Sol_FAll2006_E1 - ACCTG 321 Fall, 2006 Exam I - Solution I....

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ACCTG 321 Fall, 2006 Exam I - Solution I. A. Shipping personnel should be required to document (on paper or by computer) receipt of goods from the finished goods storeroom. This procedure acknowledges responsibility for custody of the goods transferred. B. A receiving report should be required to support the authorization of credits for sales returns. C. Shipping personnel should be required to record the actual quantity shipped on the order document and/or enter the quantity shipped into the sales order processing system, in order that bills can be prepared based upon the quantity shipped rather than the quantity ordered. D. Supervision of mailroom operations, limitation of authority to endorse checks to the cashier only, and instructions to the bank to accept only those checks endorsed for deposit in the company's account. E. All sales tickets should be prenumbered and accounted for. This would allow one to quickly spot a missing ticket. F. Segregate shipping and billing functions. G. A system of user IDs and passwords is the first line of defense. Implement access controls over individual terminals, and maintain activity logs. H. Regular backups, with copies being stored off-site. I. Encrypting sensitive data prior to transmission, creating virtual private networks, and transmitting data over secure socket layer (SSL) networks. J. Periodically testing backup data for access and compatibility with current company hardware and software. 1
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II. A. 2003 Net Income 3,000 UNDER 2003 Retained Earnings NO EFFECT 2003 Working Capital NO EFFECT 2004 Net Income 1,900 OVER 2004 Retained Earnings 1,900 OVER 2004 Working Capital 1,900 OVER 2005 Net Income 1,900 UNDER 2005 Retained Earnings NO EFFECT 2005 Working Capital NO EFFECT 2002 2003 2004 2005 Beg. Inv. 3,000 Over 1,200 Over + Purch. 700 Under 700 Over -End. Inv. 3,000 Over -------------- 1,200 Over ---------------- C.G.S. 3,000 Under 3,000 Over 1,900 Under 1,900 Over Net. Inc. 3,000 Over 3,000 Under 1,900 Over 1,900 Under R.E. 3,000 Over No Effect 1,900 Over No Effect W.C. 3,000 Over No Effect 1,900 Over No Effect 2
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B. 2003 Net Income 162,000 OVER 2003 Retained Earnings 162,000 OVER 2003 Working Capital 28,000 OVER 2004 Net Income 848,000 UNDER 2004 Retained Earnings 686,000 UNDER 2004 Working Capital 44,000 OVER 2005 Net Income 136,000 OVER 2005 Retained Earnings 550,000 UNDER 2005 Working Capital NO EFFECT $1,000,000 x 90% = $900,000 $900,000/5 = $180,000 Depreciation per year $72,000/18 = $4,000 rental income per year Only 12 months of unearned rental income is current. 2003
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This note was uploaded on 09/09/2009 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

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Sol_FAll2006_E1 - ACCTG 321 Fall, 2006 Exam I - Solution I....

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