1.AUD
Which of the following tasks would be included in a document flowchart for processing cash receipts?
A. Compare control and remittance totals.
B. Authorize and generate a voucher.
C. Authorize and generate an invoice.
D. Record returns and allowances.
2.BEC
The Hartman Conglomerate completed its annual retreat of board members and senior management and produced a document that links the organization’s mission and vision with strategic and related objectives. The document includes a commitment to develop a uniform chart of accounts for all divisions of the conglomerate. That commitment would most likely be a:
A.Strategic objective.
B.Related reporting objective.
C.Related compliance objective.
D.Related operations objective.
3.REG
In June, Mullin, a general contractor, contracted with a town to renovate the town square. The town council wanted the project done quickly and the parties placed a clause in the contract that for each day the project extended beyond 90 working days, Mullin would forfeit $100 of the contract price. In August, Mullin took a three-week vacation. The project was completed in October, 120 working days after it was begun. What type of damages may the town recover from Mullin?
A. Compensatory damages because of the delay in completing the project.
B. No damages because Mullin completed performance.
C. Punitive damages because taking a vacation in the middle of the project was irresponsible.
D. Liquidated damages because of the clause in the contract.
4.FAR
A change in the periods benefited by a deferred cost because additional information has been obtained is
A. Not an accounting change.
B. An accounting change that should be reported by restating the financial statements of all prior periods presented.
C. An accounting change that should be reported in the period of change and future periods if the change affects both.
D. A correction of an error.
Answer:
1.A
A is corrent because comparing control and remittance totals is one of the activities involved in processing cash receipts. The requirement is to identify the task that would be included in a document flowchart for processing cash receipts.
B,C,D is incorrect because it is an activity that is not part of processing cash receipts.
2.B
Choice "B" is correct. Establishment of a company-wide uniform chart of accounts would most likely be a related reporting objective. Uniform charts of accounts would promote more efficient reporting.
Choice "a" is incorrect. Strategic objectives are generally less operationally specific than the related objective contemplated by the uniform chart of accounts.
Choice "d" is incorrect. A uniform chart of accounts is a related reporting objective, not an operations objective.
Choice "c" is incorrect. A uniform chart of accounts is a related reporting objective, not a compliance objective.
3.D
D is corrent. The requirement is to identify the type of damages that may be recovered. D is corrent because liquidated damages are those agreed to in a contract to set the amount of damages in the event of breach of contract.
A is incorrect because the liquidated damages set the amount of the compensatory damages for the type of breach that occurred.
B is incorrect because there was a breach of contract with respect to completion date.
C is incorrect because punitive damages are generally not allowed in contract law.
4.C
C is corrent. ASC Topic 250 states that a change in the periods benefited by a deferred cost should be treated as a change in accounting estimate. Changes in accounting estimates are accounted for in the period of change and future periods if the change affects both.
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