Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
6th Edition
ISBN: 9780134486840
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.1EI
To determine
Ethical Issue
In the present case, BDA is a charitable organization and has an agreement with the FN bank to overdraw its cash balance only when the donations are running low. Previously BDA managed its fund wisely and rarely used the privilege. Since the time when J became the president of BDA, office equipment was acquired and huge money was spent for the fundraising. In this process BDA has a negative bank balance of approximately $10,000.
To find out: The ethical issue in this situation and approve/disapprove the management of J.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Your student club recently volunteered to go door-to-door collecting cash donations on behalf ofa local charity. The charity’s accountant went berserk when you said you wrote receipts only fordonors who asked for one.Required:Identify the control principle that you violated and explain how that violation could allow fraud tooccur. What controls might be appropriate to use in the future?
Ajio is a charity whose constitution requires that it raises funds
for educational projects. These projects seek to educate children
and support teachers in certain countries. Charities in the country
from which Ajio operates have recently become subject to new
audit and accounting regulations. Charity income consists of cash
collections at fund raising events, telephone appeals, and
bequests (money left to the charity by deceased persons). The
charity is small and the trustees do not consider that the charity
can afford to employ a qualified accountant. The charity employs
a part-time bookkeeper and relies on volunteers for fund raising.
Your firm has been appointed as accountants and auditors to this
charity because of the new regulations. Accounts have been
prepared (but not audited) in the past by a volunteer who is a
recently retired Chartered Certified Accountant.
Required;
a) Describe the risks associated with the audit of Ajio under the
headings inherent risk, control risk and…
Frustrated at the treatment he received by the bank appointed receiver; Heath is angry with Pestwac. Heath is looking for any opportunity to get back at them. He looks over his bank statements and notices some irregular transactions. It would seem as though someone discovered Heath’s password and instead of cleaning out his personal bank account, has instead made small weekly withdrawals to avoid detection. Over the space of one year, Heath has lost $2500. In addition, he thinks back to the circumstances of his loan with Pestwac. The loan manager, Jill, was very pushy. She mentioned the bank was running an internal competition amongst its staff to see who could close the most loans. In amongst the conversation she stated ‘look I really need this to go through quickly, if you sign up today I will offer you a sweet deal of 7% interest for the first five years. But the offer is only good today as the competition finishes at midnight’. Because Heath had a savings account with Pestwac, Jill…
Chapter 2 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Ch. 2 - The detailed record of the changes in a particular...Ch. 2 - Which of the following accounts is a liability? a....Ch. 2 - The left side of an account is used to record...Ch. 2 - Which of the following statements is correct? a....Ch. 2 - Prob. 5QCCh. 2 - Prob. 6QCCh. 2 - Posting a 2,500 purchase of office supplies on...Ch. 2 - Prob. 8QCCh. 2 - Which sequence correctly summarizes the accounting...Ch. 2 - Nathville Laundry reported assets of 800 and...
Ch. 2 - Identify the three categories of the accounting...Ch. 2 - What is the purpose of the chart of accounts?...Ch. 2 - What does a ledger show? Whats the difference...Ch. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - When are credits increases? When are credits...Ch. 2 - Prob. 8RQCh. 2 - What are source documents? Provide examples of...Ch. 2 - Prob. 10RQCh. 2 - Explain the five steps in journalizing and posting...Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - What is the purpose of the trial balance?Ch. 2 - Prob. 15RQCh. 2 - If total debits equal total credits on the trial...Ch. 2 - What is the calculation for the debt ratio?...Ch. 2 - Identifying accounts Consider the following...Ch. 2 - Identifying increases and decreases in accounts...Ch. 2 - Identifying normal balances For each account,...Ch. 2 - Prob. 2.4SECh. 2 - S2-5 Journalizing transactions
John Daniel opened...Ch. 2 - S2-6 Journalizing transactions
Harper Sales...Ch. 2 - Prob. 2.7SECh. 2 - Prob. 2.8SECh. 2 - Prob. 2.9SECh. 2 - Using accounting vocabulary March the accounting...Ch. 2 - Creating a chart of accounts Raymond Autobody Shop...Ch. 2 - Identifying accounts, increases in accounts, and...Ch. 2 - Identifying increases and decreases in accounts...Ch. 2 - Identifying source documents For each transaction,...Ch. 2 - Analyzing and journalizing transactions As the...Ch. 2 - Use the following information to answer Exercises...Ch. 2 - Prob. 2.17ECh. 2 - Use the following information to answer Exercises...Ch. 2 - Use the following information to answer Exercises...Ch. 2 - Analyzing transactions from T-accounts The first...Ch. 2 - Prob. 2.21ECh. 2 - E2-22 Preparing a trial balance
