Questions and Answers of Corporate Financial Accounting

Petty cash fund entries Obj. 6Journalize the entries to record the following:a. Check No. 12-375 is issued to establish a petty cash fund of $500.b. The amount of cash in the petty cash fund is now
Using bank reconciliation to determine cash receipts stolen Obj. 2, 3, 5Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. AlaskaImpressions discovered during
Bank reconciliation Obj. 5The following bank reconciliation was prepared as of June 30, 20Y7:Poway Co.Bank ReconciliationFor the Month Ended June 30, 20Y7Cash balance according to bank statement . .
Bank reconciliation Obj. 5An accounting clerk for Chesner Co. prepared the following bank reconciliation:Chesner Co.Bank ReconciliationJuly 31, 20Y4Cash balance according to company’s records . . .
Entries for note collected by bank Obj. 5Accompanying a bank statement for Borden Company is a credit memo for $21,200 representing theprincipal ($20,000) and interest ($1,200) on a note that had
Entries for bank reconciliation Obj. 5Using the data presented in Exercise 7-18, journalize the entry or entries that should be madeby the company.AppendixLO1
Bank reconciliation Obj. 5The following data were accumulated for use in reconciling the bank account of Creative DesignCo. for August 20Y6:1. Cash balance according to the company’s records at
Entries based on bank reconciliation Obj. 5Which of the reconciling items listed in Exercise 7-16 require an entry in the company’s accounts?AppendixLO1
Bank reconciliation Obj. 5Identify each of the following reconciling items as: (a) an addition to the cash balance accordingto the bank statement, (b) a deduction from the cash balance according to
Internal control of cash payments Obj. 2, 3Paragon Tech Company, a communications equipment manufacturer, recently fell victim to a fraudscheme developed by one of its employees. To understand the
Internal control of cash payments Obj. 3Abbe Co. is a small merchandising company with a manual accounting system. An investigationrevealed that in spite of a sufficient bank balance, a significant
Entry for cash sales; cash over Obj. 3The actual cash received from cash sales was $315,280, and the amount indicated by the cashregister total was $315,150. Journalize the entry to record the cash
Entry for cash sales; cash short Obj. 3The actual cash received from cash sales was $83,452, and the amount indicated by the cash registertotal was $83,480. Journalize the entry to record the cash
Internal control of cash receipts Obj. 2, 3The mailroom employees send all remittances and remittance advices to the cashier. The cashierdeposits the cash in the bank and forwards the remittance
Internal control of cash receipts Obj. 2, 3Sergio Flores works at the drive-through window of Big & Bad Burgers. Occasionally, when adrive-through customer orders, Sergio fills the order and pockets
Internal control of cash receipts Obj. 2, 3The procedures used for over-the-counter receipts are as follows. At the close of each day’s business,the sales clerks count the cash in their respective
Financial statement fraud Obj. 2, 3A former chairman, CFO, and controller of Donnkenny, Inc., an apparel company that makessportswear for Pierre Cardin and Victoria Jones, pleaded guilty to financial
Internal controls Obj. 2, 3All-Around Sound Co. discovered a fraud whereby one of its front office administrative employees usedcompany funds to purchase goods, such as computers, digital cameras,
Internal controls Obj. 2, 3An employee of JHT Holdings, Inc., a private trucking company, was responsible for resolvingroadway accident claims under $25,000. The employee created fake accident claims
Internal controls Obj. 2, 3One of the largest losses in history from unauthorized securities trading involved a securitiestrader for the French bank, Societe Generale (SCGLY). The trader was able to
Internal controls for bank lending Obj. 2, 3Pacific Bank provides loans to businesses in the community through its Commercial Lending Department.Small loans (less than $100,000) may be approved by an
Internal controls Obj. 2, 3Ramona’s Clothing is a retail store specializing in women’s clothing. The store has established a liberalreturn policy for the holiday season in order to encourage gift
Internal controls Obj. 2, 3Faith Cassen has recently been hired as the manager of Gibraltar Coffee Shop. Gibraltar CoffeeShop is a national chain of franchised coffee shops. During her first month as
Sarbanes-Oxley internal control report Obj. 1Using Wikipedia (www.wikipedia.com), look up the entry for Sarbanes-Oxley Act. Look over thetable of contents and find the section that describes Section
Days' cash on hand Obj. 8Financial statement data for years ending December 31 for Newton Company follow:20Y9 20Y8Cash (end of year) $25,500 $24,250Short-term investments (end of year) 8,270
Petty cash fund Obj. 6Prepare journal entries for each of the following:a. Issued a check to establish a petty cash fund of $500.b. The amount of cash in the petty cash fund is $85. Issued a check to
