Statement of Cash Flows_Assignment Guide
21. 141.Ryan Company deposits all cash receipts on the day they are received and makes all cash payments
141.Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $18,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following:
Deposit in transit1,450
Outstanding checks837
Additionally, a $29 check written and recorded by the company correctly was recorded by the bank as a $92 deduction.
The adjusted cash balance per the bank records should be:
A.$18,974
B.$18,911
C.$20,711
D.$19,037
E.$16,137
142.Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $17,025. Clayborn's May bank statement shows $15,800 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit$5,200
Outstanding checks$4,600
Bank service fees, not yet recorded by company$25
A NSF check from a customer, not yet recorded by the company$600
The adjusted cash balance should be:
A.$16,400
B.$11,200
C.$21,000
D.$16,425
E.$17,000
143.Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $13,162. Franklin's August bank statement shows $14,237 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit$4,500
Outstanding checks$3,900
Bank service fees, not yet recorded by company$50
The bank collected on a note receivable, not yet recorded by the company$1,725
The adjusted cash balance should be:
A.$18,737
B.$10,337
C.$14,887
D.$13,112
E.$14,837
144.Clayborn Company' bank reconciliation as of May 31 is shown below.
Bank balance$15,800Book balance$17,025
+ Deposit in transit5,200Bank service fees-25
- Outstanding checks-4,600NSF returned-600
Adjusted book balance$16,400$16,400
The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:
A.A debit to Cash of $625
B.A debit to Cash of $5,200
C.A credit to Cash of $4,600
D.A credit to Cash of $600
E.A debit to cash of $25
145.Franklin Company's bank reconciliation as of August 31 is shown below.
A.Debit Cash $4,500; credit Sales $4,500.
B.Debit Cash $1,725; credit Notes Receivable $1,725.
C.Debit Cash $50; credit Bank Service Fee Expense $50.
D.Debit Misc. Expense $3,900; credit Cash $3,900.
E.Debit Notes Receivable $1,725; credit Cash $1,725.
146.Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $60,209. Easton's June bank statement shows $58,349 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit$3,800
Outstanding checks$1,925
Check printing fee, not yet recorded by company$15
Interest earned on account, not yet recorded by the company$30
The adjusted cash balance should be:
A.$60,194
B.$60,239
C.$62,149
D.$56,424
E.$60,224
147.Great Falls Co.'s bank reconciliation as of February 28 is shown below.
Bank balance$37,643Book balance$38,153
+ Deposit in transit2,950Note collection+745
- Outstanding checks-1,730Check printing-35
Adjusted book balance$38,863$38,863
The adjusting journal entries that Great Falls must record as a result of the bank reconciliation include:
A.Debit Note Payable $745; credit Cash $745.
B.Debit Cash $745; credit Note Receivable $745.
C.Debit Cash $2,950; credit Sales $2,950.
D.Debit Cash $2,950; credit Accounts Receivable $2,950.
E.Debit Miscellaneous Expense $35; credit Accounts Payable $35.
148.Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the establishment of the fund on September 1 is:
A.Debit Cash $250; credit Petty Cash $250.
B.Debit Petty Cash $250; credit Accounts Payable $250.
C.Debit Miscellaneous Expense $250; credit Cash $250.
D.Debit Petty Cash $250; credit Cash $250.
E.Debit Cash $250; credit Accounts Payable $250.
149.Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the reimbursement of the fund on September 30 includes a:
A.Debit to Office Supplies for $73.
B.Credit to Merchandise Inventory for $137.
C.Credit to Cash for $250.
D.Debit Petty Cash for $232.
E.Credit to Cash for $18.
150.Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the increase in the fund balance on October 1 is:
A.Debit Petty Cash $300; credit Cash $300.
B.Debit Cash $50; credit Petty Cash $50.
C.Debit Miscellaneous Expense $50; credit Cash $50.
D.Debit Petty Cash $50; credit Accounts Payable $50.
E.Debit Petty Cash $50; credit Cash $50.
22. What is a management control? system? A management control system is a pe..
What is a management control?system?
A management control system is a performance measure and reporting system that strikes a balance between financial and nonfinancial?measures, links performance to?rewards, and gives explicit recognition to the link between performance measure and organization goals and objectives.
B.
A management control system is a belief system managers use to ensure employees behavior remains positive through having continuous employee feedback on the workplace environment.
C.
A management control system is a logical integration of techniques to gather and use information to make planning and control?decisions, to motivate employee?behavior, and to evaluate performance.
D.
A management control system is a set of activities and resources assigned to a?manager, a group of?managers, or other employees.
What are the purposes of a management control?system? ?(Select all choices that?apply.)
A.
To motivate managers and employees to achieve the?organization's goals.
B.
To clearly define and communicate the?organization's goals.
C.
To communicate results and coordinate actions across the organization.
D.
To ensure that managers and employees understand the specific actions required to achieve organizational goals.
E.
All of the above.
What are the major components of a management control?system?
A.
The major components?include, (1) setting goals and?targets, (2) external financial reporting to?owners, (3)?measuring, monitoring, and reporting results of?actions, and?(4) requiring monthly progress reports of employees.
