Accounting Exam 2

While preparing the April 30th bank reconciliation, the accountant identified the following items: Find adjusted cash balance for April 30th

$15,000(Balance) - $15(Service Charge) - $100(NSF)= $14,885

Interest: Amount x rate x time

$40,000 x .09 x 2/12 = $600

Which one of the following is an example of a deferred revenue?

Payments received prior to providing services to customers.

What types of accounts get closed?

Temporary Accounts

Which one of the following is an accurate description of Allowance for Doubtful Accounts?

a. Contra Account

. Accumulated Depreciation

a. increases when the monthly adjustment for depreciation is recognized. b. decreases assets.

A credit memo appeared on the september bank

a.) Add it to the company's balance

On October 1, 2013, a company paid $9,000 rent in advance. The rent per month is $1,000. Assuming the company's accounting period ends on December 31, 2013, what will be reported on the financial statements?

a.Prepaid Rent of $6,000 on its balance sheet at December 31, 2013

The account which records differences between amounts of cash deposited and amounts from the cash register tapes is called

b. Cash over and short

Strategic risk is primarily concerned with

possible external threats to the company's success in accomplishing its objectives

Match, Inc recorded salary expense at 120,000 in 2012. However, additional salaries of 9000 had been earned but not paid or recorded at December 31, 2012. After the adjusting entries are recorded and posted on December 31, 2012 the balance in the salaries expense and salaries payable accounts should be

salaries expense- 129000 salaries payable- 9000

A treasurer preparing the October bank

32500

On December 15, the accounts receivable balance was 50,000

49000

Which of the following items would be added to the company's cash balance on a bank reconciliation?

Outstanding Checks

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

A. Assets decrease and stockholders' equity decreases.

Which internal control activity is followed when the records are verified by someone?

Checks on recorded amounts

Which internal control activity is followed when a document listing out who is in charge of what exists?

Clearly defined authority and responsibility

The college store accepts MasterCard for payments of purchase made by students. Mastercard charges a 1.55% collection fee to the merchant. Credit card sales totaling 10,000 are made during August. Recording these sales transactions will result in an increase in

Credit Card Fee Expense for $155

Failure to accrue interest expense results in

D.,an overstatement of net income and an understatement of liabilities.

Cash collected and recorded by a company but not yet reflected in a bank statement are known as:

Deposits in transit

Allowance for doubtful accounts is an expense account T or F?

False- contra asset

When preparing a bank reconciliation, which of the following items should be subtracted from the bank balance?:

Outstanding checks

All of the following are true for a company that uses the allowance method of accounting for bad debts, EXCEPT:

It records bad debt expense each time an account is determined to be uncollectible

What happens to the accounting equation when the adjustment is recorded to recognize earned revenue that was previously recorded as unearned revenue

Liabilities decrease and stockholders equity increases

A check returned by the bank because the issuer's cash account balance could not cover the check is a

NSF Check

What is the distinguishing characteristic between accounts receivable and notes receivable?

Notes receivable generally specify an interest rate and a maturity date at which any interest and principle must be repaid

Which of the following is an example of a debit memo?

Notice of a bank service charge

When should a shipping company recognize revenue from its delivery service?

On the date the customers packages are delivered.

What is an essential element of internal control?

Procedures for proper authorization of transactions

When is revenue recognized under accrual accounting?

Revenues are recognized when earned and collection is reasonably assured, regardless of the period of cash collection.

Which internal control activity is followed when there are passwords for a system?

Safeguarding of assets and records

Which internal control activity is followed when two related tasks are given to two different people?

Segregation of Duties

Which of the following entries properly closes a temporary account?

Service Revenues $20,000 Income Summary $20,000

Cash includes currency, coins, savings accounts, checking accounts, credit card sales, debit card sales, and other cash equivalents. Cash equivalents are generally defined as investments that mature within three months from the date of purchase, such as money market funds, treasury bills, and certificates of deposit.

Since the CD doesn't mature until 1 year from now, it would NOT be considered a cash equivalent.

A particular company had $2,400 of supplies on hand at January 1. During the year, supplies with a cost of $4,000 were purchased. At December 31, the actual supplies on hand amounted to $2,000. After the adjustments are recorded and posted at December 31, what are the ending balances in the Supplies and Supplies Expense accounts?

Supplies $2,000 Supplies Expense $4,400

Which of the following statements is true regarding the two allowance methods used to account for bad debts?

The percentage of accounts receivable approach takes into account the existing balance in the Allowance for Doubtful Accounts account.

Accumulated Depreciation has a credit normal balance?

True

Carithers Cleaning Service received advance payments from customers during 2013 of $24,000. At December 31, 2013, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2013, the balances in the Unearned Service Revenue and Service Revenue accounts will be:

Unearned Service Revenue Service Revenue $5,000 $19,000

Certified Electronics operates five days per week with a daily payroll of $40,000. Employees are paid every Saturday for the work week just completed (Monday through Friday). The last day of the month is Tuesday, May 31. The correct adjusting entry at May 31 is

Wages Expense 80,000 Wages Payable 80,000

Which of the following is the correct entry to establish a petty cash fund in the amount of $300?

b. debit petty cash fund 300, credit cash 300

Which of the following adjusting entries would decrease net income for the period?

b. recognition of depreciation on plant assets

Which internal control activity is followed when inventory storage areas are secured with limited access?

b.) safeguarding of assets and records

Balance Sheet accounts are also called

c. permanent accounts

Which of the following items would be added to the company's cash balance on a bank reconciliation?

d) Interest earned on the bank account

Expenses should be matched against revenue:

in the same period as the revenue that they helped generate