ACCTG 320- Midterm 1

A balance sheet can be prepared by reference to: a. post-closing trial balance d. source documents b. subsidiary ledgers e. none of the above c. general and special journals

. post-closing trial balance

What does the following flowchart describe? a. A manual input was used in a manual process which generated a document. b. A decision was made regarding keyboard input data and its effect on an output record. c. Input data was processed by an EDP program and displayed on a CRT tube. d. Input data was processed by an EDP program and output on a printer. e. An EDP operation processed manually input information and output the results on a hard disk.

a. A manual input was used in a manual process which generated a document.

Which of the following reconciling items on a bank reconciliation require an adjustment to the balance of the cash account? a. A monthly service charge fee b. Outstanding checks c. Deposits-in-transit d. Errors by the bank e. All of the above require adjustment

a. A monthly service charge fee

Which is the most important assertion relating to cash receipts? a. All amounts received are properly recorded. b. All amounts received relate to actual sales. c. All amounts received are properly disclosed in the footnotes of the financial statements. d. All amounts received are recorded in the same period in which the sale occurred. e. All amounts received are from actual customers.

a. All amounts received are properly recorded.

In a cash receipts system, which of the following controls will best ensure that all receipts received are properly recorded? a. Mailing monthly statements to customers b. Requiring accounting personnel to receive checks from customers c. Independently verifying that all recorded receipts appear on the prelist d. Footing the prelist e. Operating an effective accounting system for the underlying sales

a. Mailing monthly statements to customers

Which of the following sequence of steps in the accounting process is correct? a. Prepare records, record in journals, post to ledgers, and prepare unadjusted trial balance b. Prepare records, post to ledgers, record in journals, and prepare unadjusted trial balance c. Prepare records, prepare unadjusted trial balance, record in journals, and post to ledgers d. Prepare records, record in journals, prepare unadjusted trial balance, and post to ledgers e. Record in journals, post to ledgers, prepare records, and prepare unadjusted trial balance

a. Prepare records, record in journals, post to ledgers, and prepare unadjusted trial balance

Using prenumbered sales invoices is the primary control procedure for a. ensuring that all sales transactions are recorded. b. ensuring that all recorded sales transactions are valid. c. ensuring that all recorded sales transactions are accurate. d. both a and c. e. both b and c.

a. ensuring that all sales transactions are recorded.

The overall objective of the Systems Understanding Aid is to: a. help aid in the understanding and visualization of the entire accounting process. b. demonstrate a typical manual accounting system. c. introduce accounting flowcharts. d. introduce actual accounting documents. e. demonstrate a typical computerized accounting system.

a. help aid in the understanding and visualization of the entire accounting process.

The general journal is used to: a. post all accounting entries not posted in other individual journals. b. post all accounting entries. c. post all accounting entries not involving cash. d. post only month end adjusting journal entries. e. post only year end adjusting journal entries.

a. post all accounting entries not posted in other individual journals.

The clerk who opens mail is assigned responsibility for preparing a document which identifies all cash collections received in the mail for a given day. This document is called: a. remittances prelist form d. voucher b. receiving report e. collection authorization form c. accounts receivable subsidiary record

a. remittances prelist form

Which of the following documents originates outside the company? a. purchase order d. vendor invoice b. cash sale invoice e. bill of lading c. employee time card

d. vendor invoice

In determining cost of goods sold under the periodic inventory method, which account is not affected? a. sales discounts d. freight-in b. purchase returns and allowances e. inventory c. purchase discounts

a. sales discounts

Why is the periodic inventory method used instead of the perpetual method for some companies? a. the record keeping costs are lower b. inventory is physically counted less frequently for the periodic method c. the periodic method provides more detailed information about shrinkage d. all of the above e. none of the above

a. the record keeping costs are lower

For which of the following forms is an in-house authorization separate from the preparer most important at Waren? a. Receiving report d. Deposit slip b. Credit memo e. Prelist c. Customer order

b. Credit memo

Which, if any, of the following is not a reason for preparing an accounts receivable aged trial balance? a. Reconcile the control and subsidiary accounts. b. Display activity (cash receipts and sales) for each individual account. c. Show in a convenient format a listing of accounts receivable for management review. d. Provide information about the adequacy of the allowance for uncollectible accounts. e. All of the above are reasons for preparing an accounts receivable aged trial balance.

b. Display activity (cash receipts and sales) for each individual account.