B.
The major components?include, (1) setting goals and?targets, (2) external financial reporting to?owners, (3)?measuring, monitoring, and reporting results of?actions, and?(4) evaluating and rewarding performance.
C.
The major components?include, (1) setting goals and?targets, (2) developing and executing the?plan, (3)?measuring, monitoring, and reporting results of?actions, and?(4) evaluating and rewarding performance.
D.
The major components?include, (1) setting goals and?targets, (2) external financial reporting to?owners, (3) requiring yearly employee?training, and?(4) requiring monthly progress reports of employees.
What is a key success?factor?
A.
A key success factor is an action which drives the organization towards its goals. Note the difference between a key success factor and a characteristic or attribute. Key success factors require effort and can be observed on a?short-term basis.
B.
A key success factor is when?employees, working in their own perceived best?interests, make decisions that help meet the overall goals of the organization.
C.
A key success factor is the assumption that an organization minimizes the cost of quality when it achieves high quality levels.
D.
A key success factor is a characteristic or attribute that must be achieved in order to drive the organization towards its goals. Note the difference between a key success factor and an action. Actions require effort and can be observed on a?short-term basis. A?cause-effect statement can be made that relates specific actions?(or activities) to key success factors.?"If we?_______ (fill in the?action), then we will?________ (fill in the key success?factor)." For?example, "If we reduce order lead
time?,
then we will be more responsive to our
customers?."
Actions are?verbs, key success factors are characteristics or attributes.
Goals are useless without performance?measures." Do you?agree? Explain.
A.
Performance measures are never useful for achieving goals because they distract people from focusing on the goals.
B.
Goals without performance measures may not be completely?useless, but performance measures greatly enhance the achievement of goals. They provide signals to managers about whether goals are being achieved.
C.
Goals without performance measures are completely useless. Performance measures provide motivation and without?motivation, goals will not be achieved.
D.
Goals and performance measures are two completely different approaches to motivating employees. Top managers must determine which approach is best for each individual employee.
How does management determine its key success?factors?
A.
Management examines an?organization's strategic plan and major goals and decides what factors are most important to achieving its goals.
B.
Managers motivate employees to establish various benchmarks which are then utilized to achieve organizational goals.
C.
Management examines an?organization's goal congruence and major cost centers and decides what factors are most important to achieving its goals.
D.
Management tests an?organization's cycle time and quality control to ensure that products and services perform to customer requirements.
Name three kinds of responsibility centers.
A.
Three types of responsibility centers are?(1) cost?center, (2) value?center, and?(3) monitoring center.
B.
Three types of responsibility centers are?(1) cost?center, (2) profit?center, and?(3) investment center.
C.
Three types of responsibility centers are?(1) finance?center, (2) value?center, and?(3) monitoring center.
D.
Three types of responsibility centers are?(1) finance?center, (2) profit?center, and?(3) investment center.
How do profit centers and investment centers?differ?
A.
Investment centers go a step farther than profit centers. Both measure?investments, but a profit center also compares that investment to profit using measures such as gross?margin, return on?stockholders' equity or earnings per share.
B.
Investment centers go a step farther than profit centers. Both measure?profits, but an investment center also compares that profit to investment using measures such as return on?investment, residual income or EVA.
C.
Profit centers go a step farther than investment centers. Both measure?profits, but a profit center also compares that profit to costs using measures such as gross?margin, return on?stockholders' equity or earnings per share.
D.
Profit centers go a step farther than investment centers. Both measure?profits, but an profit center also compares that profit to investment using measures such as return on?investment, residual income or EVA.
List four nonfinancial measures of performance that managers find useful. ?(Select the four choices that?apply.)
Nonfinancial performance measures: | |
1. | |
2. | |
3. | |
4. | |
Give four examples of segments.
A.
Sales?revenue, cost of?sales, gross margin and net income before taxes
B.
?Advertising, wages, supplies and depreciation
C.
?Divisions, territories, branches and product lines
D.
Cost?center, profit?center, investment center and stores
"Always try to distinguish between the performance of a segment and its?manager." Why?
A.
It is important to distinguish between the performance of a segment and its manager because the goals for each will be completely different. Evaluating the attainment of these goals must be done separately.
B.
Managers should be judged on how well they attain their currently attainable?objectives, focusing on deducting controllable costs from?revenues, whereas the subunit should be judged on its performance as an economic investment.
C.
Managers cannot control any of the costs or revenues allocated to the?segment; therefore, it would be unfair to evaluate the manager on the?segment's results.
D.
The performance of a segment and the performance of a manager are not related in any?way; therefore, it is impossible to judge them together.
What is a balanced scorecard and why are more companies using?one?
What is a balanced?scorecard?
A.
A characteristic or attribute that must be achieved in order to drive the organization towards its goals.
B.
A performance report that contains measures of all the key financial and nonfinancial variables that are important for a company to prosper.
C.
A logical integration of techniques to gather and use information to make planning and control?decisions, to motivate employee?behavior, and to evaluate performance.
D.
A measurement technique that focuses on prevention of defects and on achievement of customer satisfaction.
What are key performance?indicators?
A.
A system that strikes a balance between financial and nonfinancial measures in the performance measurement process.
B.
The effort to ensure that products and services perform to customer requirements.
C.
Measures that drive the organization to achieve its goals.
D.
The measure of outputs divided by inputs.
There are four categories of cost in the quality cost?report; match them to the correct explanation.
Costs incurred to prevent the production of defective products or services. | |
Costs incurred to identify defective products or services. | |
Costs of defective products that are scrapped or reworked. | |
Costs caused by delivery of defective products or services to customers. |
Why are companies increasing their quality control emphasis on the prevention of?defects?
A.
Although it is more costly to prevent defects than to identify and correct?them, customers have demanded that companies change their approach to quality control.
B.
Many companies are finding that it is less costly to prevent defects than it is to identify and correct defects.
C.
Companies have been very profitable in recent years and so have excess money to invest in new approaches to quality control.
D.
Employees notified management that preventing defects was more interesting than identifying and correcting them after the fact.
"Nonfinancial measures of performance can be controlled just like financial?measures." Do you?agree? Explain.
A.
Control of nonfinancial performance requires setting?objectives, measuring?results, and evaluation of results by comparing outcomes to expectations or objectives. This is the same sequence indicated by control of financial performance.
B.
The control of nonfinancial performance is based on customer satisfaction and number of repeat?customers; however, financial measures are controlled by evaluation of results by comparing goals to actual results.
C.
Nonfinancial measures of performance are controlled through employee?behavior, interaction, and setting of objectives. Financial measures are controlled through the management control system because it gathers information to make planning and control decisions for evaluating performance.
D.
Financial measures of performance are monitored on balanced scorecards for managers to monitor the goals of the?organization; however, nonfinancial measures are difficult to control because they measure and evaluate performance based on?individuals' behavior.
Discuss the difficulties of comparing productivity measures over time.
A.
Comparing productivity measures over time is complicated by changes in quality control and by unallocated costs. Changes in the production process that increase the number of defects make productivity?increase, while decreasing the number of defects makes productivity decrease.?Further, if if the correct allocation of costs is?ambiguous, costs cannot be allocated to segments and productivity is distorted.
B.
Comparing productivity measures over time is complicated by changes in quality control and by inflation. Changes in the production process that increase the number of defects make productivity?increase, while decreasing the number of defects makes productivity decrease.?Further, if either input or output?(but not?both) is measured in monetary?terms, inflation can distort productivity measures across time.
C.
Comparing productivity measures over time is complicated by changes in the production process and by inflation. Changes in the production process that substitute one input for another make productivity with respect to the replaced input?decrease, while productivity with respect to the input that is increased will increase.?Further, if both input and output are measured in monetary?terms, inflation can distort productivity measures across time.
D.
Comparing productivity measures over time is complicated by changes in the production process and by inflation. Changes in the production process that substitute one input for another make productivity with respect to the replaced input?increase, while productivity with respect to the input that is increased will decrease.?Further, if either input or output?(but not?both) is measured in monetary?terms, inflation can distort productivity measures across time.
"Control systems in nonprofit organizations will never be as highly developed as in?profit-seeking organizations." Do you?agree? Explain.
A.
Yes. A large portion of the costs are discretionary variable?costs, which are the hardest to manage through a control system.
B.
No. The relationship of inputs to outputs is easy to specify.
C.
No. There are often multiple?goals, and often the goals are not explicit.
D.
Yes. There is no?single, measurable objective such as profit that determines the?trade-off between various goals.
Yes. There is no?single, measurable objective such as profit that determines the?trade-off between various goals.
Yes. A large portion of the costs are discretionary variable?costs, which are the hardest to manage through a control system.
No. There are often multiple?goals, and often the goals are not explicit.
No. The relationship of inputs to outputs is easy to specify.
Chapter 10 Homework
Why is decentralization more popular in?profit-seeking organizations than in nonprofit?organizations?
A.
It is more difficult to hold managers of nonprofit organizations responsible for performance because inputs and outputs are generally more difficult to measure. Without reliable performance?measures, granting managerial freedom is more risky.
B.
In a?nonprofit, the local managers do not make decisions that are in the?organization's best interests. Only because they want to improve their own?segment's performance at the expense of the organization.
C.
Due to the lack of qualified?personnel, it is easier for?profit-seeking organizations to keep all the?decision-making authority only at the highest levels of the organization than it is for nonprofit organizations.
D.
Due to how costly it is to?implement, decentralization only works for?profit-seeking organizations and not for nonprofit organizations.
"The essence of decentralization is the use of profit?centers." Do you?agree? Explain.
A.
Yes.?Decision-making is concentrated at the investment center level but communicated to each of the profit centers.
B.
No. Profit centers facilitate?decentralization, but one can exist without the other. They are different concepts.
C.
No. The essence of decentralization is the use of cost centers.?Decision-making authority is delegated to the managers who have the best knowledge of how to cut costs.
D.
Yes. Decentralization means assigning?decision-making responsibility to the managers of separate profit centers.