REVIEWER IN FIN 2101 (FINALS)

TRUE OR FALSE

Module 7:

1. Cash is valued at face value.

2. The best system in handling cash is imprest system.
3. In imprest system of handling cash, all cash received are deposited to the bank, all
disbursements are through checks except for small expenses which can be paid out of
petty cash fund.
4. Combo account is better than just a saving account as it generates more interest.
5. Better yet, cash in combo account be transferred as time deposit to earn much more
income.
6. There are risks in not maintaining a change fund under the imprest system of handling
cash.
7. Provisional receipt can also be used by the cashier upon receipt of cash.
8. The collector can also use official receipt upon receiving cash.
9. Policies on cash handling can deter misuse of cash.
10. Good relationship with the bank officers is a key in getting better interest rate in time
deposits.
11. Routine audit to counter check the books and reports is one way of controlling cash.
12. There is no need to identify the books where cash transactions were recorded.
13. The preparation of a strategic plan does not help in controlling cash.
14. Without the in-depth knowledge of the cash environment, control will become a matter of
trial and error.
15. To avoid queuing in the bank, e-banking can be used in transacting with the bank.

Module 8:

1. In addition to supplies, the inventory account for organizations of trading concern is

merchandise inventory.
2. In addition to supplies, the organizations of manufacturing concern have raw materials
inventory, good in process inventory and finished goods inventory as their inventory
accounts.
3. Inventory under stocking may result to missed deliveries, and unsatisfied customer,
among others.
4. Inventory overstocking is a good practice because there are always stocks available for
customers.
5. The firm might suffer from high carrying cost for overstocking inventory.
6. To effectively manage inventory, there should be a system of inventory tracking and a
reliable
forecast of demand, among others.
7. When times are hard for the business, the purchases, the warehouse man and the stock
card clerk
can function as one.
8. The total goods available for sale is the sum of the beginning balance and the
purchases.
9. Materials are not purchased anytime; it is planned.
10. The economic order quantity is the number of units thai the firm can order to be able io
have the most economical spending on relevant costs of managing inventory.
11. The economic order quantity is computed by obtaining the square root of the product of
2, annual usage , and the ordering cost per unit divided by the carrying cost per unit.
12. The two (2) in the formula for EOQ is changeable, not constant.
13. The reorder point tells the manager when to place the order to initiate production in
replenishing deleted stocks.
14. Safety stock is the buffer to prevent stock outs.

Module 9:

1. Receivables are financial assets that represent a contractual right to receive cash from
another entity
2. There is always an inherent risk in granting credit to customers.
3. To minimize the risk, a field investigation can be conducted on the customers' paying
behavior.
4. Doing financial analysis of the financial statements of the credit applicants can also help
minimize inherent risk in granting credit to customers.
5. Receivable can be analyzed by doing current ratio analysis.
6. Computing for the accounts receivable turnover and the number of days in receivables
are ways of analyzing receivables.
 REVIEWER IN FIN 2101 (FINALS)

7. Accounts receivable turnover can be obtained by dividing total credit sales by average
accounts receivable.
8. By having aging of receivables enables the business to identify where to focus collection
efforts.
9. Receivables can be converted to cash faster by pledging it as collateral to secure loan.
10. In assigning receivables to have cash, the customers with accounts may or may not be
informed of the transaction.
11. You can sell the accounts receivable to the factor if you want to convert it to cash faster.
12. One way to pay your account to your supplier is to depesit your payment directly to
his/her account in the bank.
13. Any of the personnel assigned in handling receivables can affect the total receivables.
14. In phone banking, the account of the customers can be paid by just swiping histher debit
card.
15. In online banking, your bank account can be accessed through the internet when you
pay your account.
16. Receivable management is related to cash management.