The accounts of...Ch. 2 - Prob. 2.23ECh. 2 - Prob. 2.24ECh. 2 - Prob. 2.25ECh. 2 - Prob. 2.26ECh. 2 - Prob. 2.27ECh. 2 - Prob. 2.28ECh. 2 - P2-29A Journalizing transactions, posting journal...Ch. 2 - P2-30A Journalizing transactions, posting journal...Ch. 2 - Prob. 2.31APCh. 2 - Prob. 2.32APCh. 2 - Prob. 2.33APCh. 2 - Prob. 2.34APCh. 2 - Prob. 2.35BPCh. 2 - Prob. 2.36BPCh. 2 - Prob. 2.37BPCh. 2 - Prob. 2.38BPCh. 2 - Prob. 2.39BPCh. 2 - Prob. 2.40BPCh. 2 - Prob. 2.42CPCh. 2 - Prob. 2.43PSCh. 2 - Prob. 2.1TICh. 2 - Your friend, Dean McChesney, requested that you...Ch. 2 - Prob. 2.1EICh. 2 - Roy Akins was the accounting manager at Zelco, a...Ch. 2 - Prob. 2.1FSCCh. 2 - In 35 words or fewer, explain the difference...
Knowledge Booster
Similar questions
- The Staal Corporation is trying to decide whether to switch to a bank that will accommodate electronic funds transfers from Staal's customers. Staal's financial manager believes the new system would decrease its collection float by as much as five days. The new bank would require a compensating balance of $2,000,000, whereas its present bank has no compensating balance requirement. Staal’s average daily collections are $800,000, and it can earn 8% on its short-term investments. Should Staal make the switch? (Assume the compensating balance at the new bank will be deposited in a non-interest earning account.)arrow_forwardAsomdwe Support Centre is a small non-for profit charitable organization located in the northern part of Ghana. Due to its small size, the company can boast of only four full-time employees: two staff, an accountant, and an office manager. The majority of its funding comes from two main sources, domestic and international. Donors make pledges over the telephone. Some donors pay their pledge by credit card during the telephone campaign, but many prefer to pay in monthly installments by check. In such cases, the donor pledges are recorded during the telephone campaign, and the donors are then mailed pledge cards. Donors mail their contributions directly to the charity. Most donors send a check, but occasionally some send cash. Most donors return their pledge card with their check or cash donation, but occasionally the Family Support Center receives anonymous cash donations. Currently, the procedures employed to process donations are as follows:Akosua, a staff member who has worked for…arrow_forwardDuring the preparation of the bank reconciliation for Building Concepts Co., Joel Kimmel, the assistant controller, discovered that Lone Peak National Bank incorrectly recorded a $3,290 check written by Building Concepts Co. as $329. Joel has decided not to notify the bank but wait for the bank to detect the error. Joel plans to record the $2,961 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Joel is behaving in a professional manner.arrow_forward
- Soley is a charity (an NGO) whose constitution requires that it raises funds for educational projects. These projects seek to educate children and support teachers in certain countries. Charities in the country from which Soley operates have recently become subject to new audit and accounting regulations. Charity income consists of cash collections at fund raising events, telephone appeals and bequests. (Money left to the charity by deceased persons). The charity is small and trustees do not consider that the charity can afford to employ a qualified accountant. The charity employs a part time bookkeeper and relies on volunteers for fund raising. Your firm has been appointed as accountants and auditors to this charity because of the new regulations. Accounts have been prepared but not audited in the past by a volunteer who is a recently retired Chartered Accountant. Discuss the risks associated with the audit of Soley under headings Inherent risk, Control risk and Detection risk and…arrow_forwardSoley is a charity (an NGO) whose constitution requires that it raises funds for educational projects. These projects seek to educate children and support teachers in certain countries. Charities in the country from which Soley operates have recently become subject to new audit and accounting regulations. Charity income consists of cash collections at fund raising events, telephone appeals and bequests. (Money left to the charity by deceased persons).The charity is small and trustees do not consider that the charity can afford to employ a qualified accountant. The charity employs a part time bookkeeper and relies on volunteers for fund raising.Your firm has been appointed as accountants and auditors to this charity because of the new regulations. Accounts have been prepared but not audited in the past by a