Question 1

A consequence of a separation of duties is that

Accepted Answer

The answer of A consequence of a separation of duties...

Question 2

Feathertouch Company sold merchandize worth $800 on credit,terms n/15.The merchandize sold had cost $550.What is the required journal entry to record the transaction and to transfer the cost of merchandize inventory to cost of goods sold under the periodic inventory system?

Accepted Answer

Under the periodic inventory system, the cost of goods sold is not recorded at the time of sale. The entry only records the sale on credit.

Question 3

On June 3,Win-Tel Company sold merchandize worth $800 on credit,terms 2/10,n/30.The merchandize sold had cost $550.The customer paid the amount on June 15. What is the required journal entry to record the payment received under the periodic inventory system?

Accepted Answer

The customer paid after the discount period, so the full amount of $800 is received.

Question 4

Which of the following is not a primary concern of internal control?

Accepted Answer

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

Question 5

Each of the following is a feature of internal control except

Accepted Answer

Management compensation packages are not a feature of internal control. Internal control pertains to the policies and procedures put in place to enhance operations, safeguard assets, and ensure accuracy of financial reporting. Management compensation packages, while related to the overall management of a business, are not directly related to internal control.

Question 6

Internal control is weakened by all of the following except

Accepted Answer

Separation of duties actually strengthens internal control, so it does not weaken it. Collusion, human error, and effects of changing conditions can all weaken internal control.

Question 7

On June 3,Maryland Company purchased merchandize worth $800 on credit,terms 2/10,n/30.The amount paid on June 15.What is the required journal entry to record the payment under the periodic inventory system?

Accepted Answer

The answer of On June 3,Maryland Company purchased merchandize worth...

Question 8

The bonding of employees is an example of which feature of a good system of internal control?

Accepted Answer

The bonding of employees is a sound personnel policy that reduces the risk of theft or fraud. It ensures that employees are financially responsible for their actions and provides additional protection against unauthorized access to assets. While authorization of transactions, limited access to assets, and separation of duties are also important features of a good system of internal control, they are not directly related to the bonding of employees.

Question 9

On June 3,Win-Tel Company sold merchandize worth $800 on credit,terms 2/10,n/30.The merchandize sold had cost $550.The customer paid the amount on June 10. What is the required journal entry to record the payment received under the periodic inventory system?

Accepted Answer

The customer paid within the discount period, so a 2% discount on $800 is $16. The cash received is $784, and the accounts receivable is reduced by $800.

Question 10

Which of the following would not be found in a good system of internal control?

Accepted Answer

Allowing one person to handle all the responsibilities of a department would not provide an effective system of internal control because it creates potential for fraud, errors, and lack of accountability. A good system of internal control would include checks and balances, internal audit staff, and requiring employees to take earned vacations to ensure that tasks are properly overseen, records are accurate, and employees are refreshed to perform their job duties effectively.

Question 11

Which of the following attributes of internal control would be violated if the accounting clerk wrote checks to pay accounts payable?

Accepted Answer

The attribute of separation of duties would be violated if the accounting clerk wrote checks to pay accounts payable. The control requires that different individuals should be responsible for different tasks in a process to reduce the risk of errors or fraud. In this case, the same person would be responsible for both account payable and writing checks, which increases the risk of errors or fraud.

Question 12

A very small company would have the most difficulty in implementing which of the following internal control activities?

Accepted Answer

A very small company may have a limited number of employees which makes it difficult to implement the separation of duties effectively. Separation of duties refers to dividing responsibilities among different employees to prevent fraud and errors. In a small company, there may not be enough staff to separate all the duties effectively, making it harder to implement this control activity. However, the other internal control activities - periodic independent verification, limited access to assets, and sound personnel procedures - may still be possible to implement in a small company.

Question 13

All of the following are examples of internal control activities except

Accepted Answer

Company picnics for all employees are not considered internal control activities as they do not have any direct relation to protecting assets, ensuring accurate financial reporting, or promoting compliance with laws and regulations. The other options listed (rotation of key personnel, bank reconciliations, insistence that employees take earned vacations) are all examples of internal control activities.

Question 14

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the periodic inventory system?

Accepted Answer

Under the periodic inventory system, merchandise returns are recorded in a purchases returns and allowances account. The entry to record the return of merchandise worth $100 would be:Accounts Payable 100Purchases Returns and Allowances 100

Question 15

Each of the following is a feature of internal control except

Accepted Answer

Internal control refers to policies and procedures put in place by an organization to safeguard its assets, ensure accuracy and completeness of its accounting records, and promote operational efficiency. Advertising through television commercials is not a feature of internal control as it does not relate to the safeguarding of assets or accuracy of financial records.