Bank reconciliation Obj. 5The following data were gathered to use in reconciling the bank account of Reddan Company:Balance per bank $25,750Balance per company records 19,140Bank service charges
Items on company’s bank statement Obj. 4The following items may appear on a bank statement:1. Bank correction of an error from posting another customer’s check (disbursement) to the company’s
Internal control elements Obj. 2Identify each of the following as relating to (a) the control environment, (b) control procedures,or (c) monitoring:1. Hiring of external auditors to review the
Days' cash on hand Obj. 8Financial statement data for years ended December 31 for Holland Company follow:20Y3 20Y2Cash and short-term investments (end of year) $ 8,900 $ 7,920Operating expenses
Petty cash fund Obj. 6Prepare journal entries for each of the following:a. Issued a check to establish a petty cash fund of $750.b. The amount of cash in the petty cash fund is $115. Issued a check
Bank reconciliation Obj. 5The following data were gathered to use in reconciling the bank account of Eves Company:Balance per bank $9,350Balance per company records 8,510Bank service charges
Items on company’s bank statement Obj. 4The following items may appear on a bank statement:1. Bank correction of an error from recording a $6,200 deposit as $2,6002. EFT payment3. Note collected
Internal control elements Obj. 2Identify each of the following as relating to (a) the control environment, (b) control procedures,or (c) information and communication:1. Organizational structure2.
In preparing a bank reconciliation, the amount of checks outstanding would be:a. added to the cash balance according tothe bank statement.b. deducted from the cash balanceaccordingto the bank
The bank erroneously charged Tropical Services’ account for $450.50 for a check that was correctlywritten and recorded by Tropical Services as $540.50. To reconcile the bank accountofTropical
Which of the following is not an element of internal control?a. Control environmentb. Monitoringc. Compliance with laws and regulationsd. Control proceduresAppendixLO1
Describe and illustrate the reporting of cash and cashequivalents in the financial statements.AppendixLO1
Describe the accounting for special-purpose cash funds.AppendixLO1
Describe and illustrate the use of a bank reconciliation incontrolling cash.AppendixLO1
Describe and illustrate the application of internalcontrolsto cash.AppendixLO1
Describe and illustrate the objectives and elements ofinternal control.AppendixLO1
Describe the Sarbanes-Oxley Act and its impact oninternal controls and financial reporting.AppendixLO1
What is financial accounting?AppenedixLO1
Overview of the company and its activities AppenedixLO1
What are the accounts?AppenedixLO1
What is an accounting entity?AppenedixLO1
Who are the users of financial accounts?AppenedixLO1
Balance sheet equation illustrated In the course of a commentary on property prices, wealth and perceptions of wealth, a columnist made the following statements in a newspaper article:In spite of
Nature of the balance sheet The recent annual accounts of a famous European football club reveal that at the end of its financial year the club had total debts of A66 million, of which A45 million
Identifying transactions Set out below are the balances in Holmes Company’s asset and equity accounts at the end of each day in a nine-day period. You’ll notice that two or more of the account
Recording transactions I Dick Dewy decides to start a road haulage business. He forms a company, Greenwood Transport Company, on 1 June year 1. Set out below are the transactions the company enters
Recording transactions II Peerless Company is formed on 1 September x1. A distributor of TV and video equipment, it specialises in the sale of widescreen, high-definition televisions. It enters into
Drawing up a balance sheet Goliath Motors (name disguised) is a large manufacturer of cars in Europe. Listed below are account balances taken from the group’s 20x2 balance sheet. All amounts are in
Comparison of balance sheet data France Telecom, the dominant fixed line and wireless telecommunications company in France, expanded its international operations in 2000. In August it acquired
Recording transactions I After gaining experience of the cloth trade in France, Francesco Datini returns to his native Tuscany in x3 and opens his own wholesale cloth business in Prato, specialising
Identifying transactions Set out below are the balances in Poirot SA’s asset and equity accounts after each of eight accounting transactions or events in the week beginning 12 June. You’ll notice
Recording transactions II Dick Dewy forms a company, Greenwood Transport plc, on 1 June. During the first week of its existence, it invests in the assets necessary to begin operations as a haulage
Financial statement relationships Key figures have been taken from the x8 accounts of three separate companies. They are given below under columns 1, 2 and 3. The accounts, however, are incomplete.