volunteer who is a recently retired Chartered Accountant.a. Discuss the risks associated with the audit of Soley under headings Inherent risk, Control risk and Detection risk and…arrow_forwardSuperior Cabinets maintains a petty cash fund for minor business expenditures. The petty cashcustodian, Mo Smith, describes the events that occurred during the last two months:a. I established the fund by cashing a Superior Cabinets’ check for $300 made payable to me.b. Liz Clay provided a receipt for $50 for various supplies. I paid $50 cash to her.c. James Flyer provided a $70 taxi receipt, so I paid $70 cash to him.d. Ricky Ricota claimed to do photocopying for Superior Cabinets at The UPS Store for $97 buthad misplaced the receipt. I took him at his word and paid $97 cash to him.e. On the last day of the month, I prepared a summary of expenditures and requested the fund bereplenished. I received and cashed a Superior Cabinets’ check for $217, placing the cash intothe locked cash box.f. James Flyer provided receipts for taxi costs ($75), so I paid $75 cash to him.g. Woo Riun provided a $147 receipt from a local delivery company for an expedited delivery toa customer. I paid her $147…arrow_forward
- Innie Foundation is a non-stock, non-profit entity that is being operated exclusively for charitable purposes. The following transactions are NOT considered transactions made "in the course of trade or business", except: a. Innie Foundation transfers cash from Bank Account A to Bank Account B b. Interest income earned from bank deposits and subjected to final tax c. Receipt of donations and contributions from donors d. Sale of fully-depreciated computer equipment to Seo Enterprisesarrow_forwardHarristown Hockey Club (HHC) maintains a petty cash fund for minor club expenditures. Thepetty cash custodian, Wayne Crosby, describes the events that occurred during the last two months:a. I established the fund by cashing a check from HHC for $250 made payable to me.b. Tom Canuck provided a $70 receipt for repairs to the club’s computer, so I paid $70 cash tohim.c. Kim Harra provided a receipt for $50 for various supplies she planned to use to decorate thearena later this year. I paid $50 cash to her.d. Trainer Jim bought some equipment that the club intends to use for the next few years. Hegave me the receipt and I paid him $80.e. On the last day of the month, I prepared a summary of expenditures and requested the fund bereplenished. I received and cashed a check from HHC for $200, placing the cash into a lockedcash box.f. Wendy Wignes provided receipts for supplies purchased for the club’s office for use nextmonth. I paid $125 cash to her.g. Destiny Hook provided a phone bill…arrow_forwardABC Company established a petty cash fund for small expenses of the offices of the main building which amounts to P25,000. To track the fund usage, the cash custodian uses petty cash vouchers (PCV) and places the fund inside a cash box. Employees’ vale and check accommodation (with P1,000 maximum) are allowed disbursements out of the fund. If the fund depletes to P2,000, the custodian is authorized to replenish the fund by preparing a summary of disbursements. At the end of the first month, the internal auditor conducted a surprise cash count with the presence of the petty cash custodian. The auditor found the following items inside the petty cash box: Coins – 45.00; Bills – 2,800; PCV with expense receipts totaled 5,800; employee’s check amounting to 1,000; separated bills amounting P2,500 stapled together with a note which indicates “for department’s summer outing”; employee’s IOUs/ vale sheets totaling 225; a note from Kaging Store worded ‘deposit’ P30 for 3 liters of soft drinks.…arrow_forward
- Denjararrow_forwardDuring the preparation of the bank reconciliation for Apache Grading Co., Sarah Ferrari, the assistant controller, discovered that Rocky Spring Bank incorrectly recorded a $610 check written by Apache Grading Co. as $160. Sarah has decided not to notify the bank but wait for the bank to detect the error. Sarah plans to record the $450 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Sarah is behaving in a professional manner.arrow_forwardGoldie and Kate operate a small clothing store that has annual revenues of about $100,000. The company has established the following procedures related to cash disbursements: The petty cash fund consists of $10,000. Employees place a receipt in the fund when making expenditures from it and obtain the necessary cash. For any expenditure not made with the petty cash fund, the employee writes a check. Employees are not required to obtain permission to write a check but are asked to use good judgment. Any check written for more than $5,000can be signed only by Goldie or Kate. Required:Discuss Goldie and Kate’s internal control procedures related to cash disbursements, noting both weaknesses and strengths.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Business Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning