Question 1

Which is an example of an event that takes place in the operating process?

Accepted Answer

Payment of wages is part of the operating process as it is a regular business activity related to the day-to-day operations of a company.

Question 2

Toccata Corporation purchased raw materials,transformed them into finished goods,and sold these goods to customers on account.Describe how the subprocesses of the operating process are impacted by these events.

Accepted Answer

The answer of Toccata Corporation purchased raw materials,transformed them into...

Question 3

Which of the following is part of the conversion subprocess?

Accepted Answer

The requisition of raw materials is part of the conversion subprocess, which involves the transformation of raw materials into finished goods. The other options listed are not directly related to this subprocess.

Question 4

Using the financial statements from the (instructor supplies the income statement and balance sheet of a company and insert name here)calculate each of the following ratios and briefly describe what the results indicate.
(a.)  Return on Investment
(b.)  Quick Ratio
(c.)  Gross Margin Ratio
(d.)  Current Ratio
(e.)  Return on Sales Ratio
(f.)  Debt to Equity Ratio
(g.)  Return on Owners' Equity

Accepted Answer

The answer of Using the financial statements from the (instructor...

Question 5

Ethan Fromme is the Purchaser for Hardware Hut,a company with several hardware stores.He prepares purchase orders for merchandise and places the orders with manufacturers.Although he does not physically receive the merchandise,he is responsible for checking the invoice against the purchase order and authorizing payment of the invoice.Describe internal control this arrangement causes.

Accepted Answer

The answer of Ethan Fromme is the Purchaser for Hardware...

Question 6

On a bank reconciliation,which of the following will reduce the company's cash balance?

Accepted Answer

A non-sufficient funds check means that the company received a payment that bounced due to inadequate funds in the customer's account. Therefore, the company's cash balance will be reduced. The other options, outstanding checks, deposit in transit, and bank error, will not reduce the company's cash balance. Outstanding checks are checks that the company issued but have not yet cleared the bank. Deposit in transit refers to cash or checks that the company received but have not yet been deposited in the bank. Bank error means the bank made a mistake in the transactions, which needs to be corrected.

Question 7

Using the financial statements from the (instructor supplies the income statement and balance sheet of a company and insert name here)calculate each of the following ratios and briefly describe what the results indicate.
Current Ratio
Quick Ratio
Gross Margin Ratio
Return on Sales Ratio
Debt to Equity Ratio
Return on Investment Ratio
Return on Owners' Equity
Accounts Receivable Turnover
Inventory Turnover
Accounts Payable Turnover

Accepted Answer

The answer of Using the financial statements from the (instructor...

Question 8

Scherzo Company purchased equipment from Rondo Corporation for $20,000.Scherzo paid no cash at the time of purchase.Instead Rondo permitted Scherzo to pay for the equipment by making four annual payments of $5,000.For Scherzo and for Rondo what processes are being used by these events? Explain your answer.

Accepted Answer

The answer of Scherzo Company purchased equipment from Rondo Corporation...

Question 9

Which of the following reflects a weakness in the internal control for cash?

Accepted Answer

Allowing two employees to have access to the same cash register increases the risk of collusion and makes it more difficult to trace any errors or discrepancies in the cash transactions. This is a weakness in the internal control for cash. The other options describe good internal controls for cash.

Question 10

At July 31,Sonata Company had a general ledger cash balance of $5,900.Deposits in transit amounted to $1,200 and there was a service charge of $20.Outstanding checks totaled $1,500.What is the balance shown on the bank statement at the end of July?

Accepted Answer

Starting with the general ledger cash balance of $5,900, we add the deposits in transit of $1,200, which gives us a subtotal of $7,100. Then, we subtract the outstanding checks of $1,500, which gives us a adjusted or adjusted balance of $5,600. Finally, we subtract the service charge of $20, which gives us a final balance of $6,180. Therefore, the correct answer is (C) $6,180.

Question 11

Which of the following will not require an adjustment to the company's cash balance?

Accepted Answer

The answer of Which of the following will not require...

Question 12

At May 31,Allegro Company had a general ledger cash balance of $7,400.At the end of May,the bank statement had a balance of $7,500.Deposits in transit amounted to $1,000 and there was a service charge of $10.Outstanding checks totaled $1,110.What is the correct amount of cash?

Accepted Answer

- Starting balance per company's general ledger: $7,400
- Add deposits in transit: $1,000
- Adjust for outstanding checks: -$1,110 (subtract)
- Adjust for service charge: -$10 (subtract)
- Bank statement balance: $7,500
- Reconciled balance: $7,400 + $1,000 - $1,110 - $10 = $7,280
- Adjusted balance (bank statement balance + or - any reconciling items): $7,500
- Difference (adjusted balance - reconciled balance): $7,500 - $7,280 = $220
- This difference represents other adjustments/transactions that need to be investigated and resolved.
- Therefore, the correct amount of cash is the reconciled balance of $7,280.

Question 13

A bank reconciliation will identify all of the following except?

Accepted Answer

A bank reconciliation will typically identify unrecorded bank service charges, outstanding checks, and deposits in transit. However, it may not necessarily identify a double payment of a bill, as this error would typically be discovered by reviewing the company's internal records and payment history.

Question 14

Given the formula for each of the following ratios and then explain what each ratio measures.
a.Return on Investment
b.Quick Ratio
c.Gross Margin Ratio
d.Return on Owners' Equity

Accepted Answer

The answer of Given the formula for each of the...

Question 15

Which of the following will required the cash on the books of the company to be adjusted?

Accepted Answer

Bank service charges are expenses charged by the bank to the company's account. These charges reduce the cash balance in the company's books, requiring an adjustment to reflect the accurate cash balance. Outstanding checks, deposits in transit, and bank errors affect the bank statement balance rather than the company's book balance directly.

Question 16

Billing customers is part of which of the following?

Accepted Answer

Billing customers is a part of the Marketing/Sales/Collection/Customer Service subprocess. This subprocess involves obtaining payment from customers for the goods or services provided.

Question 17

For each of the items below,explain how it would be handled in preparing a bank statement reconciliation and why it would be handled in that way.
(a)deposits in transit
(b)outstanding checks
(c)a check for $300 was erroneously recorded in the accounts as $500

Accepted Answer

The answer of For each of the items below,explain how...

Question 18

Which of the following bank reconciliation items would require the cash on the company's books to be reduced?

Accepted Answer

A non-sufficient funds check means that the company's bank account was debited for a check that bounced or could not be processed due to insufficient funds in the account of the issuer. Therefore, the cash on the company's books should be reduced to reflect the fact that the check is not valid. Outstanding checks and deposit in transit are timing differences that do not affect the actual balance of cash on the company's books, while a bank error would be the responsibility of the bank to correct and would not affect the company's cash balance.

Question 19

On a bank reconciliation,which of the following will reduce the bank's cash balance?

Accepted Answer

The answer of On a bank reconciliation,which of the following...

Question 20

Which of the following is not a factor in getting bank and book balances to reconcile?

Accepted Answer

The answer of Which of the following is not a...

Quiz 2: Business Processes and Accounting Information