FINANCIAL ACCT.FUND.(LOOSELEAF)
7th Edition
ISBN: 9781260482867
Author: Wild
Publisher: MCG
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Question
Chapter 6, Problem 4E
To determine
Introduction:
Internal
Whether each of the given policy is a good or bad cash management policy. Also, identify the cash management policy followed or violated in each of the given procedure.
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Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. 1. Bills are paid as soon as they are received. 2. Cash receipts and cash payments are regularly planned and reviewed. 3. Excess cash is put in checking accounts, earning no interest income. 4. Customers are regularly allowed to pay after due dates without concern. 5. Rarely used equipment is rented rather than purchased.
Determine whether each policy below is good or bad cash management, then identify the cash management strategy violated or followed for each policy.
1. The company negotiates credit terms with suppliers to delay payment of liabilities as long as possible
2. Excess cash is put in checking accounts, earning no interest income.
3. Cash receipts and cash payments are regularly planned and reviewed.
4. Customers are offered discounts to pay early.
5. All equipment is purchased, even equipment infrequently used.
Good or Bad
Cash Management Strategy
Which one of these principles is considered for cash disbursement control
Select one:
O a. Print check amount by machine
O b. Same staff approve and make payment
Oc. Reconcile bank statement annually
O d. Rarely compare checks to invoices
Chapter 6 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
Ch. 6 - Prob. 1MCQCh. 6 - Prob. 2MCQCh. 6 - Prob. 3MCQCh. 6 - Prob. 4MCQCh. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQ
Ch. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQCh. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Prob. 13DQCh. 6 - Prob. 1QSCh. 6 - Prob. 2QSCh. 6 - Prob. 3QSCh. 6 - Prob. 4QSCh. 6 - Cash Over and Short P1 Record the journal entry...Ch. 6 - Prob. 6QSCh. 6 - Prob. 7QSCh. 6 - Prob. 8QSCh. 6 - Prob. 9QSCh. 6 - Prob. 10QSCh. 6 - Prob. 11QSCh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3ECh. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 1PSACh. 6 - Prob. 2PSACh. 6 - Prob. 3PSACh. 6 - Prob. 4PSACh. 6 - Prob. 5PSACh. 6 - Prob. 1PSBCh. 6 - Prob. 2PSBCh. 6 - Prob. 3PSBCh. 6 - Prob. 4PSBCh. 6 - Prob. 5PSBCh. 6 - Prob. 6SPCh. 6 - Prob. 1GLPCh. 6 - Prob. 1AACh. 6 - Prob. 2AACh. 6 - Prob. 3AACh. 6 - Prob. 1BTNCh. 6 - Prob. 2BTNCh. 6 - Prob. 3BTNCh. 6 - Prob. 4BTNCh. 6 - Prob. 5BTNCh. 6 - Prob. 6BTN
Knowledge Booster
Similar questions
- Petty cash is used to ________. A. avoid having to use checks frequently B. make small payments C. avoid having to retain receipts because the amounts are very small D. avoid having to get approvals due to the small amount of cash being paidarrow_forwardExplain potential misstatements - cash receipt and the description of of misstatements. The Recording fictitious cash receipts, Failure to record receipts from cash sales, Failure to record cash from collection of accounts receivable and Early (late) recognition of cash receipts "cutoff problems"arrow_forwardA cash receipts under a good control system will have. a. Encourage receipt of money through cheque b. Keep minimum bank book balance c. Too much amount in Cash balance d. Too much amount in Bank balancearrow_forward
- A cash payment under a good control system will have. a. Too much amount Bank book balance b. Appointing different persons to authorize the payment and sign the cheques c. Too much amount book balance d. Maintaining minimum bank book balancearrow_forwardThe purpose of a petty cash fund is toa. Provide a convenient form of payment for the company’s customers. b. Pay employee salaries at the end of each period. c. Provide cash on hand for minor expenditures. d. Allow the company to save cash for major future purchases.arrow_forwardRecording Petty Cash Fund Transactions Illustrate the effect on the accounts and financial statements of the following transactions. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. a. Established a petty cash fund of $750. Balance Sheet Assets = Liabilities + Stockholders' Equity Cash + Petty Cash = No Effect + No Effect fill in the blank 5 fill in the blank 6 fill in the blank 7 fill in the blank 8 Statement of Cash Flows Income Statement No effect fill in the blank 10 No effect fill in the blank 12 b. The amount of cash in the petty cash fund is now $188. Replenished the fund, based on the following summary of petty cash receipts: office supplies, $262; miscellaneous selling expense, $131; miscellaneous administrative expense, $169. Enter account decreases and cash outflows as negative…arrow_forward
- 34.A good internal control system provides for a. allowing one person to receive cash and to record cash receipts b. delaying the deposit of cash collections because no one knows for sure the account to be credited c. making payments from the day's collections d. preparing regular bank reconciliationarrow_forward27. Which of the following is/are helpful to control cash receipts of a company? a. Prepare a record of all cash receipts as soon as cash is received b. Deposit all cash receipts as soon as possible c. Encourage the cash receipts through cheque d. All the optionsarrow_forwardmultiple choice quetion a.When preparing a bank reconciliation statement and the closing bank statement balance is an overdraft, we begin with the balance in the bank statement and then: add unpresented cheques and deduct outstanding receipts. add outstanding receipts and deduct unpresented cheques. add all receipts and deduct all payments. 4.add all payments and deduct all receiptsarrow_forward
- Submit it in excel form E8.3arrow_forward19 When the petty cash fund is replenished: Multiple Choice Cash is debited. Petty Cash is credited. Petty Cash is debited. Appropriate expense and/or asset accounts are debited.arrow_forwardReview the following statements regarding a petty cash fund used in a business. Select the one that is correct. O A petty cash fund is controlled by top management. O The cashier of a fund will write checks for small payments like postage, supplies and deliveries, O Only the petty cashier is responsible for paying cash from the fund. OA check written against the fund is cashed when the fund is replenished.arrow_forward
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