Problem 2: true/false questions13. The large deficit in Chicago's revolving funds was due to an accounting systems problem thatresulted in bills not being sent to user departments for services rendered.14. Internal service funds can obtain long-term financing by issuing either revenue bonds or generalobligation bonds.15. Enterprise funds report bad debt expense in the operating expenses section of the statement ofrevenues, expenses, and changes in net position.16. On an enterprise fund's statement of net position, the amount reported for restricted netposition can be based upon a constraint imposed by the governing body of the localgovernment.17. On the proprietary fund financial statements, internal service funds are reported under theheading of governmental activities.18. If cash flows from operating activities are not large enough to sustain the operations of anenterprise fund, the cash to sustain the operations must come from selling investments andcapital assets.19. On the proprietary funds statement of cash flows, GASB allows local and state governments theoption to report cash flows from operating activities either directly or indirectly.20. When the water utility bills the police department for water usage, the water utility debits"customer accounts receivable" for the amount of the billing.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In prior periods, Globo Gym Services used the direct write off method to account for bad debts. Globo Gym Services historically had a stable client base and management did not continue to service clients who did not pay invoices due. Complete the following: (a) Describe the direct write off method of accounting for bad debts. (b) Explain with reference to one qualitative characteristic why the direct write off method was deemed appropriate prior to the COVID-19 pandemic and why it is unlikely to be appropriate since the pandemic. Clearly label each part of your answer related to parts a and b above.
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Which of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.
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28. Which of the following would be a red flag that internal auditors should look at for the possibility of inventory fraud?I. The controller has assumed responsibility for approving all payments to certain vendors.II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.III. Sales commissions are not consistent with the organization's increased levels of sales.IV. Payments to vendors are supported by copies of receiving memos, rather than originals. Group of answer choices I and II only II and III only I, II, and IV only I, II, III, and IV I, III, and IV only

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13. The large deficit in Chicago's revolving funds was due to an accounting systems problem that resulted in bills not being sent to user departments for services rendered.