A local bank reported that it lost $150,000 as the result of an employee fraud. Edward Jasso is not clear on what is meant by an “employee fraud.” Explain the meaning of fraud to Edward and give an example of frauds that might occur at a bank.
> J. Brownlee Company purchased equipment for $18,000. By the current balance sheet date, $6,000 had been depreciated. Indicate the balance sheet presentation of the data.
> “Depreciation is a valuation process that results in the reporting of the fair value of the asset.” Do you agree? Explain.
> Indicate whether the following accounts generally will have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries. (1) Cash. (2) Accounts Receivable. (3) Dividends. (4) Accounts Payable. (5) Salaries and Wages Expense. (
> For the following transactions, indicate the account debited and the account credited. (a) Supplies are purchased on account. (b) Cash is received on signing a note payable. (c) Employees are paid salaries in cash.
> Indicate whether each of the following accounts is an asset, a liability, or a stockholders’ equity account and whether it has a normal debit or credit balance: (a) Accounts Receivable, (b) Accounts Payable, (c) Equipment, (d) Dividends, and (e) Sup
> State the rules of debit and credit as applied to (a) asset accounts, (b) liability accounts, and (c) the stockholders’ equity accounts (revenue, expenses, dividends, common stock, and retained earnings).
> Olga Conrad, a beginning accounting student, believes debit balances are favorable and credit balances are unfavorable. Is Olga correct? Discuss.
> Can a business enter into a transaction in which only the left side of the basic accounting equation is affected? If so, give an example.
> The basic accounting equation is Assets = Liabilities + Stockholders’ equity. Replacing the words in that equation with dollar amounts, what is Apple’s accounting equation at September 26, 2015?
> What are the normal balances for Apple’s Cash, Accounts Payable, and Interest Expense accounts?
> Two students are discussing the use of a trial balance. They wonder whether the following errors, each considered separately, would prevent the trial balance from balancing. What would you tell them? (a) The bookkeeper debited Cash for $600 and credited
> Juan Kirby is confused about how accounting information flows through the accounting system. He believes the flow of information is as follows. (a) Debits and credits posted to the ledger. (b) Business transaction occurs. (c) Information entered in the j
> Describe a compound entry, and provide an example.
> Listed below are some items found in the financial statements of Jonas Co. Indicate in which financial statement(s) the following items would appear. (a) Service revenue. (e) Retained earnings. (b) Equipment. (f) Salaries and wages (c) Advertising ex
> Indicate how the following business transactions affect the basic accounting equation. (a) Paid cash for janitorial services. (b) Purchased equipment for cash. (c) Invested cash in the business for stock. (d) Paid accounts payable in full.
> The account number is entered as the last step in posting the amounts from the journal to the ledger. What is the advantage of this step?
> (a) When entering a transaction in the journal, should the debit or credit be written first? (b) Which should be indented, the debit or credit?
> Which of the following items are liabilities of jewelry stores? (a) Cash. (f) Equipment. (b) Accounts payable. (h) Service revenue. (c) Dividends. (g) Salaries and wages payable. (d) Accounts receivable. (e) Supplies. (i) Rent expense.
> (a) What is the primary source document for recording (1) cash sales and (2) credit sales? (b) Using XXs for amounts, give the journal entry for each of the transactions in part (a).
> (a) Define the terms assets, liabilities, and stockholders’ equity. (b) What items affect stockholders’ equity?
> What is the basic accounting equation?
> What are the basic steps in the recording process?
> What are the three basic forms of profit-oriented business organizations?
> What is the economic entity assumption?
> What is the monetary unit assumption?
> What is the normal balance for each of the following accounts? (a) Accounts Receivable. (b) Cash. (c) Dividends. (d) Accounts Payable. (e) Service Revenue. (f) Salaries and Wages Expense. (g) Common Stock.
> “Bookkeeping and accounting are the same.” Do you agree? Explain.
> What uses of financial accounting information are made by (a) investors and (b) creditors?
