Because most companies receive payments for the sale of products and services either in the form of cash or as a check received through the mail,Multiple choice question.cash should be audited weekly.accounting systems must be audited annually.internal control over cash receipts is important.

Accounting SystemsThere are five questions associated with this passagePeople typically use two types of accounting systems: a cash-based system and an accrual system. Several things need to be considered when choosing an accounting system. The two most important considerations are ease of use and need for accuracy.In a cash-based system, which is easy to use, you record transactions when the money is actually paid or received.An accrual accounting system is more difficult to understand, but it is more accurate than a cash-based system. In an accrual system, a transaction is recorded when you receive or provide a product or service, not when you pay or receive payment for the product or service.Assume you provided a service to a customer for $1,000 in May and received payment for it in June. You also purchased and received a $2,000 piece of equipment in May and paid for it in June.Under an accrual accounting system, in May you would record both the $1,000 for the service performed and the $2,000 for the equipment purchased. Under a cash-based system, in June you would record both the $1,000 payment received and the $2,000 payment made.The cash-based accounting system would give you an incorrect picture of your true financial status in May. It would appear that you had $1,000 more in cash than you actually did. Therefore, an accrual accounting system would provide a more accurate picture of how you are doing financially at any given point in time.What is the best reason to use an accrual accounting system?It is easy to use.It is easy to understand.It shows your real financial status.It is used by most people.It requires minimal effort.

.Question 3How is auditing related to accounting?

The Cash basis of accounting is a system where:Question 7Answera.The receipts are recorded only when cash is received while expenditures are recorded only when cash is paidb.Revenue recorded when earned and expenditures recorded when benefits are receivedc.The receipts are recorded when cash is not received while expenditures are recorded when cash is paidd.The receipts are recorded when service is received while expenditures are recorded when cash is paidClear my choice

hich of the following is an internal control for checks received through the mail?Multiple ChoiceThe cashier prepares a journal entry to record price, quantity sold, and cash received.The accounting department counts the cash, prepares the deposit slip and deposits the cash in the bank.The accounting department compares the cash in the register with the cash count sheet.The mail clerk gives checks and money orders to the person who makes the bank deposit.

In recording transactions for a business, the accountant will follow the Accounting Entity principle. This means that the accountant will:a.record cash transactions separately from credit transactionsb.separate spending on purchases from spending on non-current assetsc.separate the financial activities of the business from those of the ownerd.record revenues and expenses separately to calculate profits and losses