1. "The steps in the accounting cycle for a merchandising company are different from the accountingcycle for a service company." Do you agree or disagree? Explain.2. A local bank reported that it lost $150,000 as the result of an employee fraud. Mr. X is not clearon what is meant by an "employee fraud." Explain the meaning of fraud to Mr. X and giveexamples of frauds that might occur at a bank.3. On September 1, ABC Company had an inventory of 30 calculators at a cost of $18 each. Thecompany uses a perpetual inventory system. During September, the following transactionsoccurred. Sept. 6 Purchased 80 calculators at $20 each from DeVito Co. for cash. Sept. 9 Paidfreight of $80 on calculators purchased from DeVito Co. Sept. 10 Returned 2 calculators to DeVitoCo. for $42 credit (including freight) because they did not meet specifications. Sept. 12 Sold 26calculators costing $21 (including freight) for $31 each to Mega Book Store, terms n/30. Sept. 14Granted credit of $31 to Mega Book Store for the return of one calculator that was not ordered.Sept. 20 Sold 30 calculators costing $21 for $31 each to Barbara's Card Shop, terms n/30.Required: Journalize the September transactions.4. The following information pertains to PQR Company. 1. Cash balance per bank, July 31, $7,263. 2.July bank service charge not recorded by the depositor $28. 3. Cash balance per books, July 31,$7,284. 4. Deposits in transit, July 31, $1,500. 5. Bank collected $900 note for PQR in July, plusinterest $36, less fee $20.The collection has not been recorded by PQR, and no interest has beenaccrued, 6. Outstanding checks, July 31, $591.Required: Prepare a bank reconciliation at July 31.5. KLM Company reports the following for the month of June.June 1: Inventory 200 units @ $5 $1,000 June 12 :Purchase 300 units @ $6 $ 1,800June: 23 Purchase 500units @$ 7 $3,500 June: 30 Inventory 120 UnitsRequired: Compute the cost of the ending inventory and the cost of goods sold under FIFOMethod,

Answered: 1. "The steps in the accounting cycle…

1. "The steps in the accounting cycle for a merchandising company are different from the accounting cycle for a service company." Do you agree or disagree? Explain.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 54P

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Similar questions

1. A local bank reported that it lost $150,000 as the result of employee fraud. Ray Fairburn is not clear on what is meant by "employee fraud." Explain the meaning of fraud to Ray and give an example of fraud that might occur at a bank.
Consider the scenario in which Brooke Miles, an accounts payable clerk for West Coast Design Inc., misappropriated $48,350 by paying false bills for commodities that were never delivered to the company. It was the clerk's responsibility to open accounts in the names of the phony corporations and pay the cheques at a nearby bank. Describe a fraud-prevention or detection method that may have been used to avoid or identify the scam.
Jane Ellerby and Sam Callison are discussing the recent fraud that occurred at LowRental Leasing, Inc. The fraud involved the improper reporting of revenue to ensure that the company would have income in excess of $1 million. What is fraudulent financial reporting, and how does it differ from an embezzlement of company funds?
Allison Everhart, an employee in accounts payable, believes she can run a fictitious invoice through the accounts payable system and collect the money. She knows payments are subject to an audit. Which account would be the best place to hide the fraud?a. Inventory.b. Wage expense.c. Consulting service expense.d. Property tax expense.
Match each situation with the fraud triangle factor (opportunity, financial pressure, or rationalization) that best describes it. (a). An employee has check-writing and -signing responsibilities for a small company, and is also responsible for reconciling the bank account. (b) An employee earns minimum wage at a firm that has reported record earnings for each of the last five years. (c) An employee has an expensive gambling habit. (d) An employee's monthly credit card payments are nearly 75% of her monthly earnings
if a manager is incharge of the Credit Right Software Corp department which involves sells leading account sooftare product and two of his employess commited fraud. How should the manager prepare himself to understand what causes individuals to commit fraud and how it happens?
Which of the following statements is correct? Select one: a. Account receivable turnover is equal to net credit sales divided by average net accounts receivable. b. Buying aged receivables from businesses and then collects the payments directly from the customers is called Allowance for uncollectible accounts. c. Auto generated document numbers is a fraud preventive method which is more efficient than physical controls. d. If the same people are responsible for a series of related accounting activities is called Segregation of Duties.
Fraud refers to any intentional act to achieve gain, usually monetary. Committing a fraud isunethical and resulting in bad consequences, not just to the perpetrator, but also others (e.g.shareholders, workers etc.). Several example of fraud scenario are listed as follows:i). Store manager misused company’s car for personal purpose because he is the onlyperson that monitor the movement and usage of the car.ii). The accountant and the store keeper of AAA Enterprise co-operate in stealing thecompany’s inventory and they gain a lot of money from it.iii). The Chief Financial officer (CFO) of ABC Sdn Bhd had reported over $700,000 fakeearnings because he wants to achieve sales target.iv). XYZ Sdn Bhd booked revenues earlier than it should have because it was at risk ofmissing analyst estimates.Required;a. Identify the type of fraud committed in the scenario i). to iv). b. Based on the fraud triangle (i.e. pressure, opportunity and rationalization), identify thecause of fraud happen in the…
Which of the following scenarios reduces the risk of an employee fraud? Group of answer choices An accountant being responsible for approving payments to a vendor The bank reconciliation being prepared by an accountant Remittance advices being sent directly to the cashier A sales clerk having access to the cash register
Which of the following combinations is a good way to conceal employee fraud but an ineffective means of perpetrating management (financial reporting) fraud?a. Overstating sales revenue and overstating customer accounts receivable balances.b. Overstating sales revenue and overstating bad debt expense. c. Understating interest expense and understating accrued interest payable.d. Omitting the disclosure information about related-party sales to the president’s relatives at below-market prices.
Fictitious accounting entries are recorded that cause revenue to be overstated by $5 millionfor the year; the accounting manager was trying to make the company’s income look betteron the company’s upcoming loan application. This type of fraud is:a. asset misappropriation.b. fraudulent financial reporting.c. GAAP disordering.d. IFRS misalignment.
Why should the responsibility for a sequence of related operations be divided among different persons? Explain. The ticket seller at a movie theater doubles as a ticket taker for a few minutes each day while the ticket taker is on a break. Which control procedure of a business’s system of internal control is violated in this situation? Do items reported as a credit memorandum on the bank statement represent (a) additions made by the bank to the company’s balance or (b) deductions made by the bank from the company’s balance? Explain.