1. d.

The operating cycle is the average time it takes a company to go from cash-to inventory-to sales-and back to cash.

2. c.

The operating cycle is the period of time from purchase of merchandise to the collection of cash after sale. In this case, that would be from April 5 to April 30, 25 days.

3. b.

A vendor’s invoice would be prepared by a vendor, which is external to April Company. All the other documents would be prepared internally by April Company.

4. a.

The term, FOB, is used to determine who pays the freight on shipments of goods purchased/sold. If the goods are shipped FOB destination, the seller normally pays for the shipping cost because the goods are shipped "free on board to the destination."

5. b.

The salesman’s time ticket is part of the payroll records, not sales records.

6. c.

Registering with the Securities and Exchange Commission has nothing to do with internal control. It is required in order to issue securities to the public.

7. d.

The sales terms specify the percent discount that is allowed (one percent in this case) up to the number of days indicated (15 days from invoice date). If the invoice is not paid for by the 15th day, the full amount is to be paid by the 30th day.

8. a.

The Foreign Corrupt Practices Act of 1977 established that it is the responsibility of management to see that a company has adequate internal controls.

9. c.

Salaries for key company officers are typically reviewed and recommended by the Compensation Committee of the board of directors.

10. d.

It is difficult to see how internal controls would be strengethened if the president approved all employee vacations. However, each of the other three actions would improve a company’s internal control.