Retailing - Strand 1, Standard 2 - Internal Controls

Why should a business implement a checks and balances system for cash handling?

• To prevent fraud by requiring multiple employees to verify transactions and cash counts.

• To limit the number of employees allowed to process transactions throughout the day.

• To track which customers make the most purchases and which payment methods they use.

• To allow managers to monitor all employee transactions without performing audits.

Which financial statement focuses primarily on assets, liabilities, and equity?

• Balance sheet.

• Cash flow statement, which only tracks the movement of cash.

• Income statement, which calculates revenue and expenses over time.

• POS report, which records customer transactions but does not show financial position.

How does tracking DPT help a business?

• It helps measure how much money each customer spends per transaction.

• It determines which employees are responsible for processing the highest number of sales.

• It allows a store to predict inventory shortages by monitoring customer buying habits.

• It ensures that all transactions meet the company’s pricing policies and discount regulations.

How does UPT (Units Per Transaction) help a business improve sales?

• It helps track how many items customers buy in each transaction, allowing businesses to encourage larger purchases.

• It determines how many employees are needed on the sales floor to handle customer interactions.

• It calculates the percentage of customers who return items after making a purchase.

• It measures the average amount of money customers spend per transaction, helping with pricing decisions.

What happens when a business has negative cash flow?

• It is spending more money than it is bringing in.

• It has too much cash and needs to reinvest in new inventory.

• It generates too much revenue and must adjust product pricing accordingly.

• It needs to immediately close operations to avoid financial penalties.

What does a high DPT indicate?

• Customers are spending more per transaction.

• The business is losing money on each sale.

• More customers are returning products.

• The number of transactions has decreased.

Why is monitoring cash flow important?

• To ensure that a business has enough money available to cover expenses.

• To determine the percentage of customers who use debit cards instead of credit cards.

• To track how many employees are assigned to managing financial transactions.

• To calculate the amount of discount a store can offer without losing profitability.

Why is UPT an important metric for retailers?

• It helps determine the average number of items a customer buys per transaction.

• It calculates the amount of money a business makes from credit card fees.

• It tracks the number of times employees recommend products to customers.

• It measures the impact of seasonal discounts on store performance.

Which of the following is NOT a financial performance metric?

• Employee Satisfaction Index (ESI).

• Dollar Per Transaction (DPT).

• Units Per Transaction (UPT).

• Comparing sales against last year’s sales.

How does a POS system improve business operations?

• By tracking sales, managing inventory, and recording customer transactions.

• By allowing store managers to directly monitor customer feedback and reviews.

• By automatically adjusting product pricing based on seasonal demand patterns.

• By calculating the amount of sales tax owed by the business each month.