Acc 131 Exam 2

which of the following statements best describes the term "outstanding check" from a company's point of view?

A check written by the company but not yet presented to the bank for payment

one employee or department should verify the work of another. This is an example of which of the following internal control activities?

Checks on recorded amounts.

The matching rule relates to credit losses by stating that Bad Debt Expense should be recorded

In the same period that revenue is recorded

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

NSF check

which of the following is an example of a credit memo?

Notice of interest earned on a checking account.

Which of the following statements is false?

The cost of goods sold account is updated after each sale of merchandise under the periodic inventory system

under the allowance method, the entry to write off a $1,425 uncollectible account includes:

a debit to allowance for doubtful accounts for $1,425

If a company recorded a check they wrote as $729 when it should have been written for $279, which of the following must occur when reconciling its bank statement?

add $450 to the company's records

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

buyer

The account allowance for doubtful accounts is classified as a(n)

contra account to accounts receivable

Which of the following best describes "cost of goods available for sale"

cost of goods available for sale is allocated into cost of ending inventory and cost of goods sold.

which of the following journal entries is recorded as a result of the bank reconciliation process to record an NSF check for $250?

debit to accounts receivable and credit to cash

the primary purpose of internal controls in managing a business is to:

ensure that employees operating within the scope of their assigned responsibilities and act in the best interest of the business

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would

increase cost of goods sold and decrease merchandise inventorty

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

safeguarding of assets and records

sales returns and sales allowances are both designed to blank, however, with a sales allowance blank.

satisfy a customer who found the product unsatisfactory, the customer keeps the product

collusion is an intentional act of two or more employees to accomplish theft of a company assets. Which control activity is designed to make fraud less likely because it would require collusion among employees?

segregation of duties

merchandise inventory becomes part of cost of goods sold when a company

sells the inventory

Which of the following statements is true regarding the two allowance procedures used to estimate bad debts?

the aging of accounts receivable method takes into account the existing balance in the allowance for doubtful accounts account.

Coffski, Inc. sold merchandise to customer on credit. The invoice amount was $1,000, the invoice date was June 10th; credit terms were 1/10, n/30. Which of the following statements is true?

the customer should pay $990 if the invoice is paid on June 15th.