> Tom Dingel, a fellow student, contends that the double-entry system means each transaction must be recorded twice. Is Tom correct? Explain.
> Explain the differences between depreciation expense and accumulated depreciation.
> “The terms debit and credit mean increase and decrease, respectively.” Do you agree? Explain.
> “Accounting is ingrained in our society and it is vital to our economic system.” Do you agree? Explain.
> Liz Kelso is reviewing the principle of segregation of duties. What are the two common applications of this principle?
> In the corner grocery store, all sales clerks make change out of one cash register drawer. Is this a violation of internal control? Why?
> What principles of internal control apply to most organizations?
> Discuss how the Sarbanes-Oxley Act has increased the importance of internal control to top managers of a company.
> “Internal control is concerned only with enhancing the accuracy of the accounting records.” Do you agree? Explain.
> At what amount does Apple report cash and cash equivalents in its 2015 consolidated balance sheet?
> Riverside Fertilizer Co. owns the following assets at the balance sheet date. Cash in bank—savings account……………$ 8,000 Cash on hand………………………………………….850 Cash refund due from the IRS………………. 1,000 Checking account balance……………………14,000 Postdated checks…………
> Anna Korte is confused about the lack of agreement between the cash balance per books and the balance per bank. Explain the causes for the lack of agreement to Anna, and give an example of each cause.
> What are the advantages of using a journal in the recording process?
> “The use of a bank contributes significantly to good internal control over cash.” Is this true? Why or why not?
> What is the essential feature of an electronic funds transfer (EFT) procedure?
> (a) What is a voucher system? (b) What principles of internal control apply to a voucher system?
> Ken Deangelo Company’s internal controls over cash disbursements provide for the treasurer to sign checks imprinted by a check-writing machine in indelible ink after comparing the check with the approved invoice. Identify the internal control principles
> “To have maximum effective internal control over cash disbursements, all payments should be made by check.” Is this true? Explain.
> At Kellum Wholesale Company, two mail clerks open all mail receipts. How does this strengthen internal control?
> What principle(s) of internal control is (are) involved in making daily cash counts of over-the-counter receipts?
> What internal control objectives are met by physical controls?
> “The selection of an inventory cost flow method is a decision made by accountants.” Do you agree? Explain. Once a method has been selected, what accounting requirement applies?
> Juana Perez is the owner of a successful printing shop. Recently, her business has been increasing, and Juana has been thinking about changing the organization of her business from a proprietorship to a corporation. Discuss some of the advantages Juana w
> Describe the parts of a T-account.
> What are the components of a hospital’s net patient service revenue?
> Select the correct response for each of the following. (Note: The following data are for items 1 through 3.) Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for the year ended December 31, 2
> 1. Which of the following statements is correct? I. I n the government wide financial statements, internal service fund activities are reported in the Governmental Activities column. II. The total balance for the governmental funds that is reported
> What is the basis of accounting in a hospital’s general fund? In its restricted funds?
> 1. Which of the following accounts could be included in an enterprise fund’s statement of net position? 2. Customers’ meter deposits that cannot be spent for normal operating purposes would most likely be classified
> Select the correct answer for each of the following. 1. On December 31, 20X1, Tiffin Township paid a contractor $2,000,000 for the total cost of a new firehouse built in 20X1 on township-owned land. Financing was by means of a $1,500,000 general obl
> 7. On the statement of net position prepared at June 30, 20X5, what amount should be reported for total net position? a. $8,839,000. b. $7,804,000 c. $7,150,000 d. $8,189,000 8. On the statement of net position prepared at June
> Should a rotary club, an ONPO, report depreciation expense? Why or why not?
