accounting exam #2

Beginning balance is 2000, purchases during the year is 800, and the ending count of supplies on hand is 1200. What is the amount shown in the supplies expense account on the income statement?

$1,600

A 1,000, 12%, 90-day not is received by a company on December 1, 2019. The company will record accrued interest receivable on December 31, 2019 of...

$10.00

Cozy Corporation purchased supplies at a cost of $15,000 during the year. At January 1, supplies on hand were $5,000. At December 31, supplies on hand are $2,000. Calculate supplies expense for the year.

$18,000

A company received $2,000, 60 day, 12% note on September 15. On November 14, they should have how much $

$2,040

The company received a promissory note from a customer on March 1, 2019. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest.

$450

james river had checks outstanding totaling $162 on its July bank reconciliation. in august, james river issued checks totaling $1167. the august bank statement shows that 789 in checks cleared the bank in august. the amount of outstanding checks on james river's august bank reconciliation should be:

$540 (162 + 1167 - 789)

If a seller offered terms of 2/10, n30 on a $20,000 sale and the purchaser pays on the ninth day, how much does the seller receive?

(20,000*.02 = 400; 20,000-400) $19,600

If the end-of-year supplies on hand totaled $200, and purchases totaled $300, and supplies on hand at the beginning of the year amounted to $100, how much will be reported as supplies expense for the current year?

(beginning + purchases - ending amount = supplies expense) $200

A company receiving payment of a $20,000 accounts receivable within 10 days with terms of 2/10, n/30, would record a sales discount of:

2% of $20,000

At the end of the first period of operations a company had wages payable on the balance sheet of 500 and wages expense on the income statement of 4500. how much cash was paid for wages during the period?

4,000

deposit in transit

A deposit recorded by the company but not yet by its bank

notes receivable

A written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.

internal control system

All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

Accounts Receivable

Amounts to be received in the future due to the sale of goods or services

Accounting Equation

Assets = Liabilities + Owner's Equity

After analyzing the customers' accounts receivable accounts, it is determined that 4000 of the accounts are probable uncollectible. The balance in the account allowance for doubtful accounts is 300 debit. what would be the debit entry for the necessary adjusting entry?

Bad debts expense 4300

how do you find net increase/decrease when looking at a bank reconciliation?

Bank statement balance - service charges + interest - NSF check. Find the difference between bank statement balance and ending balance. (I think... look at practice exam)

normal balance of expenses

Debit

On November 1, 2019, a client paid 1200 for the next 12 month period. This is for unearned revenue. What is the adjusting entry for the end of 2019?

Debit 200 to unearned revenue and credit 200 to consulting revenue

The asset account, Supplies, has a balance of $10,000 on January 1. During January, $22,000 of supplies were purchased on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $2,000. What adjusting entry is necessary at January 31?

Debit 30,000 to supplies expense and credit 30,000 to supplies

(t/f) The most important element of the fraud triangle is rationalization

F

how do you find net income

Net Income = Revenues - Expenses

cash equivalents

Short-term, highly liquid investments that can be readily converted to a specific amount of cash; usually less than 100 days

(t/f) Employees sometimes commit fraud because of personal financial problems caused by too much debt

T

accrual accounting vs cash accounting

accrual is when revenue and expenses are recorded when the occur (when revenue is earned and when expenses are incurred), and cash is when cash is received/spent

When you fail to adjust a prepaid expense that has partly expired, which was originally recorded by debiting the asset account, the result will usually involve...

an overstatement of assets and an understatement of expenses

failure to adjust an unearned revenue account for an account that has been partly earned by the end of the accounting period and which was originally recorded in the unearned revenue account will result in...

an understatement of revenues and an overstatement of liabilities

List the accounting cycle

analyze business transactions, journalize the transactions, post to ledger accounts, prepare a trial balance, journalize and post adjusting entries, prepare an adjusted trial balance, prepare financial statements, journalize and post-closing entries, prepare a post-closing trial balance

From an internal control standpoint, the asset most susceptible to improper diversion and use is

cash

a good device for control over cash received in a store would be a...

cash register

normal balance of revenue

credit

Bad Debt Expense equation

credit sales (sales credit - sales returns and allowances) x bad debt loss rate; (look at #14)

short term receivables are reported on the Balance sheet as

current asset, after cash and short term investments

Prepaid advertising is $2,000, advertising expense is $5,000. If it is determines that the cost of advertising applicable to future periods is $1,500, the correct adjusting entry is...

debit $500 to advertising expense and credit $500 to prepaid advertising. (this is because you paid 2,000 but it technically only costs 1500, so you have 500 left over for next year.)

A customer's check for $25 that had been deposited into the company's checking account the previous month was returned stamped "NSF" by the bank. Which of the following journal entries is required?

debit accounts receivable and credit cash

Which method of bad debt matches revenues and expenses

direct write off

When is the petty cash fund replenished?

end of the month

Failure to record the earned portion of unearned revenue would result in...

net income being understated (because this would be on income statement)

would you add deposits in transit on a company's cash balance on a bank reconciliation?

no

assuming a 500 credit in the allowance for doubtful accounts, the act of writing off an uncollectible account receivable of 200 will cause the following effect on total current assets and net inc...

no effect on total current assets or net income

When an NSF check is returned by the bank, it should be shown on the company's books as:

receivable

Objectives of Internal Control

reduce the risks of errors, enhance the accuracy and reliability of accounting records, safeguard company assets

Which accounts get closed?

revenue, expense, and dividend accounts (temporary accounts)

The College Store accepts MasterCard for payments of purchases made by students. The credit card drafts are deposited directly in a bank account. MasterCard charges a 1.55% collection fee. Credit card drafts totaling $10,000 are deposited during August. Recording the sales and deposits will result in an increase in

service charge expense for $155

interest

the excess of the total amount of money paid to a lender over the amount borrowed

when closing a temporary account, look for...

the opposite of the normal balance for expenses or revenue (typically)

aging method

using a higher percentage for "old" accounts than for "new" accounts when estimating uncollectible accounts

under accrual accounting when is revenue recognized?

when earned, and expenses when INCURRED

2 methods for bad debt

write off and allowance