Chapter 6 – Controlling Accounts Receivables Question 1. Are credit checks performed before terms are granted to customers? Describe the process. Conducting credit checks is highly recommended prior to setting terms granted to customers. In this way, the business owner would be able to prevent bad debts that would affect the company’s financial status. To do so, the business must run a credit check on customers. Some private institutions provide credit services wherein they run background checks on individuals. The business may opt to charge customers with a credit check fee and then have them fill in forms where the customers consent to having a credit check run. After the results of the credit check, the business may then decide whether to transact with a customer. If they agree to a transaction, the business sets the terms depending on the customer’s credit background, particularly his or her ability to pay for rendered products or services. Question 2. What type of sale agreements do you have in place, which are signed before the sales takes place? Prior to signing the contract, agreements during sales include policies on return and exchange, the purchase price, the description of the product or goods being sold, warranties, description of how the goods will be delivered, and other notes agreed upon by the buyer and the seller. Question 3. What is your Accounts Receivables turnover? The Accounts Receivables turnover must be high for the business to ensure that it does not incur bad debts. Question 4. What is the procedure to receive payments from customers including the receiving of the mail, opening the mail, recording the transactions, and making deposits into the bank? To receive payments from customers including the receiving of the mail, opening the mail, recording transactions, and making deposits into the bank, the business owner should have initially recorded the terms of the receivable during the time of sale. After receiving and opening the mail, the transactions must be recorded using invoices. After keeping track of the flow of cash through invoicing, the receivables may be forwarded to the auditors and accountant. The business owner would then make a decision on how it would be deposited in the company’s bank. Question 5. Describe the procedure the company follows when receiving payments from customers. What documents are verified to insure payments match the invoice sent to customers? When receiving payments from customers, the business verifies the term of receivables agreed upon between the business owner and the customer. To insure payments match the invoice sent to customers, records such as the aging schedule and the general journal may be used to check the invoice using the records. Question 6. Is there an aging process for all Accounts Receivables accounts to better control receipts from customers and to collect from overdue accounts? Establishing and maintaining in aging process for all Acc ...

1. Chapter 6 – Controlling Accounts Receivables
Question 1. Are credit checks performed before terms are
granted to customers? Describe the process.
Conducting credit checks is highly recommended prior to
setting terms granted to customers. In this way, the business
owner would be able to prevent bad debts that would affect the
company’s financial status.
To do so, the business must run a credit check on
customers. Some private institutions provide credit services
wherein they run background checks on individuals. The
business may opt to charge customers with a credit check fee
and then have them fill in forms where the customers consent to
having a credit check run. After the results of the credit check,
the business may then decide whether to transact with a
customer. If they agree to a transaction, the business sets the
terms depending on the customer’s credit background,
particularly his or her ability to pay for rendered products or
services.
Question 2. What type of sale agreements do you have in place,
which are signed before the sales takes place?
Prior to signing the contract, agreements during sales
include policies on return and exchange, the purchase price, the
description of the product or goods being sold, warranties,
description of how the goods will be delivered, and other notes
agreed upon by the buyer and the seller.
Question 3. What is your Accounts Receivables turnover?
The Accounts Receivables turnover must be high for the
business to ensure that it does not incur bad debts.

2. Question 4. What is the procedure to receive payments from
customers including the receiving of the mail, opening the mail,
recording the transactions, and making deposits into the bank?
To receive payments from customers including the
receiving of the mail, opening the mail, recording transactions,
and making deposits into the bank, the business owner should
have initially recorded the terms of the receivable during the
time of sale. After receiving and opening the mail, the
transactions must be recorded using invoices. After keeping
track of the flow of cash through invoicing, the receivables may
be forwarded to the auditors and accountant. The business
owner would then make a decision on how it would be deposited
in the company’s bank.
Question 5. Describe the procedure the company follows when
receiving payments from customers. What documents are
verified to insure payments match the invoice sent to
customers?
When receiving payments from customers, the business
verifies the term of receivables agreed upon between the
business owner and the customer. To insure payments match the
invoice sent to customers, records such as the aging schedule
and the general journal may be used to check the invoice using
the records.
Question 6. Is there an aging process for all Accounts
Receivables accounts to better control receipts from customers
and to collect from overdue accounts?
Establishing and maintaining in aging process for all Accounts
Receivables accounts are recommended for the start-up
business. In this way, the business is able to keep track of all
receivables that must be collected within a specified period of
time.

3. The Aging Schedule provides important information on the
specific amount of Accounts Receivables, the customers from
whom to collect Accounts Receivables, and the duration of
collection. Hence, maintaining an aging schedule would help the
business identify Accounts Receivables collected as well as
those that were not collected.
The Aging Schedule also helps the business keep track of
customer patterns of bad debt. Through the Aging Schedule, the
business may determine if the customer has repeatedly failed to
pay for services rendered. As a consequence, the business may
refuse to cater to customers that incur bad debt in the future.
Question 7. What is an evidence of debt?
The business may ask customers to write a promissory note
in the event that they are unable to pay. Through the promissory
note, the customers set a date and time for their payment, and
terms if they fail to pay within the set deadline.
Financial Control for Small Business
Assignment5
Question 1: Who processes payroll for all employees?
Business owner: Payrolls are usually prepared by the accountant
in an organization. The accountant ensures that he/she gathers
all the information that relates to each employee and records it
as expected by the law.
Business owner converted into text-book language: given the
type of business and the number of employees, pay role may be
processed by different individuals within an organization. For
the larger companies, the payrolls are usually processed by
accountants (Coltman, 2012). Accountants are responsible of
collecting all the necessary information that relate to
employees, records the information, and reports it as required

4. by the law. On the other hand, small businesses that may not
have accountants may have their payrolls processed by the
mangers or the business owners.
Recommendations: it is important that the payrolls in any
organization are prepared before time. This ensures that the
management gathers all the necessary information and reports
these payrolls on time. Rushing in the last minute may lead to
provision of poor records, which may affect the effectiveness of
the information as well as the presentation process.
Question 2: How were employees categorized to determine their
exempt or non-exempt status under labor laws?
Business owner: employees were categorized in different ways
in determining their exempt or non-exempt status under labor
laws. For example, the nature of the employees’ duties and
responsibilities as well as their contract may determine this
status.
Business owner converted into text-book language: the exempt
or non-exempt status is usually determined according to the
applicable las as well as other similar factors such as nature of
employee’s duties, work, responsibilities, and their form and
level of compensation (Coltman, 2012). The non-exempt
employees are basically paid through the hour for every hour
that they work within a pay period and further receive overtime
pay based on the applicable overtime rules. On the other hand,
exempt employees are usually paid s fixed salary that is usually
intended to compensate in full for all the hours that an
employee has worked for every week.
Recommendations: the management of any organization should
specify these factors when an employee joins the organization
as a worker in order to avoid any form of future inconveniences
and conflicts.
Question 3: How many, if any, independent contractors are
employed by the business?
Business Owner: the business employs contractors based on the
amount of work that requires to be completed from by an
outside party to the company.

5. Business owner converted into text-book language: independent
contractors should be hired when needed in the provision of
required products and services. The basic guidelines of hiring a
contractor is that the contractor should be hired for the purpose
of completing a given job, should schedule the work to be
completed, should be insured for any form of labilities, should
supply necessary personnel or equipment, and should be in full
control of how the duties are completed and done (Gill, 2014).
Recommendations: before hiring any external contractor, it is
important for business owners and manger to ensure that these
contractors have the capabilities of handing the scheduled
activities as well as they adhere to the laws governing the
organization and the contract.
Question 4: Describe your procedure for hiring an employee? Is
there an interview process? What type of paperwork is required
to be filled out?
Business owner: the hiring process should involve a process in
which the best candidate for the job is hired to fill the position.
The hiring process should be well defined by the human
resource department in charge of recruiting employees into an
organization through following the detailed process.
Business owner converted into text-book language: the hiring
process should involve several steps. These steps may include
creating a detailed scorecard defining the performance
objectives, creating a detailed advertisement, shortlist the
interested candidates, schedule interviews, and select the best
candidate or candidates from the interviewed individuals (Gill,
2014). The process should be followed by a detailed orientation
before the employee joins the organization’s workforce.
Recommendations: the hiring process is very critical for the
success of any organization. The more efficient a hiring process
is the more effective the workforce shall be through hiring
quality candidates, which further translates to increased profit
making abilities by an organization.
Question 5: How are the paperwork and human resource
department managed? Do you have the required federal and