Question 16

Use this information to answer the following question. Chupka Company experienced the following events during the period:
1. A tabulation of invoices at the end of the day showed $ \$ 800 $ in MasterCard invoices, which were deposited in a bank account at full value less a 5 percent discount.

2. Made a sale on American Express card for $ \$ 400 $ and mailed invoice to American Express for payment. The discount charged by American Express is 4 percent. The entry to record transaction 1 would include an increase in

Accepted Answer

The discount on the MasterCard invoices is 5% of $800, which is $40. Therefore, the entry would include an increase in Credit Card Expense for $40.

Question 17

On June 3,Maryland Company purchased merchandize worth $800 on credit,terms 2/10,n/30.The amount paid on June 10.What is the required journal entry to record the payment under the periodic inventory system?

Accepted Answer

The journal entry to record the payment for a purchase made on credit under the periodic inventory system would be:
Debit: Accounts Payable - $800
Credit: Cash - $784
Credit: Purchase Discounts - $16
(Discount = $800 x 2% = $16)
Option B correctly shows the above journal entry.

Question 18

Use this information to answer the following question. Chupka Company experienced the following events during the period:
1. A tabulation of invoices at the end of the day showed $ \$ 800 $ in MasterCard invoices, which were deposited in a bank account at full value less a 5 percent discount.

2.Made a sale on American Express card for $ \$ 400 $ and mailed invoice to American Express for payment. The discount charged by American Express is 4 percent. The entry to record transaction 2 would include a(n)

Accepted Answer

Transaction 2 involves a sale of $400. Therefore, to record the transaction, we need to increase Sales by $400. None of the other options relate to this transaction.

Question 19

A traditional definition of internal control specifically includes all of the following features except

Accepted Answer

While a clean and safe workplace may contribute to overall organizational effectiveness, it is not explicitly included in the traditional definition of internal control. The other three features (adherence to managerial policies, promotion of operational efficiency, and reliability of accounting data) are commonly regarded as essential components of effective internal control systems.

Question 20

A retailer accepted Visa charge sales totaling $500 and deposited the charge slips in the bank.Assuming a credit card discount expense of 4 percent,what would be the increase to Cash and the increase to Sales,respectively?

Accepted Answer

The answer of A retailer accepted Visa charge sales totaling...

Quiz 5: The Operating Cycle and Merchandising Operations

A consequence of a separation of duties is that

Feathertouch Company sold merchandize worth $800 on credit,terms n/15.The merchandize sold had cost $550.What is the required journal entry to record the transaction and to transfer the cost of merchandize inventory to cost of goods sold under the periodic inventory system?

On June 3,Win-Tel Company sold merchandize worth $800 on credit,terms 2/10,n/30.The merchandize sold had cost $550.The customer paid the amount on June 15. What is the required journal entry to record the payment received under the periodic inventory system?

Which of the following is not a primary concern of internal control?

Each of the following is a feature of internal control except

Internal control is weakened by all of the following except

On June 3,Maryland Company purchased merchandize worth $800 on credit,terms 2/10,n/30.The amount paid on June 15.What is the required journal entry to record the payment under the periodic inventory system?

The bonding of employees is an example of which feature of a good system of internal control?

On June 3,Win-Tel Company sold merchandize worth $800 on credit,terms 2/10,n/30.The merchandize sold had cost $550.The customer paid the amount on June 10. What is the required journal entry to record the payment received under the periodic inventory system?

Which of the following would not be found in a good system of internal control?

Which of the following attributes of internal control would be violated if the accounting clerk wrote checks to pay accounts payable?

A very small company would have the most difficulty in implementing which of the following internal control activities?

All of the following are examples of internal control activities except

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the periodic inventory system?

Each of the following is a feature of internal control except

On June 3,Maryland Company purchased merchandize worth $800 on credit,terms 2/10,n/30.The amount paid on June 10.What is the required journal entry to record the payment under the periodic inventory system?

A traditional definition of internal control specifically includes all of the following features except

A retailer accepted Visa charge sales totaling $500 and deposited the charge slips in the bank.Assuming a credit card discount expense of 4 percent,what would be the increase to Cash and the increase to Sales,respectively?