Quiz _2 - Winter 2010 - solutions

Quiz _2 - Winter 2010 - solutions - 2 The company could...

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MGT201 Quiz #2 - Solutions Winter 2010 Part A (9 marks ) Missing Internal Control Implication Solution - segregation of duties - fraud/ misappropriation of assets - Have owner do some functions - eg. Bank reconciliation or deposit $ in bank - physical measure - fraud/ concealing cash/ not registering sales/bank deposits can go missing - ensure that all sales are entered in the cash register Independent verification -fraud/ missappropriation of assets - the owner should be overseeing the business - Proper documentation procedures -fraud/ missappropriation of assets - need “audit trail” so that things can be traced back. The cash register should be used for cash sales also Part B (5 marks)
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1. A 2. B 3. A 4. C 5. C Part C ( 8 marks) Advantages: 1. Periodic lease payments may be financially easier to manage than having to find large amounts of cash to periodically replace vehicles.
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Unformatted text preview: 2. The company could decide to replace its vehicles more often, which would result in the leasing of vehicles being more efficient. 3. The company may be able to have a repair clause included in the lease agreement, meaning that if a vehicle requires major repairs before the lease is up, the lessor must incur the cost of the repair. This would remove the risk of buying a vehicle with manufacturing faults. Disadvantages: 1. The company may be restricted in the make of the vehicle that it is able to lease. 2. The periodic payments may be higher than they would be if the company borrowed the money to buy the vehicle. 3. It would likely cost more for the lease if the company wanted the vehicles painted a particular colour, or if it wanted the company name and logo put on them....
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This note was uploaded on 12/21/2010 for the course MGT 201 taught by Professor Uppal during the Spring '09 term at University of Toronto.

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Quiz _2 - Winter 2010 - solutions - 2 The company could...

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