Recording transactions III Peerless Company is a distributor of wide-screen, high-definition television sets and related equipment.The company was formed in September x1 and its balance sheet just
Deriving financial data and calculating ratios(1) Profit and profit margin data The following income figures have been taken from Mitica Company’s accounts for year 7. (Amounts are in
Constructing an income statement Banting Corporation (name disguised) is a major international pharmaceutical company. Listed below are items and amounts taken from the company’s consolidated
Basic profitability ratios Grupo Inditex is a fast-growing Spanish-owned clothing retailer. Its leading store brand is Zara but it owns several other well-known chains – Massimo Dutti, Pull &
Meaning of debit and credit The Minister of Finance of Euroland announces the introduction of a 20% research and development(R&D) tax credit for all Euroland-based companies. Under the scheme, a
Record-keeping in community bartering schemes Community bartering schemes maintain books of account even though money is not used as a medium of exchange. People join such schemes out of conviction
Recording transactions by journal entries I Carmen opens a tabaquería in Seville in September. She records her initial investment of 10,000 in the business as follows:Cash Capital, Carmen Dr. Cr.
Journal entries, ledger posting and trial balance As we discovered in this chapter, Sam Beckett and Carrie Blixen have established a language school in mainland Europe. Listed below is a summary of
Derivation of revenues and expenses I Alain (‘Al’) Addin runs a shop in Brussels, specialising in the sale of handmade lamps from the Orient.He comes to you early in year 6 with the following
Derivation of revenues and expenses II‘Rollers’ is a shop selling bicycles, skateboards, and rollerblades. Its balance sheets at the beginning and end of the first quarter of x7 are shown in
Recording transactions by journal entries II Refer to P3.1. Set out in the problem are details of Datini SpA’s transactions in January x3.Required(a) Set up ledger accounts for Datini’s wholesale
Errors in recording transactions Charlie Cheeryble of Cheeryble Brothers and Company called Tim Linkinwater, the company controller, into his office one day. ‘This fellow, Nickleby, we’ve hired
Accrual adjustments and accounting records Governments at local and national level are examining new ways of charging motorists directly for road use. One proposal is based on an automatic vehicle
Accrual accounting and debt payments In the 1990s, some of Poland’s fastest growing companies were former foreign trade organisations(FTOs) which turned themselves into conglomerates. Keeping
Accrual adjustments I‘Autovalet’ is a successful chain of car cleaning centres. Some of the centres are owned by the company while others operate under a franchise arrangement – where Autovalet
Accrual adjustments II We learned about Sun, C and Sand in Chapters 2 and 3. The company’s balance sheet on 31 January year 1 – the end of its first month of operations – is set out in Exhibit
Financial statement relationships By coincidence, three separate companies report the same summary balance sheet at the end of year 4.Assets = Liabilities + Shareholders’ equity 105,000 = 50,000 +
Effect of errors on the accounts It’s early in x3. You are examining the financial records of Les Gaulois Company with a view to making an (amicable) bid for the company. You discover that the
Derivation of balance sheet Poseidon Company specialises in the leasing of holiday apartments with boating facilities in the Greek islands. It has asked for your help. It’s January year 3, and
Cash-based and accrual-based accounts compared Daedalus runs a small airline. He keeps his records on a cash basis. Learning that you are a master of the basics of accrual accounting (MBAA), he asks
Earnings, cash flow and dividends(1) The following item appeared in the financial section of a European newspaper:Cash flow behind rise at Kerry KERRY GROUP, the west of Ireland-based meat, dairy and
