Chapter 6 - Cash, Fraud, and Internal Controls

Question 1

Adjustment for a note receivable

Answer 1

DEBIT - Cash
DEBIT - Collection Expense

CREDIT - Notes Receivable

Question 2

Days Sales Uncollected

Answer 2

AR / Net Sales x 365

Question 3

Cash Over and Short Account

Answer 3

Affects income statement

CREDIT when cash is OVER
DEBIT when cash is SHORT

Accounts included when journaling
Cash
Cash Over & Short
Sales

Question 4

When bank sends a debit memo

Answer 4

Cash in account is going DOWN because it’s a liability

Question 5

When a bank sends a credit memo

Answer 5

Cash in account is going UP because it’s a liability