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1

Which of the following statements is false?

Cash receipts events data are comprised of one or more invoicerecords.

None of these answers are correct

The typical B/AR/CR system assists in preparing internal andexternal reports.

Cash receipts can be accelerated by using some form of EFT.

The two types of adjustments that commonly result from aperiodic review of the aging details of customer account balancesare a recurring entry for estimated bad debts and a bad debtwrite-off.

2

Which of the following statements is true?

The billing system in which the invoice is prepared after goodshave been shipped and the sales order notification has been matchedto shipping's billing notification is called a post-billingsystem.

The billing system in which the invoice is prepared after goodshave been shipped and the sales order notification has been matchedto shipping's billing notification is called a pre-billingsystem.

The billing system in which the invoice is prepared after goodshave been shipped and the sales order notification has been matchedto shipping's billing notification is called a open-itemsystem.

The billing system in which the invoice is prepared after goodshave been shipped and the sales order notification has been matchedto shipping's billing notification is called a balance-forwardsystem.

None of these answers are correct.

3

Which of the following is not an operations process goal for theBilling/Accounts Receivable/Cash Receipts process?

Ensure security of resources

Ensure efficient employment of resources

Ensure AR master data update accuracy

None of these answers are correct

Ensure effectiveness of operations

4

Which of the following statements is false?

Pre-formatted screens in the OE/S process are a control planthat involves the detailed comparison of the individual elementsappearing on two source documents.

An invoice is a business document---either paper or electronictransmission---used to notify the customer of an obligation to paythe seller for merchandise which was ordered and shipped.

Depending on how the OE/S process is designed, the sales ordermaster data may be updated at least twice¾once when a new salesorder is created and later to reflect the shipment of thatorder.

None of these answers are correct.

Funds on deposit and available for use are known as goodfunds.

5

Which of the following statement is false?

The AR master file address is a postal address, maintained bythe firm's bank, which is used solely for the purpose of collectingchecks.

None of these answers are correct

The customer master data is a data store that contains dataidentifying the particular characteristics of each customer.

EFT includes wire transfers, credit and debit card processing,as well as payments made via the ACH Network.

A tickler file is one that is reviewed on a current and regularbasis for the purpose of taking action to clear the items from thatfile.

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Bunny Greenfelder
Bunny GreenfelderLv2
28 Sep 2019

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1All of the following statements are false, except:

In a post-billing system, invoices are prepared upon acceptanceof the customer order.

In the Order Entry and Sales process, customer credit check is acontrol plan that ensures that the organization protects itsresources by dealing only with customers who have demonstrated anability to satisfy their liabilities.

None of these answers are correct.

In the Order Entry and Sales process, one-for-one checking is acontrol plan that simplifies the data entry process, and mayprevent the customer service representative from omitting data, tofill in certain fields, and reject incorrectly formatted fields toreduce input errors.

The accounts receivable master data is created as sales returns,bad debt write-offs, estimated doubtful accounts, or similaradjustments are processed.

Question 2 of 12

Which of the following statements is false?

An overall management objective is to minimize the time from thebeginning of the selling process to the end of the cash collectionprocess.

A form of fraud in which the payments made by one customer aresystematically applied to the account of another is calledlapping.

The technology that allows information on documents to beconverted into machine-readable data through a scanner is calledOCR.

None of these answers are correct.

The cash receipts process can be accelerated by using the ACHnetwork because it is a batch process.

Question 3 of 12

Which of the following statements is false?

The check and remittance advice trigger the receive paymentprocess.

From the standpoint of reducing the collector's float, acustomer check is a better payment method than a debit card.

Good funds are funds on deposit and available for use.

None of these answers are correct.

A bank lockbox provides more protection for cash than a systemwhere cash receipts are mailed to the payee company and thendeposited.

Question 4 of 12

Which of the following statements is true?

In a pre-billing system, invoices are prepared after the goodshave been shipped and the sales order notification has been matchedto the shipping's billing notification.

Of the two types of billing systems discussed in the text, thepre-billing system is appropriate in situations where there is asignificant delay between acceptance of the customer's order andthe subsequent shipment.