6. NYS employment notices posted?
Business owner: the paper work and the human resource
department are managed by the management of the department.
There are different forms of paperwork that require to be filled
in relation to all the employees’ within the organization.
Business owner converted into text-book language: the
management of paper work and the human resource department
require effective management at all times. The human resource
department is charged by providing effective paperwork that
provides required information about employees (Gill, 2014). To
make this successful, an organization should have an affective
management team to ensure effective management of the
paperwork and the human resource department.
Recommendations: the management of paperwork, especially in
reference to employee information, should be done with an
effective team. The human resource department management
should remain effective at all times to ensure effective
paperwork as well as effective management of the human
resources department.
Question 6: how are your employees paid? Is there a time slip
or time clock? Who reviews and signs off on the hours worked?
Business owner: employees are paid based on the agreement
made during the hiring process. Further, the payment plan is
also decided during the hiring process after they have been
reviewed and signed.
Business owner converted into text-book language: the payment
plans usually different from one organization to another. For
example, the employees are usually paid based on the agreement
during the recruitment process, which is determined with the
position and employee occupies. In addition, the payments for
the employees are usually made once in a month (Taylor, 2007).
However, there are payments which are made based on the
agreement made during the hiring process, which may be one a
week or two times in a month or after completion of specified
responsibilities. The payments are reviewed and signed by the
manger, who reviews information provided by the accountant.

7. Recommendations: it is important for employees to understand
their payment plan during the hiring process. This will help in
reducing any form of inconveniences as well as conflicts at a
later stage.
Question 7: How are employees’ payments determined?
Business owner: the amount paid to employees is determined
based on different factors. For example, some of the factors
may include the amount of time worked, the type of work, extra
hours worked, and the time of day worked.
Business owner converted into text-book language: the payment
plan for every employee may be different. There are
determinants that determine the amount an employee is paid.
During the hiring process, an employee is provided within
information about their responsibilities, time to work, their
benefits, and payment for extra time worked. Based on this
information the payment is calculated and made constant
(Taylor, 2007). This payment only varies in case of extra time
worked and benefits received. In many cases, the more depend a
job is the more payment an employee gets.
Recommendation: mangers should determine the payment for
every job position before making advertisement. This will
ensure that candidates understand this information before they
apply for the positions.
References
Coltman, M. M. (2012). Financial control for the small
business: A practical primer for keeping a tighter rein on your
profits and cash flow. Vancouver, B.C: Self-Counsel Press.
Gill, J. O. (2014). Financial basics for small business success.
Menlo Park, Calif: Crisp Publications.
Taylor, P. (2007). Book-keeping & accounting for the small
business: How to keep the books and maintain financial
control over your business. Oxford [England: How To Books.

8. Chapter 4 – Cash, Cash Controls
Question 1. How much of the businesses revenue is collected as
cash and what are the controls in place to protect this asset?
The business revenue collected as cash would depend on
the sales from the distribution of goods and services. To protect
the business’ cash assets, it is important that the business
immediately audited and deposited in the bank to avoid or
prevent losses and stealing.
Question 2. How is cash generated to support this business?
Cash will be generated by the business from the sales of
goods and services to customers or end users. Other forms of
cash such as cash equivalents also support the business. Cash
equivalents are in the form of instruments that mature and gain
interest within a certain period of time. Receivables are also
considered cash equal to revenue.
Question 3. What is the percentage of Cash transactions, Credit
Card transactions, and Accounts Receivables transactions? How
are receivables managed for this business?
Ideally, the percentage of cash transactions, credit card
transactions, and accounts receivables transactions must be that
they are greater than debts or liabilities. The largest percentage
of cash should be sourced from the business’ transactions,
followed by credit card transactions and accounts receivables.
Receivables are managed for the business through constant
monitoring. Ledgers are recorded to keep track of receivables
and due date. It is regularly checked to make sure that
receivables are asked from customers within the target period.
The business also maintains a credit worthy list, which contains
people who meet their obligations in paying for receivables.
Question 4. How are the duties of receiving cash and cash
disbursements

