In: Accounting
ACC101
Q1-
A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors? (1Mark)
Q2-
Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible.
Give any amount of sales and prepare the journal entry using the percent of sales method. (1Mark)
Q3-
A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.
January 1: |
Purchased 30 units at SAR11 per unit |
February 5: |
Purchased 30 units at SAR 13 per unit |
March 16: |
Sold 50 Units for SAR 15 per unit |
A.Prepare general journal entries to record the March 16 sale using the
B. What is the cost of goods sold and the gross margin for each method? (2Marks)
Q4. What is the bank reconciliation? why is it important for companies to prepare bank reconciliation periodically? (1Mark)
1Q It is a type of internal arrangement or internal audit conducted to improve operational efficiency and accuracy of the financial records,helps to protect investors from fraud
Policies and procedures
@ conduct surprise visit and investigation
@use and install proper computer security measures
@undertake strict supervision for cash receipts
@seperate payment and receipt department
@proper evaluation and monitoring
2Q. Assume your business generate credit sales of$ 20,000 $ 15,000 $10,000 for past 3 years then add these figures =$45000
Add uncollected credit sales amount that is 3%of credit sales=$ 600, $450 $300 add it=1350
Divide uncollected credit sales/Total credit sales
1350/45000*100=3%
Journal entry for above transaction
Un collectible exp a/c. Dr. 1350
To Allowance for doubtful a/c. 1350
3. Under FIFo method valuation of CGS and stock
Jan/1 purchase 30unit @SAR11=330
Feb5 purchase 30unit@SAR13=390
Inventory balance=720
March 16 sale50*SAR15=750
CGS=30*11=330
20*13=260
=590CGS
Balance=720-590=130
LIFO method
30units purchased for SAR11=330
30units purchased for SAR13=390
Total=720
March 16 sales50*SAR13=750
CGS=(30*13=390)+(20*11=220,)=610
Balance=720-610=110
WAC method
=Cost of goods available for sales/units available for sales
330+390/30+30
720/60=12
COGS 12*50=600
Balance=720-600=120
4Q . Bank reconciliation statement is the summary of banking and business activity.It shows deposit,withdrawals and other activity
Importance
Compare internal records with actual statements
Helps in bookkeeping
Comfortable for general ledger preparetion