February 24, 2011
Supplemental Instruction
IowaStateUniversity / Leader: / Allie P.
Course: / ACCT 284 (CD)
Instructor: / D. Whittle
1)Matching. Match each of the key terms listed below with the appropriate definition.
______Bank Reconciliation______Cash
______Cash Equivalents______Gross Profit
______Internal Control______Manufacturing Company
______Merchandising Company______NSF Check
______Segregation of Duties______Service Company
a)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
b)An internal control that involves separating employees’ duties so that the work of one person can be used to check the work of another person.
c)Short-term, highly liquid investments purchased within three months of maturity.
d)Sells services rather than physical goods.
e)Arises when the check writer does not have enough funds to cover the amount of the check
f)Sells goods that have been obtained from a supplier
g)Net sales minus cost of goods sold
h)Includes money or any instrument that banks will accept for deposit and immediate credit to a company’s account, including currency, checks, money orders, or bank drafts
i)Sells goods that it has made itself.
j)Methods that a company uses to protect itself against theft of assets, to enhance the reliability of accounting information, to promote efficient and effective operations, and to ensure compliance with applicable laws and regulations.
2)Matching.The following is a list of five basic internal control principles. Match each of the internal control principles with the appropriate description.
______Prepare paperwork to show activities that have occurred.
______Assign each task to only one employee.
______Check the work of others.
______Do not provide access to assets or information unless needed to fulfill assigned responsibilities.
______Do not make one employee responsible for all parts of a transaction.
a)Establish responsibility
b)Segregate duties
c)Restrict access
d)Document procedures
e)Independently verify
3)Cyclone Chocolates is a store here in Ames. The following information describes the store’s operations.
Cyclone Chocolates has many different products available to purchase; some products are purchased from a supplier, while others are made in-house. All products, regardless of origin, are labeled with a barcode. When a customer arrives at the cash register to purchase products, the desired products are scanned, and a price appears on a screen for the customer to read. At the end of the transaction, the cashier accepts payment and the cash register prints a receipt.
What type of inventory system does Cyclone Chocolates likely utilize?
4)Given the following information, what is the gross profit for Zany Industries?
Cost of Goods Sold$65,000
Income Tax Expense 4,500
Net Sales100,000
Operating Expenses 20,000
5)Which of the following statements regarding the establishment and assignment of specific responsibilities is not correct?
a)A cashier should be responsible for collecting cash and issuing a receipt at the point of sale.
b)A supervisor should be responsible for taking custody of the cash at the end of each cashier’s shift and depositing it in the bank.
c)Members of the accounting staff should be responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system.
d)Segregating the duties helps to ensure efficiency of operations because the person who handles the cash also records transactions relating to it.
6)Which of the following statements regarding inventory systems is not correct?
a)Periodic systems require that inventory be physically counted at the end of the period.
b)Bar codes and optical scanners are used extensively in a periodic inventory system.
c)Perpetual systems update accounting records every time an item is bought, sold, or returned.
d)Perpetual inventory systems allow manners to continually estimate shrinkage.
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