In a post-billing system, invoices are prepared upon acceptanceof the customer order.

None of these answers are correct.

Of the two types of billing systems discussed in the text, thepre-billing system requires the more accurate inventoryrecords.

Question 5 of 12

All of the following are part of the horizontal informationflows of the B/AR/CR process except:

Accounts receivable aging report

Customer payment

Customer invoice

None of these answers are correct

Bank deposit

Danielle Wongus processes hundreds of sales orders monthly forcontractor tools for Cambridge Wholesale Industries. The companysells the tools to retail stores in the Mountain stores. Some areshipped from inventory, but others are shipped directly to theretail stores form vendors. Direct shipment results in significantfreight savings. In most cases, Danielle receives the sales orderrequest from the salespeople, but in other cases the orders comedirectly to Danielle by phone from customers who want directshipments or who are used to buying directly from the company.Danielle processes the order through the Sales Orders task icon andsends the sales order to shipping, which results in the shipmentsbeing sent. When sales orders are initiated by the shippingdepartment after the goods are shipped, they are sent back toDanielle for billing. She processes them using the Sales Invoicestask icon and sends the sales invoice tot eh customers.

Several years ago, Danielle’s brother-in-law formed a smallbusiness, Idaho Valley Hardware that sells certain contractortools. Idaho Valley Hardware orders some of their tools fromCambridge Wholesale Industries. When the order comes in, Danielleprocesses the order like any other sales order to initiate theshipment. The shipping department ships the goods and initials thesales order, indicating shipment has occurred. If the amountshipped differs from the amount on the sales order, shippingchanges the shipping order. When the initialed sales order isreturned to Danielle, she sometimes destroys the sales order anddoes not prepare a sales invoice. Other times she records a lowerprice for the sales than the normal amount or bills for less goodsthan were shipped.

Later, Danielle does one of three things. In some cases sheprepares a credit memo for an allowance for defective merchandiseor a pricing error. Other times, she deletes the transactionentirely to eliminate the account receivable from the records.Another method that Danielle uses to conceal the fraud is to give alarger early payment discount than the normal 2% allowed by companypolicy when processing cash receipts.

Required:

Suggest improvements in the system including both Sage 50Accounting control and other system improvements to minimize thelikelihood of this fraud. Danielle must process sales invoices. Itis impractical, given the size of the business, to restrictDanielle to only one of the Sales Orders, Sales invoices, Creditsand Returns, and Receive Money task icons

Question 14 pts

The five components to a system of internal controls include all of the following except:

control procedure
risk assessment
safeguarding assets
monitoring controls

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Question 24 pts

An automobile company testing brakes on new vehicles is part of:

control procedure
risk assessment
information systems
monitoring controls

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Question 34 pts

Which account would we debit to open a new petty cash fund?

cash
petty cash
miscellaneous expense
petty cash expense

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Question 44 pts

Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?

a credit to petty cash for $127
a debit to travel expenses for $125
a credit to cash over and short for $2
a credit to cash for $125

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Question 54 pts

On a bank reconciliation, which of the following will not appear as a deduction on a bank statement?

deposit
NSF check (non-sufficient funds)
service charge
Payments made by EFT (electronic fund transfer)

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Question 64 pts

Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $2,000 and a deposit in transit of $1,000. What is the adjusted bank balance after we complete the bank reconciliation?

$7,000
$9,000
$11,000
$13,000

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Question 74 pts

Our company has decided to write off an uncollectible account of $3,000. What account would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?

bad debt expense
accounts receivable
allowance for doubtful accounts
cash

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Question 84 pts

Where does allowance for doubtful accounts appear on our financial statements?

on balance sheet as a current liability
on income statement as part of cost of goods sold
on balance sheet as a contra asset related to accounts receivable
on the statement of retained earnings as a deduction from net income

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Question 94 pts

At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?

bad debt expense, $30,000
allowance for doubtful accounts, $30,000
bad debt expense, $20,000
accounts receivable, $20,000

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Question 104 pts

On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we debit when we record the year-end adjusting entry on December 31, 2017?

interest revenue, $300
interest revenue, $350
interest receivable, $300
interest receivable, $350

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