ACC 202 TEST PAPER FINAL PAPER FULL
SOLUTION 2026 GRADED A+.
◍ Sarbanes-Oxley Act (SOX). Answer: 2002 law created after Enron
& WorldCom to strengthen corporate accountability
◍ Five Components of Internal Control. Answer: Control
environment, risk assessment, control activities, info &
communication, monitoring
◍ Preventive Control (Example). Answer: Separation of duties
◍ Detective Control (Example). Answer: Bank reconciliation
◍ Limitations of Internal Control. Answer: Human error, collusion,
cost-benefit limits
◍ Cash Equivalents Definition. Answer: Short-term, highly liquid
investments (ex: T-bills)
◍ Bank Reconciliation Purpose. Answer: Match company records
with bank records
◍ Petty Cash. Answer: Small fund used for minor cash expenses
, ◍ Service Provided on Account (Journal Entry). Answer: Debit
Accounts Receivable, Credit Service Revenue
◍ Trade Discount. Answer: Reduction in list price before sale is
recorded
◍ Sales Discount. Answer: Discount for early payment (ex: 2/10,
n/30)
◍ Sales Return. Answer: Customer returns goods; reduce revenue and
accounts receivable/cash
◍ Allowance Method Adjusting Entry. Answer: Debit Bad Debt
Expense, Credit Allowance for Doubtful Accounts
◍ Write-Off Under Allowance Method. Answer: Debit Allowance for
Doubtful Accounts, Credit Accounts Receivable
◍ Direct Write-Off Method. Answer: Bad debt expense recorded
when account is uncollectible
◍ Allowance vs Direct Write-Off. Answer: Allowance follows
matching principle; direct write-off does not (not GAAP)
SOLUTION 2026 GRADED A+.
◍ Sarbanes-Oxley Act (SOX). Answer: 2002 law created after Enron
& WorldCom to strengthen corporate accountability
◍ Five Components of Internal Control. Answer: Control
environment, risk assessment, control activities, info &
communication, monitoring
◍ Preventive Control (Example). Answer: Separation of duties
◍ Detective Control (Example). Answer: Bank reconciliation
◍ Limitations of Internal Control. Answer: Human error, collusion,
cost-benefit limits
◍ Cash Equivalents Definition. Answer: Short-term, highly liquid
investments (ex: T-bills)
◍ Bank Reconciliation Purpose. Answer: Match company records
with bank records
◍ Petty Cash. Answer: Small fund used for minor cash expenses
, ◍ Service Provided on Account (Journal Entry). Answer: Debit
Accounts Receivable, Credit Service Revenue
◍ Trade Discount. Answer: Reduction in list price before sale is
recorded
◍ Sales Discount. Answer: Discount for early payment (ex: 2/10,
n/30)
◍ Sales Return. Answer: Customer returns goods; reduce revenue and
accounts receivable/cash
◍ Allowance Method Adjusting Entry. Answer: Debit Bad Debt
Expense, Credit Allowance for Doubtful Accounts
◍ Write-Off Under Allowance Method. Answer: Debit Allowance for
Doubtful Accounts, Credit Accounts Receivable
◍ Direct Write-Off Method. Answer: Bad debt expense recorded
when account is uncollectible
◍ Allowance vs Direct Write-Off. Answer: Allowance follows
matching principle; direct write-off does not (not GAAP)
