms best describes the 12% interest rate?

Accepted Answer

The 12% interest rate represents the market rate, which is the rate of return investors require for similar investments with similar risk. The coupon rate is the rate stated on the bond, which in this case is 10%. The terms relevant and current do not accurately describe the 12% interest rate.

Question 17

Within the context of the financing process, separation of duties means:

Accepted Answer

The answer of Within the context of the financing process,...

Question 18

On May 1, CGI Corporation declared cash dividends on its common stock. The divided was payable on May 15 to shareholders of record on May 5. On which date will CGI record a debit to retained earnings and a credit to cash?

Accepted Answer

The answer of On May 1, CGI Corporation declared cash...

Question 19

DRH Corporation's conversion process is highly automated; computers and other forms of information technology are used to prepare raw materials for production and to move partially completed units through the factory. Which of the following statements is most true?

Accepted Answer

Although DRH's conversion process may be highly automated, there is still a risk of equipment malfunction and breakdowns. Regular equipment inspections can help identify potential issues and prevent production delays or defects. While computers and other forms of information technology may minimize the risk of human errors, they are not completely infallible. Therefore, statement A is not entirely true.

Question 20

Adequate documentation can promote strong internal control in the conversion process. All of the following documents are used in the conversion process except:

Accepted Answer

Materials requisition, labor time ticket, and materials move ticket are all documents used in the conversion process to track and record the movement of materials, labor, and inventory. Form W-2, however, is a tax form used to report employee wages and is not directly related to the conversion process.

Quiz 14: Other Business Processes

On May 1, CGI Corporation declared cash dividends on its common stock. The divided was payable on May 15 to shareholders of record on May 5. Which of the following entries will CGI make on May 5 in its accounting information system?

Which of the following transactions is commonly associated with the financing process?

Which of the following best pairs a financing process risk with an internal control that will address the risk?

One of the transactions commonly associated with the financing process is the distribution of dividends. Information needed to process that transaction includes:

CGI Corporation had 10,000 shares of $2 par common stock outstanding; the shares had been issued at $5 per share. At the end of March 2011, CGI declared a $3 cash dividend per share when the market price of the stock was $8 per share. Which of the following statements is most true?

One of the transactions commonly associated with the financing process is the issuance of long-term debt. Which of the following pieces of information is least likely to be required to process such a transaction?

As part of the financing business process, corporations may need to account for an initial public offering. How many different forms of a prospectus are parts of the IPO based on the seven steps listed in the text?

Factory workers at OMI Corporation are scheduled to work forty hours per week, but frequently work forty-five hours per week, leading to increased payroll costs for OMI. Which of the following statements is most true?

Which of the following best pairs a financing process risk with an internal control that will address the risk?

Transactions associated with the financing process include all of the following except:

In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due to poor quality in a recent batch of raw materials, he used an average of four pounds. Which of the following internal controls would prevent the problem in the future?

Separation of duties can promote strong internal control in the conversion process. Which three duties should be separated?

In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due to poor quality in a recent batch of raw materials, he used an average of four pounds. Mike's company is therefore exposed to ___ risk.

CGI Corporation was preparing to issue long-term debt securities. They planned to pay 10% interest semi-annually, although investments of similar risk were paying 12% at the time. Which of the following terms best describes the 12% interest rate?

Within the context of the financing process, separation of duties means:

On May 1, CGI Corporation declared cash dividends on its common stock. The divided was payable on May 15 to shareholders of record on May 5. On which date will CGI record a debit to retained earnings and a credit to cash?

DRH Corporation's conversion process is highly automated; computers and other forms of information technology are used to prepare raw materials for production and to move partially completed units through the factory. Which of the following statements is most true?

Adequate documentation can promote strong internal control in the conversion process. All of the following documents are used in the conversion process except: