S-A E 148
Angie Rizzoli operates a small business and uses a manual system of accounting. Transactions are entered in the general journal and posted to accounts in the general ledger at the end of the month. Although the volume of transactions has increased significantly in the past year, Ms. Rizzoli does not feel that it would be cost-effective to install an electronic accounting system. She hires you as a consultant to make recommendations about how to record transactions more efficiently. Briefly describe the principles that you would consider in making recommendations to Ms. Rizzoli.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 5, AACSB: Technology, AICPA BB: Industry/Sector Perspective, AICPA FN: Leverage Technology, AICPA PC: Project Management, IMA: Business Applications
S-A E 149
(a) When do companies normally post to (1) subsidiary accounts and (2) the general ledger control accounts? (b) Describe the relationship between a control account and a subsidiary ledger.
Ans: N/A, LO: 2, Bloom: K, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA
S-A E 150
At the end of the month, the accountant for Seneca Company prepared a schedule of accounts receivable from the accounts receivable subsidiary ledger. Its total did not agree with the balance in the Accounts Receivable control account in the general ledger. Briefly describe the procedure that should be followed in reconciling the two balances.
Ans: N/A, LO: 2, Bloom: K, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Research, AICPA PC: Problem Solving, IMA: Internal Controls
S-A E 151
Why would special journals used in different businesses not be identical in format? What type of business would maintain a cash receipts journal but not include a column for accounts receivable?
Ans: N/A, LO: 3, Bloom: K, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Professional Demeanor, IMA: Business Applications
S-A E 152 (Ethics)
Sasha Isles has been a manager at MoonBeam, a large telecommunications company, for ten years. She has worked very hard, but she had to take two unpaid leaves of absence to assist her sick mother, and then later, she took unpaid leave when her children needed care. As a result, she has received only two promotions during that time. She realizes that she probably will not receive any more promotions, since the company views her as somewhat unstable.
Last week, a newly promoted manager bragged that he could just “sniff out” accounting errors. Sasha, angered at his arrogance, deliberately recorded sales salaries as rent expense. Other accountants were present when she did so. The dollar amounts of her changes were not significant.
Required:
Has there been a violation of ethical standards? Explain.
Ans: N/A, LO: 1, Bloom: C, Difficulty: Easy, Min: 5, AACSB: Ethics, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Professional Demeanor, IMA: Internal Controls
S-A E 153 (Communication)
You are a supervisor in the accounting department of a large manufacturing company. Two weeks ago, you were anxious to leave for your vacation, and so you hurriedly recorded a whole stack of journal entries so that the others would not have as much to do while you were gone. When you returned, you realized that you had entered a payment on account of a customer, Horton, as payment on another customer’s account, Holten. Even worse, you realized that Horton’s payment had been on an overdue account, and that Holten had received a refund for overpayment.
Required:
Write a memo to Paula Prezzoli, your boss, explaining your mistake.
Ans: N/A, LO: 1, Bloom: K, Difficulty: Easy, Min: 5, AACSB: Communications, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Communications, IMA: Internal Controls
