Source: Horngren, C. T., Harrison, W. T. & Oliver M.S., (2012). Internal control and cash. Accounting (9th ed., pp. 386 of Reading 5). Prentice Hall. See Reading 5 in the learning materials within Interact.

The following situations suggest a strength or a weakness in e-commerce internal controls.

a. Netproducts sells merchandise over the Internet. Customers input their credit card information for payment.

b. Netproducts maintains employee information on the company intranet. Employees can retrieve information about annual leave, payroll deposits, and benefits, from any computer using their login information.

c. Netproducts maintains trend information about its customers, products, and pricing on the company’s intranet.

d. Tax identification numbers for all vendors are maintained in Netproduct’s database.

Requirement

1. Identify the control that will best protect the company.

    Question 2

E7-18 Preparing a bank reconciliation, D.J. Harrison
Source: Horngren, C. T., & Harrison, W. T. (2012). Internal control and cash. Accounting (9th ed., pp. 387-388 of Reading 5). Prentice Hall. See Reading 5 in the learning materials within Interact.

D.J. Harrison’s checkbook lists the following:

Harrison’s November bank statement shows the following:

Requirements:

1. Prepare Harrison’s bank reconciliation as at November 30, 2012.

2. How much cash does Harrison actually have on November 30, 2012?

Answer all parts. Solve using a spreadsheet. Include the normal view and formula view and include an IF function to check balances.

Question 3

1-2 (illustrate your explanation with examples), 1-16, 1-22 (illustrate your explanation with examples), 2-5, 2-9 (illustrate your explanation with examples).
Source: Horngren, et al. (2014). Introduction to management accounting (16th ed., pp. 44, 45 & 85). Pearson.

1-2.   “The emphases of financial accounting and management accounting differ.” Explain

1-16. Name the six primary business functions (excluding support functions) that make up the value chain, and briefly describe each.

1-22. ‘The problem with accounting is that accountants never get to become top managers such as CEOs.” Do you agree? Explain. Illustrate your explanation with examples.

2-5.   “It is confusing to think of fixed costs on a per-unit basis.” Do you agree? Why or why not?

2-9.   “Classification of costs into variable and fixed categories depends on the decision situation.” Explain. Illustrate your explanation with examples.

Question 4

1-48 Ethical Issues
Source: Horngren, et al. (2014). Introduction to management accounting (16th ed., p. 49). Pearson. 

Suppose you are controller of a medium-sized oil exploration company in western Texas. You adhere to the standards for ethical conduct for management accountants. How would those standards affect your behaviour in each of the following situations?

1. Late one Friday afternoon you receive a geologist’s report on a newly purchased property. It indicates a much higher probability of oil than had previously been expected. You are the only one to read the report that day. At a party on Saturday night, a friend asks about the prospects for the property.

2. An oil industry stock analyst invites you and your wife to spend a week in Tahiti free of charge. All she wants in return is to be the first to know about any financial information your company is about to announce to the public.

3. It is time to make a forecast of the company’s annual earnings. You know that some additional losses will be recognized before the company prepares its final statements. The company’s president has asked you to ignore these losses in making your predictions because a lower-than-expected earnings forecast could adversely affect the chances of obtaining a loan that is being negotiated and that will be completed before actual earnings are announced.

4. You do not know whether a particular expense is deductible for income tax purposes. You are debating whether to research the tax laws or simply assume the item is deductible. After all, if you are not audited, no one will ever know the difference. If you are audited, you can plead ignorance of the law.

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