A document used to report to the federal government income taxes (federal income taxes and F.I.C.A.) withheld from wages of employees is called a: a. W-2 form d. earnings record b. Form 941 e. Form 1040 c. deduction authorization form

b. Form 941 (better answer) a. W-2 form

Which of the following statements about closing entries is false? a. Closing entries are prepared only at the end of the organization's year. b. If there has been a net loss for the year, the Income Summary account is closed by a debit. c. The total debits and total credits must be equal for each closing entry. d. Every revenue and expense account must be closed out to zero. e. Closing entries are prepared after all transactions and adjusting entries have been prepared and posted to the general ledger.

b. If there has been a net loss for the year, the Income Summary account is closed by a debit.

Interpret the following credit terms: 2/10, Net 30. a. a 10 percent discount can be taken if the balance is paid within 2 days; otherwise, the balance is due in 30 days. b. a 2 percent discount can be taken if the balance is paid within 10 days; otherwise, the balance is due in 30 days. c. 20 percent of the balance is due in 30 days. d. 20 percent of the balance is due upon receipt, with the remaining balance due in 30 days. e. a 20 percent discount can be taken if the balance is paid with 30 days.

b. a 2 percent discount can be taken if the balance is paid within 10 days; otherwise, the balance is due in 30 days.

A document that indicates such things as the description and quantity of goods and services received, the price including freight, the cash discount terms and the date of billing. It is an essential document because it specifies the amount of money owed for an acquisition. This document is a:

b. sales invoice e. vendor invoice

What is a payroll journal? a. a place where the names, social security numbers, pay rates, exemptions, withholding information, etc., are kept by the personnel department b. a special journal where payroll hours, dollars and deductions are accumulated for subsequent posting to the general ledger accounts c. a list of all employees on the payroll d. the clerical window where paychecks are picked up e. a list of employees validated by department foremen for payment in the current period

b. a special journal where payroll hours, dollars and deductions are accumulated for subsequent posting to the general ledger accounts

If the accountant was asked by management to determine the cost of inventory purchases during the year from a particular vendor, he would most likely examine which of the following to arrive at the answer: a. purchases journal b. accounts payable subsidiary ledger c. chronological file of purchase orders d. perpetual inventory records e. cash disbursements journal

b. accounts payable subsidiary ledger

If you received a request from a customer who wanted to know how much they owed, you would go to the: a. accounts receivable - general ledger account b. accounts receivable - subsidiary ledger c. sales journal d. sales invoice file e. sales department manager

b. accounts receivable - subsidiary ledger

A document prepared at the time of shipment indicating the description of the merchandise, the quantity shipped and other relevant data. It is a written contract of the receipt and shipment of goods between the seller and the carrier. This document is a: a. remittance advice d. receiving report b. bill of lading e. sales order c. purchase requisition

b. bill of lading

What document does a customer receive when goods are returned? a. purchase order d. receiving report b. credit memo e. bill of lading c. debit memo

b. credit memo

In order to maintain controls over cash receipts, cash is typically deposited _____, while a bank reconciliation is performed _____. a. daily, weekly b. daily, monthly c. weekly, monthly d. monthly, daily e. weekly, weekly

b. daily, monthly

To determine how many of a particular inventory item you have on hand at any particular time, you would: a. examine the periodic inventory record for the item. b. examine the perpetual inventory record for the item. c. examine the monthly postings to the purchase account. d. examine the total in the purchase account for the year. e. examine the individual vendor's invoices for the particular item purchased in the current year.

b. examine the perpetual inventory record for the item.

