Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter D, Problem 1DC
Lance Berkman is the controller of Saturn, a dance club whose year-end is December 31. Berkman prepares checks for suppliers in December, makes the proper
Requirements
- 1. What financial ratio(s) is(are) most affected by the action to hold onto the checks until January?
- 2. What is Berkman’s purpose in undertaking this activity?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Your small business client, Phillip’s Computer Repair Shop, is experiencing financial difficulties and has to lay off one of its four employees in the accounting area. Phillip has asked you to determine what duties should be assigned to the three remaining employees—Abigail, Bryan, and Chris—to maintain the best separation of duties.Required:Assign the following 10 duties to each of the three employees.a. Reconcile bank statement.b. Open mail and list checks.c. Prepare checks for Phillip’s signature.d. Prepare payroll checks.e. Maintain personnel records.f. Prepare deposit and take to bank.g. Maintain petty cash.h. Maintain accounts receivable records.i. Maintain general ledger.j. Reconcile accounts receivable records to general ledger account.
What financial ratio is most affected by the action of the controller holding on to the checks he creates in December until January? What is his purpose for doing this if he already posted all of the journal entries?
brenda, an accounts payable employee, is going out on maternity leave for three months. susan, another member of the accounting department who is
responsible for bank reconciliations and filing, has given her two weeks’ notice. their departures leave just your three existing members of the accounting
department. what is your plan to cover their responsibilities? write a memo to the ceo of your company, from a controller’s perspective, considering the need
for internal controls.
Chapter D Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. D - Prob. 1TICh. D - Prob. 2TICh. D - Prob. 3TICh. D - Prob. 4TICh. D - Prob. 5TICh. D - Prob. 6TICh. D - Prob. 7TICh. D - Prob. 8TICh. D - Prob. 9TICh. D - Prob. 10TI
Ch. D - Prob. 1QCCh. D - Prob. 2QCCh. D - Vertical analysis of Libertys balance sheet for...Ch. D - Prob. 4QCCh. D - Libertys inventory turnover during 2019 was...Ch. D - Prob. 6QCCh. D - Prob. 7QCCh. D - Prob. 8QCCh. D - Prob. 9QCCh. D - Prob. 10QCCh. D - Prob. 1RQCh. D - Prob. 2RQCh. D - Prob. 3RQCh. D - Prob. 4RQCh. D - Prob. 5RQCh. D - Prob. 6RQCh. D - Prob. 7RQCh. D - Prob. 8RQCh. D - Prob. 9RQCh. D - Prob. 10RQCh. D - Prob. 11RQCh. D - Prob. 12RQCh. D - Prob. 13RQCh. D - Prob. 1SECh. D - Verifine Corp. reported the following on its...Ch. D - Prob. 3SECh. D - Prob. 4SECh. D - Prob. 5SECh. D - Prob. 6SECh. D - Prob. 7SECh. D - Accels Companies, a home improvement store chain,...Ch. D - Prob. 9SECh. D - Prob. 10SECh. D - Prob. 11SECh. D - Prob. 12SECh. D - Prob. 13ECh. D - Prob. 14ECh. D - Prob. 15ECh. D - Refer to the data presented for Mulberry Designs,...Ch. D - Prob. 17ECh. D - Prob. 18ECh. D - Prob. 19ECh. D - Micatin, Inc.s comparative income statement...Ch. D - Prob. 21ECh. D - Prob. 22ECh. D - Prob. 23APCh. D - Prob. 24APCh. D - Prob. 25APCh. D - Prob. 26APCh. D - Comparative financial statement data of Sanfield,...Ch. D - Prob. 28APCh. D - Prob. 29APCh. D - Prob. 30BPCh. D - Prob. 31BPCh. D - Prob. 32BPCh. D - Prob. 33BPCh. D - Prob. 34BPCh. D - Prob. 35BPCh. D - In its annual report, XYZ Athletic Supply, Inc....Ch. D - Prob. 38PCh. D - Lance Berkman is the controller of Saturn, a dance...Ch. D - Prob. 1EICh. D - Prob. 1FSC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Bobby is accounting manager of Home Depot, home building materials retailer whose year-end is December 31. He prepares checks for suppliers in December, makes the proper journal entries, and posts them to the appropriate accounts in that month. However, he holds on to the checks and mails them to the suppliers in January. Required: 1. What financial ratios are most affected by the action? 2. Through this activity, what would Bobby want to achieve?arrow_forwardThe vice president of finance asks the accounts payable (AP) clerk to write a check in the name of the president for $10,000. He and the president will sign the check (two signatures needed on a check of this size). He further instructs the AP clerk not to disclose this check to her immediate supervisor. What should the AP clerk do? Should she prepare the check? Should she inform her immediate supervisor? Discuss with internal controls in mind.arrow_forwardYour client is preparing financial statements to show the bank. You know that he has incurred a refrigeration repair expense during the month, but you see no such expense on the books. When you question the client, he tells you that he has not yet paid the 1,255 bill. Your client is on the accrual basis of accounting. He does not want the refrigeration repair expense on the books as of the end of the month because he wants his profits to look good for the bank. Is your client behaving ethically by suggesting that the refrigeration repair expense not be booked until the 1,255 is paid? Are you behaving ethically if you agree to the clients request? What principle is involved here?arrow_forward
