Financial Accounting Quizzes 4,5,6

The most important internal control over cash is to:

separate cash-handling duties from cash-accounting duties

If a bookkeeper mistakenly records a disbursement as $47 instead of the correct amount of $74, the error should be shown on the bank rec as a:

$27 deduction from the balance per books

under the allowance method for estimating uncollectible accounts:

-the allowance for uncollectible accounts is a contra account to gross accounts receivable -a company sets up an allowance for uncollectible accounts to estimate the amount of the receivables the company does not expect to collect -the allowance for uncollectible accounts will normally have a credit balance

Corbin Company was charged $25 for a check printing fee associated with their checking account. What journal entry is required?

Debit Miscellaneous expense for $25 and credit cash for $25

T/F: Following GAAP, two methods to estimate uncollectible accounts receivable are the direct write-off method and the allowance method

False

T/F: Since a perpetual inventory system continuously updates the inventory account, a physical inventory count is not necessary to prove the inventory records

False

T/F: The principal amount of a note is the amount borrowed by the creditor

False

Which inventory costing method provides the most realistic measure of net income?

LIFO

The book side of a bank reconciliation includes:

NSF checks, bank collections of notes receivable and interest earned on the checking account

ABC Furniture Unlimited sells antique furniture. ABC will most likely use the ___ method to cost its ending inventory

Specific-Unit Cost

T/F: Accounts (trade) receivables are amounts to be collected from customers from the sale of goods or services

True

T/F: Journal entries need to be made for all transactions on the book side to get the accounts up to date

True

T/F: The inventory cost under the average cost per unit method will generally fall in between the inventory cost using the LIFO and FIFO methods

True

T/F: Under the allowance method, Uncollectible-ACcount Expense is recorded in the same accounting period as the sale

True

T/F: in a perpetual inventory system, a business maintains a continuous record of the number of units purchased, sold, and on hand for each inventory item

True

T/F: the LIFO method assigns the most recent inventory cost to COGS

True

The aging of receivables method of estimating uncollectible accounts is:

a BS approach, since it focuses on accounts receivable

The Allowance for Uncollectible Accounts is classified as:

a contra-asset account

The net realizable value of accounts receivable is the difference between gross accounts receivable and

allowance for uncollectible accounts

A bank statement included a NSF check from customer Kim Fields for $2,100. The journal entry to record this reconciling item should:

debit accounts receivable and credit cash for $2,100

The journal entry to record accrued interest on a note receivable at year end is:

debit interest receivable and credit interest revenue

In a bank reconciliation, a bank service charge for printing checks is:

deducted from the book balance

deposits that have been recorded on the books, but have not yet been recorded by the bank are:

deposits in transit

the cost of inventory that is still on hand is called:

inventory, a current asset that appears on the BS

a bank reconciliation included an outstanding check of $850 for the payment of salaries. The journal entry to record this reconciling item:

is not required

A check received from a customer for which there are not sufficient funds in the bank to cover the amount of the check is an:

non-sufficient funds check

There are three parties to a check. The person or company to whom the check is paid is the:

payee