9. Duties of receiving cash and cash disbursements are segregated
such that receipts are handled by the bookkeeper and the cash
disbursements are processed by the accountant. The bookkeeper
is responsible for keeping track of transactions by receiving and
noting invoice. The auditor and accountant work together to
determine and process disbursements when needed.
Question 5. What type of checks and balances do you have in
place when cash has to be counted, recorded and deposited into
the bank?
The types of checks and balances in place when cash has to
be counted, recorded, and deposited must involve splitting up
financial roles and responsibilities. There must be different
teams that will count and record cash. Another team will double
check the cash. Different people will then be tasked to deposit
the money in the bank. The bookkeeper and accountant would
also have to reconcile the cash with the records.
Question 6. Who established your Accounts Payable Contracts
and what type of terms are negotiated? How is this relationship
maintained and improved?
For the business, the Accounts Payable Contracts must be
an accountant and the business owner. Types of terms
negotiated include those that involve payment, authorization of
payments and transactions with vendors, and the signing of the
contract.
Question 7. Do you have a list of credit worthy customers?
The business should create a list of credit worthy
customers so it would know which customers to give credit in
future transactions.

10. Chapter 3- Fraud, Ethics, and Control
Question 1: what are the financial or business controls in place,
in order to protect the appropriation of the assets of the
company?
Business owner: control misappropriates, employees hired
former thoroughly review. In addition, report policy should be
in place, employees and anyone can report any divert attention.
Then there should be a regular audit process and functions of
the program.
Business owners to teaching material of language of answer:
control abuse of company, company should set up a policy,
maintain appropriate records, key employees to ensure that the
assets and bonds; Finally from the custody assets record alone.
Recommendation: a business should ensure that its correct
operation records, and regularly audit, to ensure everything is
correct. Employees should keep again under the rules and
regulations, not to steal.
Question 2: financial or business control to protect company
from corruption?
Business owners, such as the manager of the company
leadership should not bribe to get regulatory approval means
that products such as the shortcut. Enterprise should make sure
that it pay tax at the right time and amount.
Business owners to teaching material of language of answer:
graft and corruption plan account for 13% of professional
cheats. Business success is critical to control cash. Should
practice, there is no room to make sure that all internal control
corruption

11. Recommendation: internal control applications such as
appropriate technology control and execution and independent
review should take on a regular basis. This is done to show any
sign of the corruption.
Question 3: financial or business control to protect company
from false financial statements?
Business owners: access to financial assets and information,
including accounting system limitation, carefully controlled.
The task of financial reporting is not just one task. Therefore,
sharing obligations. The responsibility division between the
management team.
Business owners into language teaching: financial control to
protect company from fraud financial statements include the
financial records of responsibility to share the responsibility.
Access to relevant financial information and control should be
limited.
Advice/description: all relevant financial information should be
handled with care all the time to ensure that business to expose
fraud.
Question 4: what did you do any background investigation,
including criminal and drug test your employees, especially
those who handle cash? They are bonded?
Business owners: the only check completed staff is just
background information, they have been working, the referee
said information from CVs. There is no other such as drug
background investigation.
Business owners into teaching material of language: employees
should be in their criminal background checks and any

12. information likely to show that their use of drugs. Information
can be displayed on how best to deal with the issues of
employees and business whether can trust their financial
situation.
Advice/description: criminal record and drugs should check
employees, so that business can know people in it.
Question 5: what do you have a risk management professional
access to your strengths and weaknesses in the field of business,
including insurance knight to protect your business for this type
of loss.
Business owner: business sometimes hires experts to check the
performance of the business, suggest put more effort to
maximize revenue.
Business owners into teaching material of language: business
should conduct regular audit, its operation and records, to
ensure that everything is according to the business ethics and
according to the laws of the state. The audit company can also
provide advice on where to put more money.
Recommend/description: enterprise should employ the
advantages and disadvantages of the professional advice.
Question 6: how often do you have the external accounting firm
in a tax year to review your book? These audit finish?
Business owner: business books outside of certified public
accountants audit the audit once a year. Hire potential audit
firm audit completed.
Business owners into teaching material of language: law