Income statement format and terminology OMV Group is one of Austria’s largest listed companies and a leading European oil and gas group.The English-language version of its 2000 consolidated income
Balance sheet format and terminology Set out below is the consolidated balance sheet at 23 February 2002 of Tesco plc, a large UK retailer:£m Fixed assets Intangible assets 154 Tangible assets
Identifying operating, investing and financing cash flows Van Baerle Company, a seed and bulb producer, is famous for its tulips, especially the almost black variety, Tulipa ‘A. Dumas’.The
Construction of simple cash flow statement Sonne AG is a magazine publisher and distributor. Set out in Exhibit 6.23 are the company’s balance sheets at the start and end of year 7, together with
Understanding cash flow terminology‘MetroModa is getting to be as laid back as its clothes. Operating working capital soared by over A200 million in x1, absorbing cash needed for expansion and
Ratios in the financial press Newspapers such as the Financial Times and the Wall Street Journal publish share price and dividend data for quoted companies every day. Set out below are data for three
Unusual events: accounting treatment Consider the following events. How do you think each should be accounted for in the light of the IASB’s conceptual framework described in the chapter?(a) A
Accounting for pre-contract costs Amey is a UK-based support services group. It provides a range of services – from IT support to property maintenance – for public sector and private sector
Effect of alternative valuation bases on accounts On 1 January x1, Exprés Company, a distributor of ultra-fast (‘Josep’) coffee-making machines, has 30 in stock with a unit historical cost (and
Effect of alternative capital maintenance objectives on accounts Assume the same facts as in P7.3. In addition, general prices increase by 10% between the start and end of x1.Required(1) Draw up
CPP accounting: purchasing power gains and losses Exprés Company decides to finance part of its assets with debt. Assume its start-x1 balance sheet is as follows:Inventory 75,000 Shareholders’
and P7.4, i.e. start-x1 inventory comprises 30 machines at 2,500 each, 20 are sold at end-x1 – each for 4,000 cash – when the replacement cost is 3,000, and general prices increase 10% in
Long-term debt: impact of alternative valuation bases On 1 January x1, Sylvie Company borrows A750,000 for five years at a fixed interest rate of 6% from Old Goriot Bank. Under the terms of the
Effect of falling prices on corporate financial statements General prices can decrease as well as increase. The most notable example of a country that has experienced falling prices in recent years
Valuation using present value methods*(1) Valuation of bonds at issuance Company X raises A20 million in cash by issuing five-year 5% bonds to investors on 2 January x1.(Bonds are interest-bearing
Fixed asset measurement: which costs to capitalise?Diafoirus, Purgon and Argan (two established doctors, one newly qualified) run a health clinic, Les Médecins Imaginaires (MI). Their practice is
Introduction to depreciation methods The Tivoli Company has just opened a pizza restaurant in Copenhagen. The restaurant contains a new pizza oven which cost 110,000 to buy and install. The oven has
Depreciation: alternative methods and change in estimated useful life Early in January x1, Ionian Airlines purchases a new wide-bodied aircraft for its short- and mediumhaul routes in Europe. The
Depreciation, profits and cash flow Sensing that the business world would profit from closer acquaintance with his fables, Aesop decides to launch a management consulting firm. It begins trading on 1
Economist’s view of depreciation Milton Keynes is puzzled by the accountant’s calculation of depreciation. As an economist, he views depreciation as the decline in an asset’s market value over

Showing 1 - 100 of 1290