> Select the correct response to each of the following. 1. The government wide financial statements use the a. Economic resources measurement focus and the accrual basis of accounting. b. Current financial resources measurement focus and the accrual
> The numbered items on the left consist of a variety of transactions and events that occurred in the capital projects and debt service funds of Walton City for the year ended June 30, 20X9. Items A, B, and C on the right represent three categories that ar
> The numbered items on the left consist of a variety of transactions that occurred in Jeffersen City’s water utility enterprise fund for the year ended June 30, 20X9. Items A, B, C, and D on the right represent the four categories of cas
> The numbered items on the left consist of a variety of transactions that occur in a municipality. The lettered items on the right consist of various ways to record the transactions. Select the appropriate method for recording each transaction. Some trans
> Mountain View City is preparing its government wide financial statements for the year. As of the year-end, the city has determined the following information for its capital assets, exclusive of its infrastructure assets: 1. On the government wide state
> 1. Which basis of accounting should a voluntary health and welfare organization use? a. Cash basis for all funds. b. Modified accrual basis for all funds. c. Accrual basis for all funds. d. Accrual basis for some funds and modified ac
> On August 1, 20X6, the City of Rock haven received $1,000,000 from a prominent citizen to establish a private-purpose trust fund. The donor stipulated that the cash be permanently invested and that the earnings from the investments be spent to support lo
> Do agency funds have a net fund balance? Why or why not?
> What is a VHWO’s basis of accounting for unrestricted assets and restricted assets?
> Is depreciation accounted for by a hospital? Why or why not?
> Where is a gain on the sale of hospital properties recorded by a hospital? How is the gain reported in the hospital’s financial statements?
> 1. For the summer session of 20X2, Pacific University assessed its students $1,700,000 (net of refunds) covering tuition and fees for educational and general purposes. However, only $1,500,000 was expected to be realized because scholarships totaling $15
> Smith was approached by a man who introduced himself as Brown of Brown & Co. Smith, who did not know Brown, asked Dun & Bradstreet for a credit report on Brown. He thereupon sold Brown some expensive gems and billed Brown & Co. “Brown” turned out to be a
> Franco, a New York dealer, purchased twenty-five barrels of specially graded and packed apples from a producer at Hood River, Oregon under a contract that specified an agreed price on delivery at Franco’s place of business in New York. The apples were sh
> Farber owned a quantity of corn that was stored in a corncrib located on Farber’s farm. On March 12, Farber wrote a letter to Barber stating that he would sell to Barber all of the corn in this crib, which he estimated at between nine hundred and one tho
> Brown contracted to buy sixty cases of Lovely Brand canned corn from Smith, a Toledo seller, at a contract price of $1,260. Based on the contract, Smith selected and set aside sixty cases of Lovely Brand canned corn and tagged them “For Brown.” The contr
> On May 10, the Adair Company, acting through one Brown, entered into a contract with Clark for the installation of a milking machine at Clark's farm. Following the enumeration of the articles to be furnished, together with the price of each article, the
> Regan received a letter from Chase, the material portion of which stated, “Chase hereby places an order with you for fifty cases of Red Top Tomatoes. Ship them C.O.D.” As soon as he received the letter, Regan shipped the tomatoes to Chase. While en route
> Mike Moses purchased a mobile home, including installation, from Gary Newman. Newman delivered the home to Moses’s lot. Upon inspection of the home, Moses’s fiancée found a broken window and water pipe. Moses also had not received keys to the front door.