13. requires all enterprises have the book of account review at least
once a year. Enterprises should not audit itself, but it should
hire outside certified public accountants audit book.
Advice/explanation: accounting books shall check in accordance
with the law, to ensure that no abuse and corruption in business
Question 7: student work
Business owner: fraud stealing commercial personal benefits.
Can fraud by employees or by third parties. The assets of the
business internal control is the implementation of maintenance,
maintain data accuracy and completeness, promote the
efficiency.
Business owners into teaching material of language: fraud is
theft, concealment, other people's money into their personal
interests. Internal control's main goal is to safeguard assets,
maintain data accuracy, promote the efficiency of the business.
Recommend/description: business should be check regularly
checks fraud, its operations and to ensure the implementation of
internal control can resist any fraud, abuse and corruption.
Chapter 2 – Recording Business Transactions
Question 1. How has the business owner determined the book
value of the business’s short-term and long-term assets?
The business owner may determine the book value of the
business’ short-term and long-term assets by comparing the
balance sheet depending on a given period. Some balance sheets
provide weekly or monthly logs of assets in terms of cash,
accounts, receivables, supplies, raw materials, and inventory,

14. among others. Other balance sheets provide information on a
yearly basis. To determine the book value of the business’
short-term and long-term assets, the owner’s equity must be
calculated during a week or month, and then a year. The values
will indicate short-term and long-term assets remaining minus
liabilities.
Question 2. When and how do you categorize revenues for your
business?
Revenues for business should be categorized if they come
from different sources. In this way, the business owner would
be able to determine what goods or services generate the most
and least revenue.
Revenue may be categorized as operating or non-operating
revenue. Operating revenue refers to those gained from sales of
goods or services provided. Operating revenue is gained
generally from business operations. Non-operating revenue is
the business’ passive income. Examples of passive revenue
include those obtained as interest, dividends, and royalties.
Question 3. How do you calculate your Gross Margins? How do
you establish cost parameters for the products or services being
offered to customers?
To calculate gross margin, the business owner must
subtract the cost of goods sold from the total revenue. The
result of which must be divided form the revenue.
To establish cost parameters, the business owner must
detail all expenses in producing products or services being
offered to customers. Cost or expenses include raw materials,
delivery or flow throughout the supply chain, and cost of labor.
The business owner must identify all these expenses and then
set cost parameters based on amount needed to earn reasonable
profit and meet target revenue.
Question 4. How do you calculate the Equity for the business?

15. Do you track the Equity monthly, quarterly, semi-annually or
annually?
One can calculate the Owner’s Equity by subtracting
liabilities from assets.
Yes, it is important for business owners to track Owner’s
Equity regularly, whether it is monthly, quarterly, semi-
annually or annually so that the business owner may make and
adjust decisions accordingly based on the movement of assets
and liabilities.
Question 5. Who insures the books and records are kept up-to-
date and balanced? Who reconciles the businesses bank
statements? Is the bank statement reconciled to the books?
The managerial accountant, bookkeeper, or auditor insures
that the books and records are kept up-to-date and balanced. An
internal auditor will be responsible for reconciling the
businesses’ bank statements.
The bank statement must be reconciled to the books to
ensure that the business’ financial records are the same as the
bank’s records. If the statements are not reconciled, then the
business must make notations to explain the discrepancies.
Question 6. Who is responsible for entering the daily business
transactions? Who audits the work being completed by this
person? How often are the books often audited to insure
accuracy and honesty?
The bookkeeper is responsible for entering the daily
business transactions. The auditor or accountant then audits the
work being completed by the bookkeeper. The books are often
audited
It is recommended that auditing is conducted on a regular
basis – daily, weekly, monthly, and annually.
Question 7. What are the components of the Financial Statement
that contribute to decision-making?

16. The components of the Financial Statement include the
Balance Sheets, Income Statements, and Cash Flow.