The basic source document which is used for recording a credit sale is: a. bill of lading b. sales invoice c. customer order form d. monthly billing statement e. debit memo

b. sales invoice

When processing the payment from a customer on an accounts receivable, the accountant needs at his disposal all of the following except: a. deposit slip d. cash receipts journal b. sales invoice e. all of the above are needed c. accounts receivable subsidiary ledger

b. sales invoice

An auditor is interested in testing whether a sample of sales to customers in the current year have been recorded. In this case, the auditor would most likely select a sample from which source? a. customer orders b. sales invoices c. entries in sales journal d. entries in the cash disbursements journal e. the accounts receivable subsidiary ledger

b. sales invoices

A document prepared in the sales department of most firms for recording the description, quantity and related information for goods purchased by their customers is called a: a. customer order d. purchase order b. sales order e. purchase requisition c. sales invoice

b. sales order

For the most effective and efficient control environment, payments for supplies purchases should be signed by a. the president of the company. b. the manager of accounts payable. c. the treasurer of the company. d. the requisitioner of the supplies. e. the controller of the company.

b. the manager of accounts payable.

35. Which of the following statements is false? a. The perpetual inventory method requires that cost of goods sold be calculated for each sale. b. Perpetual inventory records reflect the quantity of inventory on hand at any point in time. c. If perpetual inventory records have been historically accurate, a physical inventory count can be omitted in a given year. d. Record-keeping errors can cause discrepancies between perpetual and physical count quantities. e. Significant differences between the physical count and perpetual records should be investigated.

c. If perpetual inventory records have been historically accurate, a physical inventory count can be omitted in a given year.

Your company purchased merchandise from the "X" Corporation. As the "gopher" person in your company, you picked up the merchandise as you delivered the order to buy. You paid for the merchandise instantly with one of your company's checks. Where would this transaction be recorded first by your company? a. purchase journal d. general journal b. accounts payable subsidiary ledger e. general ledger c. cash disbursements journal

c. cash disbursements journal

When a company receives a check in the mail in payment of an account receivable, the first recording of information about the collection is in the: a. accounts receivable c. cash receipts journal subsidiary ledger d. general journal b. receiving report e. check register

c. cash receipts journal

A client's accounting records are unfamiliar to a new auditor. Where would a new auditor go to learn the names and numbers of the accounts being debited and credited in the transactions. a. general journal d. internal control flowcharts b. general ledger e. inquire of the client c. chart of accounts

c. chart of accounts

A document indicating a reduction in the amount due from a customer because of returned goods or an allowance granted is called a: a. debit memo c. credit memo b. sales return and allowances d. sales invoice journal e. uncollectible account authorization form

c. credit memo

An arrow with a dotted line ( ------>) in a systems flowchart indicates which of the following? a. the direction of processing or data flow d. an on-page connector b. a decision is to be made e. an off-page connector c. information flow only, no document flow

c. information flow only, no document flow

Time cards alone can be used by the payroll department to do which of the following? a. keep track of wage and salary information for each employee b. calculate net pay for each employee for each time period c. keep track of the hours worked by each employee for each time period d. calculate gross by for each employee for each time period e. calculate withholdings for each employee for each pay period

c. keep track of the hours worked by each employee for each time period

Benefits of the perpetual inventory method include all but which of the following: a. provides close control over the actual goods on hand b. provides a check on the accuracy of cost of goods sold c. lower record-keeping costs than under the periodic method d. provides a measure of losses through theft and spoilage e. provides up-to-date information about the quantity and dollar value of goods on hand

c. lower record-keeping costs than under the periodic method

At Waren, how often is the general ledger updated? a. daily d. annually b. weekly e. never c. monthly

c. monthly

A remittance advice is used to: a. send or receive billing for asset or service b. ship or receive asset or service c. pay or receive cash d. authorize a transaction e. record or issue order to sell, buy or employ

c. pay or receive cash

A place where gross pay, withholdings, and net pay are recorded for all employees. The amounts are normally totaled and posted to the general ledger monthly. The above is called a: a. personnel record d. employee time card b. labor distribution report e. perpetual employee record c. payroll journal

c. payroll journal

Which transaction would not affect perpetual inventory records? a. sale of merchandise d. sales returns b. purchase of merchandise e. purchase returns c. sales discounts taken

c. sales discounts taken

At Waren, where is the total net pay from the payroll journal posted? a. the cash receipts journal b. the cash disbursements journal c. the general ledger d. the general journal e. the working trial balance

c. the general ledger

A document frequently used by organizations to establish a formal means of recording and controlling acquisitions. It is the basis not only for recording acquisitions in the journal but also for making cash disbursements. This document is called: a. invoice d. statement b. check e. subsidiary ledger c. voucher

c. voucher

Which of the following statements relating to the preparation of the year-end worksheet for Waren is false? a. The amounts entered in the "unadjusted trial balance" columns are the totals from each of the general ledger accounts prior to adjustments. b. The amounts entered in the "adjustments" columns are taken directly from the general journal. c. The amounts entered in the "income statement" columns are the closing entries for each income statement account, with the residual equaling net income for the year. d. "Debit" columns represent increases to each account, while "credit" columns represent decreases to each account. e. Amounts computed for the "Balance Sheet" columns are the same amounts that will used for the year-end balance sheet.

d. "Debit" columns represent increases to each account, while "credit" columns represent decreases to each account.

Which of the following is not adjusted as an accrual by a Company at the end of the year? a. Taxes payable d. Accounts payable b. Allowance for uncollectible accounts e. Accumulated depreciation c. Interest payable

d. Accounts payable

Adjusting journal entries are prepared for which of the following? a. record depreciation expense b. adjust payroll expense for wages earned but not yet paid c. record an inventory purchase d. a and b only e. all of the above

d. a and b only

Closing entries are used to zero-out accounts that appear on which of the following statements: a. the income statement d. a and b only b. the statement of retained earnings e. a, b and c c. the balance sheet

d. a and b only

11. When a customer of a company inquires about the amount which the customer owes the company, the clerk handling the question would go to the: a. accounts receivable general ledger d. accounts receivable subsidiary ledger b. original copy of the monthly statement e. customer service department c. sales journal

d. accounts receivable subsidiary ledger

A document shown in a systems flowchart can: a. come from a source outside the company. b. be prepared by the department being described in the flowchart. c. be received from a department not shown in the flowchart. d. all of the above e. b or c only

d. all of the above

An auditor has as his or her objective determining that sales transactions are recorded in the proper period. The document he or she will be most interested in is: a. sales invoice d. bill of lading b. monthly billing statement e. customer order form c. cash receipts journal

d. bill of lading

Which of the following documents and records is not required to prepare a reconciliation? a. prior month's bank reconciliation d. prior month's bank statement b. cash balance per general ledger e. cash disbursements journal c. cash balance per bank

d. prior month's bank statement

Which of the following transactions would not result in an entry to the accounts receivable subsidiary ledger? a. charge sale d. recording provision for doubtful b. write-off of bad debt accounts c. sales return e. cash receipts

d. recording provision for doubtful accounts

An auditor is interested in testing to see whether all items purchased over $500 were properly capitalized. In this case, the auditor would lost likely select a sample from which source? a. the fixed asset subsidiary ledger b. the sales journal c. the general journal d. the purchases journal e. the accounts payable subsidiary ledger

d. the purchases journal

The trial balance worksheet does not provide information sufficient to: a. compute net income b. prepare a balance sheet c. prepare a statement of retained earnings d. the trial balance worksheet is sufficient for all of the above purposes e. the trial balance worksheet is not sufficient for any of the above purposes

d. the trial balance worksheet is sufficient for all of the above purposes

The purpose of a bank reconciliation is to: a. make sure the bank hasn't made a mistake b. make sure our cash bookkeeper hasn't made a mistake c. to make sure all cash which our company received got deposited d. to identify the differences between the bank balance per bank statement and our balance per books e. to show how much money our company has at any point in time

d. to identify the differences between the bank balance per bank statement and our balance per books

