Financial Accounting Exam 2 Questions

When $2,500 of accounts receivable are determined to be uncollectible, which of the following should the company record to write off the accounts using the allowance method?

Debit: Allowance for uncollectible accounts Credit: Accounts Receivable

Damon Company receives its monthly bank statement, which reports a balance of $1,875. After comparing this to the company's cash records, Damon's accountants determine that deposits outstanding total $3,700 and checks outstanding total $3,950. Required: Calculate the reconciled bank balance for cash.

1,875 + 3,700 - 3,950 = 1,625

Bourne Incorporated reports a cash balance at the end of the month of $2,345. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($74), an NSF check from a customer ($240), a customer's note receivable collected by the bank ($1,200), and interest earned ($24). Required: Calculate the reconciled company balance for cash.

2,345 - 74 - 240 + 1,200 + 24 = 3,255

Which of the following would NOT need to be accounted for in a bank reconciliation?

Checks written by the company and recorded by the bank.

At the beginning of 2018, the balance in Jackson Enterprises' Allowance for Uncollectible Accounts was $31,800. During 2018, the company wrote off $38,000 of accounts receivable. Writing off the individual bad debts would include a:

Credit to Accounts Receivable.

A company's adjustment for uncollectible accounts at year-end would include a:

Debit to bad debt expense

After preparing a bank reconciliation, the service fee charged by the bank would be recorded with a:

Debit to service fees expense

Which of the following best describes the goal of internal controls?

Improving the accuracy and the reliability of financial information.

For accounts receivable, the longer an account is outstanding, the:

More likely it will prove uncollectible.

Which of the following is not an example of preventive controls?

Reconciliations

Which of the following items would cause the balance of cash in the bank statement not to equal the balance of cash in the accounting records?

The company deposited a customer check that was found by the bank to have insufficient funds.

Collections of accounts receivable that previously have been written off are credited to:

accounts receivable

A bank reconciliation reconciles the bank statement with the company's:

cash account in the balance sheet

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a:

sales return

Using the allowance method, writing off an actual bad debt would include a:

credit to accounts receivable

The amount of cash that is actually expected to be collected on accounts receivable is referred to as:

net realized value

Richard LLC accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation?

no effect on the accounting equation

Which of the following is an example of detective controls?

reconciliations