> Fred Lane, who sells boats, motors, and trailers, sold a boat, motor, and trailer to John Willis in exchange for a check for $6,285. The check was not honored when Lane attempted to use the funds. Willis subsequently left the boat, motor, and trailer wit
> Home Indemnity, an insurance company, paid one of its insureds after the theft of his car. The car reappeared in another state and was sold to Michael Schrier for $8,300 by a used car dealer. The dealer promised to give Mr. Schrier a certificate of title
> McCoy, an Oklahoma cattle dealer, orally agreed with Chandler, a Texas cattle broker, to ship cattle to a New Mexico feedlot for delivery to Chandler. The agreement was for six lots of cattle valued at $119,000. After McCoy delivered the cattle, he prese
> On December 2, 2015, Miles executed and delivered to Proctor a negotiable promissory note for $1,000, payable to Proctor or order due March 2, 2016, with interest at 14 percent from maturity, in partial payment of a printing press. On January 3, 2016, Pr
> A seller had manufactured forty thousand pounds of plastic resin pellets especially for a buyer, who agreed to accept them at the rate of one thousand pounds per day upon his issuance of shipping instructions. Despite numerous requests by the seller, the
> Johnson, who owns a hardware store, was indebted to Hutchinson, one of his suppliers. Johnson sold his business to Lockhart, one of Johnson’s previous competitors. Lockhart combined the inventory from Johnson’s store with his own and moved the combined i
> On February 7, Pillsbury purchased eight thousand bushels of wheat from Landis. The wheat was being stored at the Greensville Grain Company. Pillsbury also intended to store the wheat with Greensville. On February 10, the wheat was destroyed. Landis dema
> Justin told Jennifer he wished to buy Jennifer’s collection of antique watches. He told Jennifer he wanted to take the watches to his partner for evaluation. Justin then left with the watches and never returned. Justin sold the watches in another state t
> Stein, a mechanic, and Beal, a life insurance agent, entered into a written contract for the sale of Stein’s tractor to Beal for $6,800 cash. It was agreed that Stein would tune the motor on the tractor. Stein fulfilled this obligation and on the night o
> The plaintiff, while driving a pickup manufactured by the defendant, was struck in the rear by another motor vehicle. Upon impact, the plaintiff’s head was jarred backward against the rear window of the cab, causing the plaintiff serious injury. The pick
> The plaintiff brings this cause of action against a manufacturer for the loss of his leg below the hip. The leg was lost when caught in the gears of a screw auger machine sold and installed by the defendant. Shortly before the accident, the plaintiff’s c
> Fred Lyon of New York, while on vacation in California, rented a new model Home Run automobile from Hart’s Drive-A-Car. The car was manufactured by the Ange Motor Company and was purchased by Hart’s from Jammer, Inc., an automobile importer. Lyon was dri
> Testator gives property to Timothy in trust for Barney’s benefit, providing that Barney cannot assign or pledge future trust income. Barney borrows money from Linda, assigning his future income under the trust for a stated period. Can Linda obtain any ju
> Under an oral agreement, Hyer rented from Bateman a vacant lot for a filling station. Hyer placed on the lot a lightly constructed building bolted to a concrete slab and several storage tanks laid on the ground in a shallow excavation. Later, Hyer prepar
> Graham owns a building having a fair market value of $120,000. She takes out a fire insurance policy from the Bentley Insurance Company for $72,000; the policy contains an 80 percent co-insurance clause. The building is damaged by fire to the extent of $
> On July 15, Adler purchased in Chicago a Buick sedan, intending to drive it that day to St. Louis, Missouri. He telephoned a friend, Maruchek, who was in the insurance business, and told him that he wanted liability insurance on the automobile, limited i
> Seindenberg and Hutchinson (the site owners) leased a four-acre tract of land (the Bluff Road site) to a chemical manufacturing corporation (COCC). While the lease initially was for the sole purpose of allowing COCC to store raw materials and finished pr
> Atlantic Cement operated a large cement plant. Neighboring landowners sued for damages and an injunction, claiming that their properties were injured by the dirt, smoke, and vibrations coming from the plant. The lower court found that the plant constitut
> Frank finds Thomas’s wallet, which contains many credit cards and Thomas’s identification. By using Thomas’s identification and VISA card, Frank goes on a shopping spree and runs up $5,000 in charges. Thomas does not discover that he has lost his wallet
> Jane Jones, a married woman, applies for a credit card from Exxon but is refused credit. Jane is bewildered as to why she was turned down. What are her legal rights in this situation?
> Central Adjustment Bureau allegedly threatened Consumer with a lawsuit, service at his office, and attachment and sale of his property in order to collect a debt, although it did not intend to carry out the threat and did not have the authority to commen
