Exam 7: Reporting and Analysing Cash and Receivables

The method being used to determine the amount of the allowance for doubtful debts that relies on a schedule in which customers' balances are classified by the length of time they have been unpaid, is known as the:

The ratio of cash to daily cash expenses is calculated by dividing:

Receivables that mature within the entity's operating cycle are classified in the statement of financial position as:

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply. Possible errors or problems: -Three cashiers use one cash register drawer and the cash in the drawer is often short of the balance kept on hand.

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply. Possible errors or problems: -A sales person, when serving customers, often rings up a sale for less than the actual amount and then keeps the additional cash collected from the customer.

A factor is used to:

Using the following information, prepare a bank reconciliation for Everest Ltd for 31 July. a. The bank statement balance is $2,306. b. The cash account balance is $2,930 c. Outstanding cheques totalled $585. d. Outstanding deposit $1,175. e. The bank service charge is $25. f. A cheque for $98 for supplies was recorded as $89 in the ledger.

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply. Possible errors or problems: -An employee steals the cash collected from a customer for an account receivable and conceals this theft by issuing a credit memorandum indicating that the customer returned the merchandise.

Ethics case: The financial officer of Suit Ltd believes that the yearly allowance for impaired receivables for Shirt Ltd should be $185 000. The CEO of Suit Ltd, nervous that the shareholders might expect the business to sustain its 10% growth rate, suggests that the financial controller increase the allowance for impairment to $285 000. The CEO thinks that the lower profit, which reflects a 7% growth rate, will be a more sustainable rate for Suit Ltd. Required: (a) Who are the stakeholders in this case? (b) Does the CEO's request pose an ethical dilemma for the controller? (c) Should the financial controller be concerned with Suit Ltd's growth rate in estimating the allowance? Explain your answer.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Using the following information, prepare a bank reconciliation for Mont Blanc Ltd for 31 May. a. The bank statement balance is $9,100. b. The cash account balance is $7,412 c. Outstanding cheques totalled $1,600. d. Outstanding deposit $300. e. The bank service charge is $12. f. Collection of a note receivable by bank, $400.

Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the left of each item. -Outstanding deposit (deposit in transit)

Which of the following will not help minimise potential losses resulting from credit customers?

Managing accounts receivable involves five steps of which the following occurs first:

Exploring the web: To learn more about factoring from the website of a business that provides factoring services. Address: www.tradedebtorfinance.com.au Steps: Go to the website and answer the following questions. Required: (a) What are some of the benefits of factoring? (b) What is the range of the percentages of the typical discount rate? (c) If a business factors its receivables, what percentage of the value of the receivables can it expect to receive from the factor in the form of cash, and how quickly will it receive the cash?

Please complete the following statements: -A(n) ______________ note is a written promise to pay a specified amount on a defined date.

Comparative analysis problem: Computershare's financial statements can be accessed via the investor relations link on the website www.computershare.com.au. Data3's financial statements can be accessed via the investor relations link on the website www.data3.com.au. Required: (a) Based on the information contained in the most recent financial statements, calculate the following ratios for each company: (1) accounts receivable turnover ratio (2) average collection period for receivables. (b) What conclusions concerning the management of accounts receivable can be drawn from these data?

Listed below are seven errors or problems that might occur in the processing of cash transactions. Also shown is a list of internal control principles. Evaluate each possible error and cite a principle that is listed that would reduce the probability of the error occurring. If none of the principles given will correct the problem, write 'None'. If you think more than one principle is appropriate, list all principles that apply. Possible errors or problems: -Cashiers with over 5-years' experience are not required to take holidays.

Accounts receivable are reported on the statement of financial position as a/an:

The credit risk ratio is calculated by dividing the allowance for doubtful debts by: