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Unformatted text preview: Accountancy 2010 Spring 2010 Exam 3 Study Guide Exam 3 will cover portions of Chapters 9, 10, 16, 19, 20, and 21 in your textbook (see Class Schedule for the specific pages assigned from each chapter). The exam will be worth 120 points. The exam will consist of multiple-choice questions, matching, and problems. Remember to bring a four-function calculator to use during the exam. No other calculators will be allowed to be used during the exam. In order to properly prepare for the exam, you should read all of the chapters, review all of the PowerPoint slides, study the summary information provided in Course Packet, practice the exercises in the Course Packet, and review the homework problems. You may want to consider making flashcards from the PowerPoint slides to help you study for the exam. On the following pages of this study guide, I have listed out the important concepts you need to know from each chapter. Chapter 9 (Managing and Reporting Working Capital) • Identify internal controls over working capital accounts (including Cash, Accounts Receivable, Inventory, and Accounts Payable). • Internal control structure = a set of policies and procedures that directs how employees should perform a company’s activities. Managers use this structure to control each aspect of the operating cycle to ensure that operating activities are performed in accordance with company objectives. • Cash = includes money on hand, deposits in checking and savings accounts, and checks and credit card invoices that it has received from customers but not yet deposited; cash includes anything that a bank will accept as a deposit; Internal Controls are usually MOST important for cash. Cash Controls: • Controls over Cash Receipts o Company uses controls to ensure that it properly records the amounts of all cash receipts in the accounting system and to protect them from being lost or stolen. Cash receipts result from cash sales and from collections of accounts receivable mailed in by its customers. o For Cash sales, company should use three Control Procedures: 1) Proper use of a cash register (most important) 2) When check is accepted, salesperson should make sure that the customer has proper identification in order to minimize likelihood that check will bounce 3) At the end of each salesperson’s shift, employee should match the total of the amounts collected against the total of the cash register tape and report any difference between the two o To safeguard collections of cash from Accounts Receivable, company should use three Control Procedures: 1) “Separation of duties” = either the owner-manager or an employee who does not handle accounting records should open the mail. Separating duties of handling accounting records and opening the mail prevents an employee from stealing undeposited checks and covering up the theft by making a fictitious entry in the accounting records....
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This note was uploaded on 02/06/2012 for the course ACCTCY 2036 taught by Professor Cunningham during the Spring '11 term at Missouri (Mizzou).
- Spring '11