1. Briefly describe internal control and how can it be used to protect assets. How can petty cash funds be used for internal control purposes?
2. Why are bank accounts used? What is bank reconciliation, and why should a business use it?
3. Why is it necessary to record journal entries after the bank reconciliation has been prepared?
4. What does the cash ratio help to determine? Explain your reasoning and support your answer.
5. On which financial statement would you find Accounts Receivable (A/R)? Explain common types of receivables.
6. Explain unearned revenues and how unearned revenues arise.
7. Explain what a warranty is and when businesses record warranty expense, and why.
8. Explain contingent liabilities. How should a company handle contingent liabilities that are reasonable, possible, or probable but cannot be estimated?