- Weyman Z. Wannamaker is the chief financial officer of Cogburn Company. He prides himself on being able to manage the company’s cash resources to minimize the interest expense. Consequently, on the second business day of each month, Weyman pays down or draws cash on Cogburn’s revolving line of credit at First National Bank in accordance with his cash requirements forecast.You are the auditor. You find the information on this line of credit in the following table. You inquired at First National Bank and learned that Cogburn Company’s loan agreement specifies payment on the first day of each month for the interest due on the previous month’s outstanding balance at the rate of “prime plus 1.5 per cent.” The bank gave you a report that showed the prime rate of interest was 8.5 per cent for the first six months of the year and 8.0 per cent for the last six months. Check the following image for payable balances Required:a. Prepare an audit estimate of the amount of interest expense you…arrow_forwardYou are the auditor for Lambda Ltd, a sportswear company. The following is an excerpt from an interview between you and the sales ledger clerk, Sandy. Auditor: What are the controls over the cash receipts your company receives?Sandy: Good. The receptionist opens the mail each day and makes sure each cheque is crossed. She then gives me all the cheques to post against the sales ledger.Auditor: What happens then?Sandy: I make a list of all the cheques received – for control purposes. Then I record each cheque against each customer’s record on the sales ledger. After the cheques have accumulated for a couple of days, I give them to the receptionist to bank. The receptionist keeps all the bank-in slips as a record in case there are any queries later.Auditor: Are there ever any difficulties between the cheque value and the associated invoice?Sandy: Sometimes there are. Usually it relates to a special discount that has been authorised by me or the sales manager. If the differences are not…arrow_forwardYou are the auditor for Konerko’s Office Supply Store, which is opening for business next week. The store owner has established all the controls you have recommended for ensuring that sales are recorded properly and cash is accounted for. The owner has heard from other small business owners that employees often used returned goods as means of skimming money from the register.Required:a. How might an employee use returned goods to skim money from the register?b. What controls would you recommend to prevent or detect fraudulent returns?c. What audit procedures might you perform to detect fraudulent returns?arrow_forward
- What financial ratios are most affected by the controller holding checks written in December, until January to their suppliers. What purpose would it serve for him to do so?arrow_forwardMiss Anglea recently joined A2A Limited as an accounting clerk. As a part of financial reporting process, she receives the following source documents to prepare journal vouchers for general ledger entries. purchase orders, sales invoices, and vendor invoices At the end of each day, Angela posts the journal vouchers to the general ledger and the related subsidiary ledgers. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Required: Discuss any control weaknesses and risks associated with the accounting information system of A2A Limited. Please provide references as well.arrow_forwardThe A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend to deposit in his bank account, and then he writes her a personal check for the full amount of $145. What can the company do to prevent this type of behavior?arrow_forward
- Miss Angela recently joined A2A Limited as an accounting clerk. As a part of the financial reporting process, she receives the following source documents to prepare journal vouchers for general ledger entries. purchase orders, sales invoices, and vendor invoices Angela posts the journal vouchers to the general ledger and the related subsidiary ledgers at the end of each day. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Required: Discuss any control weaknesses and risks associated with the accounting information system of A2A Limited.arrow_forwardThe A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend to deposit in his bank account, and then he writes her a personal check for the full amount of $145. Eventually, what will be the effect of her actionsarrow_forwardJanice Dodds opens the mail for the Ajax Plumbing Company. She lists all customer checks on a spreadsheetthat includes the name of the customer and the check amount. The checks, along with the spreadsheet, are thensent to Jim Seymour in the accounting department who records the checks and deposits them daily in the company’s checking account. How could the company improve its internal control procedure for the handling of itscash receipts?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY