Question

Essay Questions (Company: NIKE)

based on the feedback from your instructor, make any corrections to Part 1, which you submitted in Lesson 7, and continue building(writing) your report.

Briefly describe internal control and how can it be used to protect assets. How can petty cash funds be used for internal control purposes? Why are bank accounts used? What is bank reconciliation, and why should a business use it? Why is it necessary to record journal entries after the bank reconciliation has been prepared?

Calculate and compare your selected corporation’s cash ratio to its biggest competitor for the two years preceding the current year. What does the cash ratio help to determine? Explain your reasoning and support your answer. Show your calculations.

On which financial statement would you find Accounts Receivable (A/R)? Explain the common types of receivables. What was the amount of A/R for your selected corporation for the two years preceding the current year? What does this tell you? Give your reasoning and support your assertions with your research.

Review and analyze the notes for the financial statements for your selected corporation. In what note number did you find the amount for Allowance for Doubtful Accounts? What was the amount for Allowance for Doubtful Accounts for year-end in both of the two years preceding the current year? What does this tell you? Give your reasoning and support your assertions with your research.

Explain unearned revenues and how unearned revenues arise.

Explain what a warranty is and when businesses record warranty expense, and why.

Explain contingent liabilities. How should a company handle contingent liabilities that are reasonable, possible, or probable but cannot be estimated?

Conclude the essay with answers to these questions: From the additional the information you have gathered in your final report, do you consider your report an optimal analysis for determining whether to invest in your selected corporation? Why or why not? The conclusion should be built on the information you provided in the body of the essay. Do not introduce new ideas in the conclusion.

Answer 1

1. Internal control are the policy laid down by the management so that they can protect the asset of the company or organisation.Mangement is responsible to protect these asset .Hence a transaction are divided among so many person that one person couldn't get control of things and misuse it. Policy should be such that all work are divided among the employee. Therefore the prepare of transaction and the approval of the transaction ate two different authorities.

2. Petty cash transaction following internal control policy may be approved by the immediate supervisor and hence the unnecessary expenses can be control.

3. Dealing in Cash in case of high value transaction can be a great risk and audit trail cant be happen . Further handling and dealing in cash can be a money laundering transaction. Government also cant hv control over these things and therefore bank transaction are used to show the source as well as the name of the party to sources.

3.Bank reconciliation statement are prepared to understand why the bank balance in bank book maintained by organisation is different from that of bank pass book

Also bank reconciliation is a statement which explain the reason mainly because of time, error and transaction

It's one of the effective internal control.

4.Cash ratio are important to understand the liquidity of the company. They help the user to understand that how far company is able to pay their daily expenditure.

5. Account receivable are shown in Balance sheet. It includes trade receivable and Bill's receivables.

6. Unearned revenue are those revenue which are due but not accrued

For e.g. interest on fixed deposit.

7. Warranty are basically the services charge to the customer so anyexpenses incurred against the warranty are adjusted.

8. Contingent liabilities are those liability that may or may not be incurred in future. A company should put in its notes to account mentioning regarding the same.

Since two  corporation data was not shared hence concept will help you to understand and do the needful.