Which items in the following list are required for the preparation of a proper bank reconciliation? I. Bank statement V. Prior month's bank reconciliation II. Cash receipts journal VI. Cash disbursements journal III. Sales journal VII. Accounts payable trial balance IV. General ledger a. I, II, III, V, VI d. I, II, V. VI b. I, II, III, IV, V, VI e. I, II, IV, V, VI c. I, II, IV, V, VI, VII

e. I, II, IV, V, VI

When estimating uncollectible accounts, which of the following would be least useful? a. Past experience b. Industry experience c. Economic indicators d. Current-year aging report e. Sales forecasts

e. Sales forecasts

What does it mean to "cancel" a vendor's invoice? a. Writing "void" on an invoice that contains a mistake to prevent a Company from billing a customer more than once. b. Crossing out information on a vendor's invoice for goods not received to prevent payment for such goods. c. Sending an invoice back to the vendor along with the goods ordered when a credit memorandum is desired by the Company. d. Contacting a vendor prior to receiving goods in order to cancel a previous order. e. Writing "paid" on a vendor invoice when making a payment to prevent an invoice from being paid more than once.

e. Writing "paid" on a vendor invoice when making a payment to prevent an invoice from being paid more than once.

The pre-closing trial balance contains all information necessary to prepare which of the following? a. the statement of cash flows d. b and c only b. the statement of retained earnings e. a, b and c c. the income statement

e. a, b and c

What can the fixed asset subsidiary ledger be used to determine? a. accumulated depreciation for a particular asset b. the age of an asset c. the estimated useful life of an asset d. a and c only e. a, b and c

e. a, b and c

Which of the following are not shown on a fixed asset subsidiary ledger? a. estimated life b. accumulated depreciation balance c. cost of the asset d. final disposition of the asset e. all of the above are shown on the fixed asset subsidiary ledger

e. all of the above are shown on the fixed asset subsidiary ledger

Which of the following transactions would never be recorded in a cash disbursements journal? a. purchase of inventory d. payment of shipping charges b. sales return e. all of the above could be recorded through the CD journal c. payment of payroll withholdings

e. all of the above could be recorded through the CD journal

Which of the following items on a bank reconciliation would require an adjusting journal entry? a. another company's check deducted by the bank in error b. deposits in transit c. outstanding checks d. another company's deposit credited by the bank in error e. an error by the company bookkeeper in recording a cash disbursement

e. an error by the company bookkeeper in recording a cash disbursement

In the cash disbursements cycle, the vendor invoice is marked paid when a check is issued in order to: a. file the invoice alphabetically. b. make the necessary entry in the cash disbursements journal. c. indicate that the purchase is a fixed asset acquisition. d. indicate that the purchase has an approved purchase order. e. avoid duplicate payment of the invoice.

e. avoid duplicate payment of the invoice.

Which of the following errors would not cause the trial balance to be out of balance? a. failing to post part of a journal entry b. posting a debit as a credit c. incorrectly calculating the balance of an account d. omitting an account from the trial balance e. failing to record a transaction

e. failing to record a transaction

Which of the following is subtracted from an employee's gross pay: a. federal unemployment tax b. state unemployment tax c. local unemployment tax d. employer portion of FICA tax e. federal income tax withholding

e. federal income tax withholding

What is the normal sequence of recording a transaction where inventory was acquired? a. purchase order, purchases journal, general journal, general ledger b. purchases journal, purchase order, general journal, general ledger c. purchase order, general journal, purchases journal, general ledger d. purchases journal, purchase order, general ledger e. purchase order, purchases journal, general ledger

e. purchase order, purchases journal, general ledger

A document that accompanies the bill mailed to the customer and can be returned to the seller with the cash payment is called a: a. statement d. cash receipts memo b. voucher e. remittance advice c. collection invoice

e. remittance advice