ACG 4101 - Chapter 7 Questions with
complete solution
To be classified as cash equivalents, investments must have a maturity date
no longer than ______ months from the date of __________________. -
correct answer ✔3 ; purchase
In what financial statement are cash and cash equivalents reported on? -
correct answer ✔balance sheet
What are the four characteristics of internal control? - correct answer ✔1.
encourage adherence to company policies/procedures
2. promote operational efficiency
3. minimize errors and theft
4. enhance the reliability and accuracy of accounting data
What three characteristics are part of the definition of internal control by the
Committee of Sponsoring Organizations? - correct answer ✔1.
effectiveness/efficiency of operations
2. reliability of financial reporting
3. compliance with applicable laws and regulations
Employees who hand cash should not be involved in or have access to
_______________ ____________ nor be involved in the reconciliation of
________ __________ balances to ___________ balances. - correct answer
✔accounting records ; cash book ; bank
What three important elements are part of a cash disbursement control
system? - correct answer ✔1. disbursements should be made by check
, 2. expenditures should be authorized before check is made
3. checks signed by authorized individuals
What is a sinking fund? - correct answer ✔setting aside funds for the future
payment of a debt
Specified balance a borrower or a loan is asked to maintain in a low-interest
or noninterest-bearing account at the bank - correct answer ✔compensating
balance
A compensating balance results in the borrower's paying an _____________
______________ ________ higher than the stated rate on the debt. - correct
answer ✔effective interest rate
What are nontrade receivables? - correct answer ✔include tax refund claims,
interest receivable and advances to employees
type of discounts that allow a customer to pay an amount that is below the list
price
How do you report these types of discounts? - correct answer ✔trade
discount ; at the discounted price
types of discounts that reduce the amount the customer has to pay if payment
is made within a specified period of time
What does 2/10, n/30 mean?
How are these types of discounts recorded? - correct answer ✔sales
discounts ; 2% discount if paid within 10 days, if not, full payment within 30
days) ; either gross or net method
complete solution
To be classified as cash equivalents, investments must have a maturity date
no longer than ______ months from the date of __________________. -
correct answer ✔3 ; purchase
In what financial statement are cash and cash equivalents reported on? -
correct answer ✔balance sheet
What are the four characteristics of internal control? - correct answer ✔1.
encourage adherence to company policies/procedures
2. promote operational efficiency
3. minimize errors and theft
4. enhance the reliability and accuracy of accounting data
What three characteristics are part of the definition of internal control by the
Committee of Sponsoring Organizations? - correct answer ✔1.
effectiveness/efficiency of operations
2. reliability of financial reporting
3. compliance with applicable laws and regulations
Employees who hand cash should not be involved in or have access to
_______________ ____________ nor be involved in the reconciliation of
________ __________ balances to ___________ balances. - correct answer
✔accounting records ; cash book ; bank
What three important elements are part of a cash disbursement control
system? - correct answer ✔1. disbursements should be made by check
, 2. expenditures should be authorized before check is made
3. checks signed by authorized individuals
What is a sinking fund? - correct answer ✔setting aside funds for the future
payment of a debt
Specified balance a borrower or a loan is asked to maintain in a low-interest
or noninterest-bearing account at the bank - correct answer ✔compensating
balance
A compensating balance results in the borrower's paying an _____________
______________ ________ higher than the stated rate on the debt. - correct
answer ✔effective interest rate
What are nontrade receivables? - correct answer ✔include tax refund claims,
interest receivable and advances to employees
type of discounts that allow a customer to pay an amount that is below the list
price
How do you report these types of discounts? - correct answer ✔trade
discount ; at the discounted price
types of discounts that reduce the amount the customer has to pay if payment
is made within a specified period of time
What does 2/10, n/30 mean?
How are these types of discounts recorded? - correct answer ✔sales
discounts ; 2% discount if paid within 10 days, if not, full payment within 30
days) ; either gross or net method
