Exam 6: Managing and Reporting Working Capital

The _____________ of aggressive working capital management has been questioned by some business leaders and critics.

It is possible that a business could have negative working capital should current assets be less than current liabilities.

Accounting issues are the basis for three of the top 10 reasons why small businesses fail.

The first in first out (FIFO) method of inventory calculation allocates costs to cost of goods sold by assigning each unit sold the cost to the business of purchasing that particular unit.

An appropriate amount of working capital is enough to finance the business' long-term growth plus an extra amount in case something happens.

A business should deposit all cash receipts into the bank once a week.

An ____________________ is a set of policies and procedures that direct how employees should perform a business' activities.

Why is accounting for, controlling, and reporting on inventory important?

What is an internal control structure?

Describe the specific identification method of calculating inventory balances.

Which of the following would NOT be a reason for the difference between the bank balance in a business' accounting records and the balance per the bank statement?

The fact that customers receive a copy of the ____________________ helps to ensure that each sale is entered into the cash register.

The Cash Account is the amount of money under the control of one employee used for making small cash payments for a business.

____________________ is the excess of a business' current assets over its current liabilities.

An examination of the accounting records and the bank statement of Johnson Business revealed the following: Balance in Johnson's cash account \ 25000 Balance according to the bank \ 30000 Outstanding cheques \ 7600 Deposits in transit \ 17500 Bank fees 100 Direct deposits to the bank \ 15000 Prepare a bank reconciliation, and identify the items that require adjustments to Johnson's records.

A business' working capital is:

A business' ____________________ includes money on hand, deposits in cheque and savings accounts, and cheques and credit card invoices that it has received from customers but not yet deposited.

Which of the following is a good internal control for cash payments?

Each month the bank sends the business a ____________________ that summarises the business' banking activities during the month.

Describe simple controls that might be established over accounts payable.