Exercise by alicejenny


									Slide 1

                                       for Sales

                                       Chapter 6,
                                       Part 2
                                                Introduction to Financial Accounting
                                                Suzanne Thornton Garrett, MBA, PMP

Slide 1
Hello, I'm Susanne Garret, and this is Introduction to Financial Accounting. This is Session 7 of this
course, and this is a continuation of our study of Chapter 6. In this session, we will be examining
further some topics relating to cash, accounts receivable, and sales specifically. We are going to look
at the last three objectives, that is in this chapter having to do with assessing the level of accounts
receivable, discussing more in detail what proper internal control procedures 1would be, and finally,
looking at a bank reconciliation. So this, again, is a continuation of Chapter 6, and we'll be looking
specifically at Pages 249 through 259 in your text.
Slide 2

                                   Credit Sales and Accounts
                                     Most sales create Accounts
                                     Both costs and benefits
                                     Potential uncollectible accounts – bad
                                     debt expense

                                                Introduction to Financial Accounting
                                               Suzanne Thornton Garrett, MBA, PMP

Slide 2
As you may recall from our prior session, we discussed several aspects of having credit sells,
including the possibility of having uncollectible accounts receivable, or bad debt. Now, we explored
how to account for bad debt and how to calculate estimates and so forth. However, how much should
a credit -- a company give in terms of credit to various customers? How much accounts receivable is
appropriate? And how much of an allowance or bad debt should we have? Now some people might
naturally respond that the ideal situation is to not have any bad debt at all. However, for most
companies their philosophy is that a small amount of bad debt is actually good, and the reason why is
that by taking some risks and having uncollectible accounts, we are also expanding the amount of
sells in total that we will be receiving because we are allowing people to buy with credit. This would
expand our customer base, as we discussed before. And the hope is to find that balance which
maximizes the overall profit to the company. Meaning increasing accounts receivable and sells to a
point where it lists the bad expense to the highest point possible. We want to maximize our net
profits. So let's examine some tools that we could use to assess our level of accounts receivable and
match this using some financial ratios.
Slide 3

                                    Assessing the Level of
                                    Accounts Receivable
                                      One measure:

                              Accounts receivable turnover = Credit Sales /
                                                             Average A/R

                                                 Introduction to Financial Accounting
                                                Suzanne Thornton Garrett, MBA, PMP

Slide 3
One measure of assessing the level of accounts receivable in a company is to use what's called the
accounts receivable turnover ratio. This is a way of measuring how fast accounts receivable is turned
into cash. This is a calculation of an indication of how many times each year the accounts receivable
is converted into cash. It is calculated by taking the total amount of credit sells for the year and
dividing it by the average level of accounts receivable. We have used this concept of averaging of an
amount before in our prior discussions. And we would apply the same way here by looking at the
beginning balance of accounts receivable for the period and the ending balance and then dividing by
two or multiplying by five, in order to have an average of those balances. In examining the result, a
higher turnover would indicate that a company is turning its accounts receivable into cash faster than
a company who is turning over a low, a lower number. So in general, companies would feel that the
higher the turnover, the better.
Slide 4

                                   Assessing the Level of
                                   Accounts Receivable - Example
                                      Suppose credit sales for Compuport in
                                      20X8 were $1 million and beginning
                                      and ending accounts receivable were
                                      $115,000 and $112,000, respectively

                            Accounts receivable turnover = $1,000,000 /
                                                    0.5 ($115,000 + $112,000) = 8.81

                                                  Introduction to Financial Accounting
                                                 Suzanne Thornton Garrett, MBA, PMP

Slide 4
Let's look at an example by using this turnover ratio, by looking once again at our company from the
book, Compuport. In this case, let's assume they have $1 million in sells, and we're given its
beginning and ending balances of accounts receivable for this same year. So our accounts
receivable turnover would be calculated by taking the $1 million on the top part of our ratio and
dividing it by the average of $115,000 and the $112,000. Again, that average could be calculated in a
couple of different ways. You can see here that I'm taking half, or .05, of the sum of these two
numbers. The resulting turnover calculation is 8.81. Again, this is meaning that, in essence, the
turnover of our accounts receivable is happening approximately 8.8 times in a year. Now this doesn't
mean that it happens all at once. This is just an average number of what is happening.
Slide 5

                                    Assessing the Level of
                                    Accounts Receivable
                                      Second method:

                              Average collection period = 365 //
                              Average collection period = 365
                                                       Accounts receivable turnover
                                                       Accounts receivable turnover

                                                  Introduction to Financial Accounting
                                                 Suzanne Thornton Garrett, MBA, PMP

Slide 5
Another method we can use to assess the level of accounts receivable is the days to collect accounts
receivable or the average collection period. This ratio is found by taking 365 days and dividing it by
the accounts receivable turnover. In the case of Compuport from before, we would have already
calculated our accounts receivable turnover, and so this is simply another way of looking at this same
financial information, but it is a measurement in days. In other words, how many days does it take us
on average to convert our accounts receivable into cash. So our resulting number from this
calculation will be in days. Now if we did do the calculation from Compuport, we would take 365 and
divide it by 8.81 and we would get a result of 41.4 days. Now this may seem long. In some
companies, it is rather short. A lot will depend on the specific credit policy they have in place and
what their goal is of how fast they want their accounts receivable to turn into cash. If you look at
Exhibit 6.3 in your textbook, and that's on Page 250, you can see a comparison of accounts
receivable turnover ratios average collection periods for several different industries. Note that they
are quite different in some cases and this is the case in a lot of different industries. These
expectations and their normal collection periods can vary quite a bit.
Slide 6

                                    Management of Cash

                                      Major internal control procedures
                                        Separation of duties
                                        Record and deposit cash receipts
                                        Use serially numbered checks,
                                        Require proper authorization
                                        Reconcile bank accounts monthly

                                                 Introduction to Financial Accounting
                                                Suzanne Thornton Garrett, MBA, PMP

Slide 6
In our last session, we discussed that cash management is very important because of a variety of
things, including the fact that we want to make sure that we're not opening ourselves up for someone
to steal or embezzle our funds. Cash is something easy to take away. Relate it to this: We need to
have procedures in place that try to prohibit or at least convince people that it would be too difficult,
too risky, to try to take funds from the company. Some major internal procedures we talked about
before that affect cash are things such as separation of duties, the issue of deposits, and recording
funds as fast as possible, to use numbered checks, to require proper authorization to the issuing of
checks, and to do monthly bank reconciliations. We are going to explore this further in detail.
Slide 7

                                     Overview of Internal Control

                                       Internal control

                                                  Introduction to Financial Accounting
                                                 Suzanne Thornton Garrett, MBA, PMP

Slide 7
We've used the term internal control. Let's talk about that a little bit in detail. First, what exactly is
internal control? Well it should be some sort of system of checks and balances that a company has
in place so that the management can ensure accurate financial records and ensure that employees
and others are dissuaded from trying to take money, embezzle funds, or even take other assets of the
company. Now, we're specifically talking about cash in this chapter, but let's talk about two different
types of internal controls that a company probably has in place. There are administrative controls
and then there are accounting controls. Administrative controls could be things such as budgeting
procedures, reports on performance, procedures for how to determine how much credit to give to
customers. These are things that help us to, again, manage planning and control of our day-to-day
operations. Accounting controls are things like ensuring that we have proper authorization before the
issue of a check so that the person who is writing the check is not the same person who signs the
check. This is an example of separation of duties and a good internal control procedure, and it has to
do with our accounting system. Some other things about recording could be an example of an
accounting internal control. In other words, we are trying to safeguard our accounting system and
what we record so that we can ensure our financial statements and our records are accurate.
Slide 8

                                   The Accounting System

                                      Repetitive transactions:
                                        Cash disbursements
                                        Cash receipts
                                        Purchase of goods and services,
                                        including employee payroll
                                        Sales or other rendering of goods and

                                                 Introduction to Financial Accounting
                                                Suzanne Thornton Garrett, MBA, PMP

Slide 8
Looking specifically at our accounting system. The accounting system, again, can be quite
automated and handle a number of repetitive tasks or transactions, such as the ones listed here,
numerous cash disbursements. We may be receiving cash on a daily basis, purchasing goods and
services, and this includes making payments to employees through our payroll efforts. We could be
doing numerous sells, multiple sells in a single day, in some types of companies. All of these should
be handled well if you have a good accounting system in place. If we have many repetitive tasks, we
want to try to automate these as best as possible, which will serve us to reduce the number of errors
and probably the amount of time, effort and cost in accounting for these things. Well-designed and
well-run accounting systems are definitely positive contributions to the organization. And we could
look at inventory controls as an example, and ordering systems. If a company is constantly needing
to replenish the goods that it turns around and sells to their customers, they may expand their
accounting system to allow for an interactive way for our inventory control system to contact our
suppliers directly to inform them when our inventory level is getting low and to automatically place a
new order with our normal supplier.
Slide 9

                                    Checklist of Internal Control

                                        Reliable personnel with clear
                                        Separation of duties
                                        Proper authorization
                                        Adequate documents

                                                Introduction to Financial Accounting
                                               Suzanne Thornton Garrett, MBA, PMP

Slide 9
In a good accounting system, we would need to have good internal controls. Some of the areas of
internal controls that a manager might use to check and safeguard our cash and payroll and related
information could include some of the following: First of all, having a reliable personnel with clear
responsibilities that include the second bullet there, separation of duties. We have people who have
good responsibilities, know what they are doing, plus have a separation of their duties, such as
having two people open up deposits at a bank instead of just one, having the person who creates a
deposit slip check in with a second person to verify the amount before it is actually taken to the bank,
and the person preparing checks to be written not have the authority to sign the actual checks.
Another area is proper authorization. For instance, someone should be approving how much credit is
given to various customers. This could be a situation where we're watching that a customer who is
not really a customer or a friend of someone who works in the credit department might get too much
credit extended and become a major uncollectible account in the future. Another safeguard in this
area would be the approval of overtime in advance or the approval of large expenditures for such
things as capital assets. Lastly, we want to make sure that we have accurate documentation of our
decisions and transactions. We want to have what's called source documents to refer back to, to
clearly see who requested certain transactions, and in most cases, who approved these transactions
in advance, in case there are any questions later, and make sure that these documents are tamper
proof and are safeguarded for future reference.
Slide 10

                                    Checklist of Internal Control
                                        Proper procedures
                                        Physical safeguards
                                        Vacations and rotation of duties
                                        Independent check
                                        Cost-benefit analysis

                                                 Introduction to Financial Accounting
                                                Suzanne Thornton Garrett, MBA, PMP

Slide 10
Continuing our discussion on the checklist, our internal controls, we have a number of other areas
that we would want management to consider in creating a good internal control system. One area is
have proper procedures in place. If we have good standardized procedures regarding things such as
dividing up duties, who does which part of a process and who needs to approve it. This routine is
replicated potentially many times daily, weekly, monthly, in an organization, and repetition and
expectation of what's happening would minimize the possibility of someone tampering with this
process. Another area is to place physical safeguards where appropriate. In safeguarding our
assets, we would want to ensure that we have good physical safeguards in place for important
assets, valuable assets, as well as those assets that can easily walk off, as we say. Meaning, that
could easily be taken by either customers or employees and not be noticed right away. Things like
good lighting at night. Using safes and locks would be examples of this. Another area would be
ensuring that vacations are taken and perhaps even having rotation of duties. For example, many
banks promote that you must take two weeks in a row of vacation each year. The thought being if
you only take one week, perhaps if you are embezzling funds, it wouldn't be noticed, but if you miss
two weeks in a row, your absence and someone else doing your job would allow the company to see
that something wrong was taking place. Rotation of duties would have the same affect. Someone
else will periodically do the exact same responsibility you have now and they could be examining
those things that you've done, written down, tampered with, that might not be appropriate. Next we
suggest that you have an internal check, meaning that an independent person verifies what has been
done in key job areas, again, to verify that there is no embezzlement or other misdoings going on.
Then, finally, the cost benefits. We do recognize that some internal control procedures can be quite
costly. So we need to verify that the cost of an internal control procedure is not more than the benefit
that you would get from it. A good example, yes, something like a pencil can easily walk out the door
by a customer or an employee, but how available is a pencil? It would not make sense to have an
expensive internal control procedure in place for that type of asset. It would cost more to do that than
the actual cost of losing a few pencils. The goal of internal control is really not to prevent all of fraud
from happening. It's to minimize the possibility and the temptation because of these procedures.
Slide 11

                                    Management bears the primary
                                    responsibility for a company’s
                                    financial statements
                                    The audit committee oversees the
                                       Internal accounting controls
                                       Financial statements
                                       Financial affairs of the corporation

                                                Introduction to Financial Accounting
                                               Suzanne Thornton Garrett, MBA, PMP

Slide 11.
It is really management's responsibility to see that the company's financial statements are accurate
and prepared well. This means that they need to have those appropriate procedures in place for
internal control for preparation. Many companies have what's called an audit committee that is
separate from management, and it often reports not to management of any level but to the board of
directors. And this audit committee oversees the internal controls of a company and that the financial
statements and the general financial affairs of the organization are being done in an appropriate way.
This audit committee, as I said, ideally is independent of management and is an example of an
independent check that we just discussed. If they do not report to management, then they cannot
have any fear in examining and reporting any misdoings that they find.
Slide 12

                                     Bank Reconciliation

                                      Two sections:
                                        Company books
                                        Bank statement

                                        Equal adjusted balances

                                               Introduction to Financial Accounting
                                              Suzanne Thornton Garrett, MBA, PMP

Slide 12.
Next, I wanted to talk about what's in your appendix of your chapter, which is about bank
reconciliations. Bank reconciliation, as you've seen mentioned, is an important part of internal
controls. Though many bank reconciliations these days are done by a computer, there still needs to
be someone examining them and knowing what they should look like and verifying their accuracy and
their interpretation. We are going to examine bank reconciliations that can easily be done by hand for
any size organization or even you, as an individual. Usually a bank reconciliation has two sections.
One is looking at the company books and the second section is looking at the bank statement. The
goal of a bank reconciliation is to adjust each of these amounts to a matching adjusted balance that
would then accurately reflect the true cash balance that should be recorded on our balance sheet.
Let's look at this more in detail.
Slide 13

                                   Adjustments to Company
                                   Books’ Balance
                                     Bank service charges
                                     Bad customer checks - NSF

                                               Introduction to Financial Accounting
                                              Suzanne Thornton Garrett, MBA, PMP

Slide 13.
Let's first examine the normal first section of the bank reconciliation, which is about the company
book balance. Normally we would see adjustments to the company books about such things as bank
service charges, customer checks that were returned for insufficient funds, we often shortcut this
name as NSF, standing for nonsufficient funds checks, another possibility that a bank may collect
money on our behalf. In other words, in some situations, a bank is actually collecting the cash from a
customer of ours and depositing it directly into the checking account, but the company has not been
notified as of yet. Lastly, we may have errors that need to be corrected on our books, as opposed to
what actually happened at the bank. These types of adjustments usually need a journal entry to be
made in the company books because these are things that have yet to be recorded in your
accounting books, in your journal, but should be because they are transactions that have already
Slide 14

                                   Adjustments to Bank
                                     Outstanding checks
                                     Deposits in transit

                                                Introduction to Financial Accounting
                                               Suzanne Thornton Garrett, MBA, PMP

Slide 14.
Next, let's look at the second section of bank reconciliation, which is about the bank statement
balance. When the bank issues it's statement, normally for a company it is dated the end of month.
There may be checks that the company has written and recorded on its books that the bank has not
processed yet. Perhaps who we've written it to has not cashed it yet. These would be called
outstanding checks and would need to be deducted from the bank balance. There also may be
deposits and transactions in it. For example, a deposit may have been made on that last day of the
month and taken to the bank, but if it was taken too late in the day, it would not be on the bank
statement. Yet, we have accurately recorded it as a deposit into our cash account and have taken it
to the bank as of the end of month. This, again, would simply be a timing issue and our adjustment
would be to add this amount to the bank balance. There also could be errors on the bank end of
things, though not very often, but they may need to be made to adjust the bank balance to its final
adjusted balance.
Slide 15

                                   Exercise 1

                                  Look at Exercise 6-51, page

                                                Introduction to Financial Accounting
                                               Suzanne Thornton Garrett, MBA, PMP

Slide 15.
Let's put into practice some of the things that we have discussed. Take a look at Exercise 6-51 (K),
which is on Page 265 of your text. This is an exercise designed to calculate those financial ratios to
measure the level of accounts receivable. So take a moment and look at this exercise and try it on
your own before advancing to the next slide.
Slide 16

                                    Solution to Exercise 1
                                   6-51 Dollar amounts are in millions.
                                      Vulcan’s accounts receivable
                                      turnover is:
                                      $2,700÷ [0.5 x ($334 + $343)] = 7.98
                                      The average collection period is:
                                      365 ÷ 7.98 = 45.74 days

