Question

41. Journal entries for purchases, purchase discounts, purchase returns and

allowances, sales, sales discounts, sales returns and allowances, delivery

expenses

42. What is internal control and how can it be used to protect a company’s

assets?

43. What are the objectives of internal control?

44. Name three examples that are representative of safeguarding assets.

45. What is meant by the internal control procedure of “separation of duties”?

46. What are bonds? Bond payable? Face value?(maturity value, principal

amount, par value) Maturity date? Stated interest rate? (coupon rate, contract

rate)

47. Bond prices, bond price information quote

48. Stockholders’ Equity two parts. How do you determine total stockholder’s

equity?

49. Classifications, or sections, of the statement: operating activities, investing

activities, financing activities, non-cash investing and financing activities

50. Purpose of the Statement of Cash Flows

Answer 1

41.Purchases………………………….Dr

Accounts payable………………………Cr

Accounts payable…………………….Dr

Purchase discount………………….….Cr

Cash……………………………………Cr

Accounts payable…………………….Dr

Purchase return and allowance………...Cr

Cash……………………………………Cr

Accounts receivable…………………..Dr

Sales …………………………….……..Cr

Cash…………………………………..Dr

Sales discount…………………………Dr

Accounts receivable………………….Cr

Cash…………………………………..Dr

Sales return and allowance………...…Dr

Accounts receivable………………….Cr

42. Internal control is a system of management which gives surety that the activities of the organizations are going in the right direction to accomplish the organization’s objectives and goals. The assets of the company can be protected in the following manner:

a) Integrity in management

b) Clear and accurate recording of all transactions

c) Competent workforce

d) Separation of duties

43. Objectives of internal control system are shown below:

a) Accuracy and reliability in financial reporting

b) Efficient and effective operations

c) Compliance with all the rules, regulations and laws

44. Three examples of safeguarding assets are as follows:

a) Purchasing insurance policies for assets

b) Proper maintenance of assets

c) Physical examination of assets

45. Separation of duties means there should be a separate person for performing separate task so that frauds can be reduced in the entity.