Fin AC- Bus Decsn 4e- Ch 07- EOC Sol

Fin AC- Bus Decsn 4e- Ch 07- EOC Sol - CHAPTER 7 Internal...

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7-1 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 Bloom’s 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. 2. 1, 2, 3C 4. 4 AP 6. 7 AP 1, 2, 3, 4 E Problems: Set B 1. 1, 3 C 3. 4 AP 5. 4 AP 7. 7 AP 8. 2. 1, 2 C 4. 4 AP 6. 7 AP 1, 2, 3, 4 E
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7-2 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Identify internal control weaknesses for cash receipts. Simple 20–30 2A Identify internal control weaknesses in cash receipts and cash disbursements. Simple 20–30 3A Prepare bank reconciliation and adjusting entries. Simple 20–30 4A Prepare bank reconciliation and adjusting entries from detailed data. Moderate 40–50 5A Prepare a bank reconciliation and adjusting entries. Moderate 30–40 6A Prepare a cash budget. Moderate 30–40 7A Prepare a cash budget. Moderate 30–40 8A Prepare comprehensive bank reconciliation with theft and internal control deficiencies. Complex 40–50 1B Identify internal control principles for cash disbursements. Simple 20–30 2B Identify internal control weaknesses in cash receipts. Simple 20–30 3B Prepare bank reconciliation and adjusting entries. Simple 20–30 4B Prepare bank reconciliation and adjusting entries from detailed data. Moderate 40–50 5B Prepare a bank reconciliation and adjusting entries. Moderate 30–40 6B Prepare a cash budget. Moderate 30–40 7B Prepare a cash budget. Moderate 30–40 8B Prepare comprehensive bank reconciliation with theft and internal control deficiencies. Complex 40–50
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7-3 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 company’s 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 internal control principles and evaluated for compliance with expected procedures on a regular basis.
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This note was uploaded on 07/20/2009 for the course FI 504 taught by Professor Mrsmith during the Spring '09 term at DeVry Addison.

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Fin AC- Bus Decsn 4e- Ch 07- EOC Sol - CHAPTER 7 Internal...

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