Module 10:

1. Working capital is the difference between current assets and current liabilities.
2. The elements of working capital are current assets and current habilities
3. Working capital is the lifeblood of the firm.
4. If the firm has no sufficient working capital, salaries and benefits, utilities, and other
expenses cannot paid, hence affecting business operations.
5. Failure to manage working capital well will create imbalance.
6. Acid test ratio can be used a tool to analyze working capital
7. A good working capital timeline is one wherein the collection of receivable is
simultaneously done with the releasing of the check payment for the goods purchased.
8. If the check in payment of the goods sold on account is on receipt float, the cash
represented by the check can already be used for operations.
9. If the check in payment for purchases on account is on disbursement float, the cash
represented by the check can still be used in operations.
10. Management of cash affect working capital management.
11. The way the accounts receivable is managed has nothing to do with working capital
management.
12. Too much working capital is always good since the accounts account of the firm can be
paid anytime.
13. Working capital turnover can detect how efficient the working capital is managed
14. A current ratio of 2:1 means that the firm has P2.00 of its current assets to pay for its
P1.00 current liability.
15. Once the check is deposited by the payee to his/her bank account, the amount will be
deducted from the account of the payer on that same day.
16. The cash represented by the check payment made to the account of the payee/supplier
by the payer/customer, can be used by the payee immediately.
17. A short-term borrowing like open credit policy with a bank can be done to support the
check payment under receipt float to avend bouncing check
18. Inventory and receivable turnovers can be improved so that collection can be made early
enough to cover the check payment for the supplier.
19. Working capital turnover can detect how efficient the working capital is managed
20. Lack of working capital means ineffective operations
21. Sufficient free cash flow means efficient and effective working capital management.
22. The credit terms of the supplier can be extended to match with the present inventory and
receivable turnover.

FILL IN THE BLANKS

Module 7:

CASH ON HAND Represents the remaining cash collection of the day waiting to be deposited
the next banking day.
CASH IN BANK Represents cash already deposited in the bank
SAVINGS ACCOUNT An account where the money deposited will earn interest income for the
meantime while it is not yet used.
CHECKING ACCOUNR OR CURRENT ACCOUNT Sometimes called demand deposit
COMBO ACCOUNT Savings and current accounts in one bank account
CASH FUND The fund that has to be maintained under the imprest system of handling cash
CASH EQUIVALENT Short-term and highly liquid investments readily convertible to cash
 REVIEWER IN FIN 2101 (FINALS)

INHERENT RISK Risk built-in in every organization

SYSTEM RISK Risk associated with the use of technology
PROVISIONAL RECEIPT Receipt used by collectors
OFFICIAL RECEIPT Receipt used by the cashier upon receipt of cash
DAILY COLECTOR'S REMITTANCE FORM Summary of collection made by the collector for
the day
LAPPING Misappropriating collection from one customer and concealing this defalcation by
applying a subscquent collection made from another customer
KITING Happens when a check is drawn from one bank and is deposited to another bank at end
of the month or year.

Module 8:

SERVICE CONCERN Type of organization whose only inventory account is supplies

MERCHANDISE INVENTORY Are items which the firm purchased for the purpose of selling
HOLDING COST MIGHT BE TOO HIGH The result of overstocking
FOB DESTINATION Contract that stipulates that the supplier will deliver the merchandise to the
supplier free of charge
FREE ALONGSIDE (FAS) Contract which states that the seller bears all delivery expenses and
risks up to the dock; while the buyer bears all expenses once the carrier takes possession of the
goods
GOODS ON CONSIGNMENT Merchandise not owned by the firm but in its possession
MERCHANDISE INVENTORY BEGINNING Merchandise inventory end of the last accounting
year
BOOKKEEPER The personnel who records the purchases made by the purchaser as received
by the warehouse man
AUDITOR The personnel who checks the inventory in the warehouse, the documents that
support the purchases and the books where the transactions were recorded
STOCK CARD Used as subsidiary ledger for the raw materials
PURCHASE ORDER Form used by the purchases, an authority io purchase merchandise
FIFO (FIRST IN, FIRST OUT) An inventory valuation method where the raw materials that were
received first are assumed to be issued first
INTERNAL RETURNS A type of inventory return recorded as deduction from the issued column
and increase the balance of inventory
ECONOMIC ORDER EQUITY (EOQ) The number of units that the firm can order to be able to
have the most economical spending on the relevant costs of managing inventory
CARRYING COST Cost incurred by the firm in maintaining inventory in the warehouse
ANNUAL REQUIRED UNIT The requirement of the firm in terms of units for a specific raw
material for the whole year
COST PER ORDER Cost that will be incurred by the firm if it will purchase raw matenals
considering the number of orders in one year which may include clerical cost, handling and
transportation
LEAD TIME (LT) The time the order was placed up to the time the order will be received
SAFETY STOCK Stock which includes extra units above the computed average number of units

Module 9:

NOTES RECEIVABLE Receivables supported by a formal promise to pay

NOTES RECEIVABLE Receivables supported by a formal promise to pay
TRADITIONAL ACCOUNT RECEIVABLE Receivable normally supported by a credit invoice
TRADE DISCOUNT Discounts not recorded in the books
ACCOUNTS RECEIVABLE TURNOVER (ART) Can be obtained by dividing total credit sales by
average accounts receivable
AUDITOR Check the activities related to receivable
ASSIGNMENT A formal type of pledging where specific receivable will serve as collateral
THE FIRM In non-notification basis of assigning receivable, the customers pay their accounts to
FACTORING Aecounts receivable is converted to cash by selling to the lender
AUTOMATIC DEBT ARRANGEMENT An industry practice where the customer can just swipe
his card in paying for his/her purchases on account
ONLINE BANKING An industry practice where the customers can just deposit his/her
payment to the banks account of the supplier using the internet

Module 10:

CURRENT ASSETS Part of the element of working capital

CASH ON HAND Cash is represented by
GENERAL MANAGER Manages the operation of the firm
COMPTROLLER Manages the implementation of accounting policies
 REVIEWER IN FIN 2101 (FINALS)

ACCOUNTING MANAGER Manages the right classification of accounts

QUICK RATIO Tells the ability of the firm to pay its current fmancial obligation using its quick
assets
RECEIPT FLOAT Happens when the collection from a custoiner is in a forh of check which will
be drawn from the bank of the payer different from the bank of firm

ENUMERATION

Module 7:

What are the types of funds?

Cash on hand
Cash in bank
Cash funds
Cash equivalent

Cash in bank takes the form of?

Savings account
Demand deposit
Combo account

What are the funds being maintained under the imprest system of handling cash?
Petty cash fund
Change fund
Dividend fund

Give some examples of bank products

Debit card
Loans
Salary loans

What are the documents evidencing cash?

Provisional receipt
Official Receipt
Cash sales invoice
Daily Collector’s Remittance Form

Personnel related to handling cash?

Collector
Cashier
Junior Accountant
General Accountant

What are the common misuses of cash?

Lapping
Kiting
Fraudulent Documents & Evidences

Various risks in cash handling?

Inherent Risk
System Risk

Module 8:

What are the types of inventories for a manufacturing concern?

Supplies Inventory
Raw Materials Inventory
Work-in-Process Inventory
Finished Goods Inventory

What are the results of understocking inventories?

Missed Deliveries
Lost Sales
Unsatisfied Customers
Production Bottleneck
Work Stopage
 REVIEWER IN FIN 2101 (FINALS)

What are some of the “musts” in the effective management of inventories?

A system to keep track of the inventory on hand and on order
A reliable forecast demand
Knowledge of lead-time
Classification system for Inventory items

What are some personnel handling the inventory account?

Purchaser
Warehouseman
Stock card clerk
Bookkeeper
Auditor

What are the documents used in handling inventory?

Stock card
Material Receiving Report (MRR)
Material Issuance Slip (MIS)

What are the inventory valuation methods?

First In, First Out (FIFO)
Last In, First Out (LIFO)
Weighted Average

What are some of the factors that affect the cost of goods sold?
Purchase Discount
Purchases

What are tge relevant costs of maintaining inventory?

Carrying Cost
Stockout Cost

Module 9:

What are the kinds of receivables?

Notes Receivable
Loans Receivables

What are the accounting elements that affect receivables?

Discounts
Return

Who are the personnel handling loans and recievables?

Auditor
Bookkeeper
Collector
Cashier

What are the ways to convert receivables to cash faster?

Factoring
Pledging
Assignment

Module 10:

What are the elements of working capital?

Current Assets
Current Liabilities

What are some of the examples of current assets?

Cash
Receivables
Inventory

Cash can be represented by the following:

Cash on hand
Cash in bank
Cash fund
 REVIEWER IN FIN 2101 (FINALS)

What are some of the examples of current liabilities?

Accounts Payable
Social Charges Liabilities
Short-term Notes Payable

Contributions to be remitted to the following agencies are also part of current liabilities:
GSIS
Pag-ibig
SSS

Who are the personnel handling working capital?

The general manager
The comptroller
The accounting manager

Kinds of cash float

Receipt Float
Disbursement Float
Collection Float