                                                 Introduction to Financial Accounting
                                                Suzanne Thornton Garrett, MBA, PMP

Slide 16.
In solving exercise 51, we can eliminate the millions of dollars since all of our dollar values are there,
and you can see that if we want to examine and calculate the accounts receivable turnover, we can
do this by dividing $2,700 by the average of accounts receivable, which is one-half of our two
accounts receivable balances, $334 and $343. The resulting turnover value is 7.98, or about eight
times. To calculate the average collection period, we would take that result and divide it into 365. In
other words, we want to take 365 days and divide it by 7.98 times. The result is 45.75 days, or
almost seven days, as being the average period or almost 46 days as being the average collection
period for Vulcan.
Slide 17

                                  Exercise 2
                                   Look at Exercise 6-54, page 266.

                                   Let’s do a simple two-part bank
                                      reconciliation and the journal
                                      entries related to the

                                               Introduction to Financial Accounting
                                              Suzanne Thornton Garrett, MBA, PMP

Slide 17
Now let's check ourselves in the area of a bank reconciliation. If you look at exercise 6-54 on Page
266 of your text, you can see that we have some similar bank reconciliation information given for this
company. Let's do that bank reconciliation and the corresponding journal entries for this exercise.
Please try do this on your own before advancing to the next slide to see how I would do it on the
Slide 18

                                         Exercise 2
                                          Balances as of July 31: books -
                                            $47,000; bank statement -
                                          Cash receipts on July 31 of $9,000
                                            not on bank statement.
                                          Bank service charge was $120.
                                          NSF checks totaled $11,000.
                                          Outstanding checks = $6,000.
                                                        Introduction to Financial Accounting
                                                       Suzanne Thornton Garrett, MBA, PMP

Slide 18
All right, let's try to create our bank reconciliation and our corresponding journal entries. The normal beginning of a bank
reconciliation, as we reviewed earlier, starts with the balance per books. In this case, in our example, we are given that
the book balance was $47,000. So that's where we will begin. Now in the given information, did you identify any of that
as being necessary to affect our book balance? Well you should have recognized that there weren't any additions that we
need to make, but there is two things that would need to be deducted from our book balance. Those would be the bank
service charge and the nonsufficient fund checks. So we need to record those as deductions, bank charges, and our
nonsufficient fund checks, and those amounts were $120 and $11,000, for a total deduction of $11,100, and now we can
get our adjusted book balance by subtracting, and we should see that this is $35,880. This is the balance that we hope
we now get when we examine our bank statement and adjust its balance. We were given that our balance from the bank
statement on that same date, July 31st, was $32,880. So that was given information. Now what adjustments do we need
to make in the bank balance? If you look through the remainder of the given information, you should see that we have a
deposit that had been recorded on your books dated July 31, but the bank had not put it on our account yet. So this
would be an addition for an adjustment here of the deposit amount on 7/31, and that amount was $9,000. This increases
our bank balance to $41,880, but we have some deductions. We also were given information about outstanding checks.
These would be payments that our books would already reflect but had not cleared at the bank yet. So we need to deduct
outstanding checks, and we were given that this amount was $6,000. So this is a subtraction, and we do get a balance of
$35,880, which matches what we had for our book balance. This would be called an adjusted bank balance, which should
match our adjusted book balance. So that completes part one of this exercise. The second part asks us to do journal
entries. Now in examining what we did in our bank reconciliation, which of these things would still need to be recorded in
your journal? In other words, what things have not yet been recorded that we now know we need to do? It should make
sense that these would be the things we need to do to adjust our book balance. The other things have already been
recorded. So in this example, we are looking at a bank service charge and our insufficient fund check as far as
adjustments that need to be made. We would need to put an accounts receivable back on our books because now we do
have a customer that owes us money that we had previously removed from accounts receivable because we thought that
they had paid it. So that's a debit of $11,000. The bank service charge would be some sort of expense account, perhaps
just titled bank charges, and that's our $120. These would both be debits. The corresponding credit would be to cash,
$11,120. This is a credit to cash because these were charges that reduced our balance in our books. So now we would
be reflecting this reduced balance. Another way to look at it is this: If we examine our cash account before we had done
the bank reconciliation, we had $47,000 in our books. By doing this journal entry, we reduce our cash balance by
crediting it $11,120 and our new balance is the $35,880. That matches what we got on our bank reconciliation and it also
is the correct amount that this company should now use on its balance sheet.
Slide 19

