SUA REFERENCE CHAPT #1-3 EXAM
QUESTIONS WITH COMPLETE
ANSWERS
Systems flowchart - ANSWER-describes the flow of documents and records in the
organization, but not the segregation of duties
Internal control flowchart - ANSWER-similar to a systems flowchart except that it
does show the segregation of duties and other internal controls
Overall approach in creating a flowchart - ANSWER-1. identify the system or process
to be flowcharted
2. learn what documents, records, and activities are in the system
3. develop a tentative organization for the flowchart, including segregation of duties
4. draw a rough sketch of the system or process
5. draw a flowchart including comments/annotations
6. trace the documents and records to check accuracy
Sales and cash receipts: subcycles - ANSWER-sales, cash receipts, sales returns
and allowances, estimate of bad debt expense, write-off of uncollectible accounts
Steps in the Accounting Process - ANSWER-1. transactions occur
2. prepare documents
3. record in journals
4. post to ledgers
5. prepare unadjusted GL trial balance
6. prepare and post adjusting entries
7. prepare adjusted trial balance
8. prepare financial statements
9. prepare closing entries
three most common transaction cycles - ANSWER-sales and cash receipts,
purchases and cash disbursements, and payroll
general ledger - ANSWER-summarizes the transactions in journals by account
balances; includes accumulated net total of all transactions (by account balance)
since the inception of the company
Adequate documents and records - ANSWER-improves the likelihood of the correct
transmission of information to users
documents and records should be:
-prenumbered consecutively; prepared before a transaction occurs, at the time, or
soon after; simple; designed for multiple uses whenever possible
Authorization of transactions - ANSWER-every transaction must be properly
authorized if control is to be satisfactory (approval of credit)
QUESTIONS WITH COMPLETE
ANSWERS
Systems flowchart - ANSWER-describes the flow of documents and records in the
organization, but not the segregation of duties
Internal control flowchart - ANSWER-similar to a systems flowchart except that it
does show the segregation of duties and other internal controls
Overall approach in creating a flowchart - ANSWER-1. identify the system or process
to be flowcharted
2. learn what documents, records, and activities are in the system
3. develop a tentative organization for the flowchart, including segregation of duties
4. draw a rough sketch of the system or process
5. draw a flowchart including comments/annotations
6. trace the documents and records to check accuracy
Sales and cash receipts: subcycles - ANSWER-sales, cash receipts, sales returns
and allowances, estimate of bad debt expense, write-off of uncollectible accounts
Steps in the Accounting Process - ANSWER-1. transactions occur
2. prepare documents
3. record in journals
4. post to ledgers
5. prepare unadjusted GL trial balance
6. prepare and post adjusting entries
7. prepare adjusted trial balance
8. prepare financial statements
9. prepare closing entries
three most common transaction cycles - ANSWER-sales and cash receipts,
purchases and cash disbursements, and payroll
general ledger - ANSWER-summarizes the transactions in journals by account
balances; includes accumulated net total of all transactions (by account balance)
since the inception of the company
Adequate documents and records - ANSWER-improves the likelihood of the correct
transmission of information to users
documents and records should be:
-prenumbered consecutively; prepared before a transaction occurs, at the time, or
soon after; simple; designed for multiple uses whenever possible
Authorization of transactions - ANSWER-every transaction must be properly
authorized if control is to be satisfactory (approval of credit)
