Ch.7solutions

Ch.7solutions - CHAPTER 7 Internal Control and Cash Study...

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Unformatted text preview: CHAPTER 7 Internal Control and Cash Study Objectives 1. Identify the principles of internal control. 2. Explain the applications of internal control to cash receipts. 3. Explain the applications of internal control to cash disbursements. 4. Prepare a bank reconciliation. 5. Explain the reporting of cash. 6. Discuss the basic principles of cash management. 7. Identify the primary elements of a cash budget. Summary of Questions by Study Objectives and Blooms Taxonomy Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT Questions 1. 1 C 6. 1 C 11. 5 AP 16. 3 C 21. 6 C 2. 1 K 7. 1 C 12. 2 C 17. 3 K 22. 4 C 3. 1 C 8. 1 C 13. 2 C 18. 3 K 23. 5 C 4. 1 C 9. 1 C 14. 2 C 19. 3 C 24. 8* C 5. 1 C 10. 1 C 15. 3 C 20. 4 C Brief Exercises 1. 1 C 4. 3 C 7. 4 C 9. 4 AP 11. 7 AP 2. 1 C 5. 3 C 8. 4 AP 10. 5 C 12. 8* AP 3. 2 C 6. 4 C Exercises 1. 1 C 5. 1, 3 E 8. 4 AP 11. 4 AP 14. 7 AP 2. 1 C 6. 4 AP 9. 4 AP 12. 5 AP 15. 8* AP 3. 1, 2 E 7. 4 AP 10. 4 AP 13. 6 C 16. 8* AP 4. 1, 3 E Problems: Set A 1. 1, 2 C 3. 4 AP 5. 4 AP 7. 7 AP 8. 1, 2, 3, 4 E 2. 1, 2, 3 C 4. 4 AP 6. 7 AP Problems: Set B 1. 1, 3 C 3. 4 AP 5. 4 AP 7. 7 AP 8. 1, 2, 3, 4 E 2. 1, 2 C 4. 4 AP 6. 7 AP 7-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Identify internal control weaknesses for cash receipts. Simple 2030 2A Identify internal control weaknesses in cash receipts and cash disbursements. Simple 2030 3A Prepare bank reconciliation and adjusting entries. Simple 2030 4A Prepare bank reconciliation and adjusting entries from de- tailed data. Moderate 4050 5A Prepare a bank reconciliation and adjusting entries. Moderate 3040 6A Prepare a cash budget. Moderate 3040 7A Prepare a cash budget. Moderate 3040 8A Prepare comprehensive bank reconciliation with theft and internal control deficiencies. Complex 4050 1B Identify internal control principles for cash disbursements. Simple 2030 2B Identify internal control weaknesses in cash receipts. Simple 2030 3B Prepare bank reconciliation and adjusting entries. Simple 2030 4B Prepare bank reconciliation and adjusting entries from de- tailed data. Moderate 4050 5B Prepare a bank reconciliation and adjusting entries. Moderate 3040 6B Prepare a cash budget. Moderate 3040 7B Prepare a cash budget. Moderate 3040 8B Prepare comprehensive bank reconciliation with theft and internal control deficiencies. Complex 4050 7-2 ANSWERS TO QUESTIONS 1. Disagree. Internal control is also concerned with the safeguarding of company assets from em- ployee theft, robbery, and unauthorized use. 2. The Sarbanes-Oxley Act requires that a company develop sound principles of control over financial reporting and continually verify that these controls are working. The act specifically requires top management to attest that the companys internal controls are reliable and effective. In order to achieve and maintain the required level of control, all employees must be educated with regard to...
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Ch.7solutions - CHAPTER 7 Internal Control and Cash Study...

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