                                   Exercise 2
                                    1.      Bank Reconciliation - July 31

                                    Balance per books                                        $47,000
                                         Bank service charge $    120
                                         NSF checks            11,000                         11,120
                                    Corrected balance per books                              $35,880

                                    Balance per bank                              $32,880
                                    Add: Deposit in transit                         9,000
                                    Subtotal                                                 $41,880
                                    Deduct: Outstanding checks                                 6,000
                                    Corrected balance per bank                               $35,880

                                    2.   Patient receivables         11,000
                                         Bank service charge expense    120
                                            Cash in bank                                     11,120

                                                      Introduction to Financial Accounting
                                                     Suzanne Thornton Garrett, MBA, PMP

Slide 19.
Here is the final formal version of what we just did on the board. Note that the journal entry in Part 2
is once again to record the deductions in cash that we had as actual transactions, by July 31. We
had not recorded these yet in the book, so this journal entry is necessary. None of the rest of the
adjustments that we did as part of being the banking reconciliation need to be adjusted on your
books. They have already been recorded. I have previously mentioned the possibility of errors
occurring and that we have not seen one in practice of our examples. I wanted to give you one here
that might have happened for this company. For example, if a company had written a specific check
for $491 to one of their suppliers and then had deposited it in the bank. When the bank receives the
check back to deduct it from the checking account, they would see that the check was actually written
out for $419, not $491. There was a transposition error and, yes, this would be an error that needs to
be corrected. If the company has actually recorded it incorrectly in their books as $491 dollars, but
the check was actually made out for $419, then we would have an error and we would, in this case,
need to adjust our books to reduce the amount of the actual payment that was made to this supplier.
If we actually did owe the higher amount, this would also result in another check needing to be written
to the supplier to complete our payment.
Slide 20


                                   Analyzing Starbucks’
                                    Financial Statements
                                       Problem 6-82, Part 2,
                                       page 277
                                       Use Appendix, pages A-1
                                       through A-33
                                               Introduction to Financial Accounting
                                              Suzanne Thornton Garrett, MBA, PMP

Slide 20
It's once again time to take a look at Starbucks. Let's look at problem 6-82, Part 2, which is on Page
277. We already completed Part 1 in an earlier session. Please try to complete Part 2 before going
on to the next slide.
Slide 21

                                   Solution to Starbucks

                                   2. Average Collection Period
                                     = 365 days ÷ Accounts receivable
                                     = 365 days ÷ [Credit Sales ÷ Average
                                     Accounts Receivable]
                                     = 365 ÷ [$4,075,522 ÷ (0.5($114,448 +
                                     = 365 ÷ [($4,075,522 ÷ $106,101.5]
                                     = 365 ÷ 38.4 = 9.5 days
                                                Introduction to Financial Accounting
                                               Suzanne Thornton Garrett, MBA, PMP

Slide 21.
Now let's solve our Starbucks problem and look at Part 2 in trying to calculate the average collection
period and the accounts receivable turnover for Starbucks. Remember that our average collection
period is determined by taking 365 and dividing the accounts receivable turnover. So we need to
calculate accounts receivable turnover, which is the credit sells divided by the average accounts
receivable. For Starbucks, we can see that you need to pull the credit sells information and then the
beginning accounts receivable balance, the ending accounts receivable balance for our year and, in
this case, adding those two up and then dividing by two or multiplying by .05, and that is our
denominator for the calculation of the accounts receivable turnover. So your accounts receivable
turnover becomes 38.4 and our average collection period, or our days on average to collect accounts
receivable, is 9.5 days. Now this amount is quite different than some examples we have looked at in
the past, but it should make sense with Starbucks being the type of organization it is that it would
have a fast turnover. Can you think of an industry that it might make sense that they have a slow
turnover? Typically it's companies that have large, more expensive goods that they are selling to
clients. Perhaps a piano seller is going to have a very long turnover period or a large collection
period. Starbucks, in emphasizing coffee and small, inexpensive items, would have a small turnover,
typically. This is the end of Session 7 and hopefully through this session you now have a good idea of
how to assess the level of accounts receivable, understand a bit more about internal control
procedures, particularly as it pertains to cash, and how to do a basic bank reconciliation.

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