Accounting Quiz Chapter 8 and 9

Ancient Grains Unlimited has an accounts receivable turnover ratio of 3.34 times. The net credit sales for the year are $567,920. What is the days' sales in receivables ratio for 2018 (rounded to the nearest whole number)?

109 days

South Rims has an accounts receivable balance at the end of 2018 of $357,470. The net credit sales for the year are $769,346. The balance at the end of 2017 was $325,300. What is the accounts receivable turnover rate for 2018 (rounded to two decimal places)?

2.25 times

Doer Company reports year-end credit sales in the amount of $390,000 and accounts receivable of $85,500. Doer uses the income statement method to report bad debt estimation. The estimation percentage is 3.5%. What is the estimated balance uncollectible using the income statement method?

$13,650

Michelle Company reports $345,000 in credit sales and $267,500 in accounts receivable at the end of 2019. Michelle currently uses the income statement method to record bad debt estimation at 4%. To manage earnings more efficiently, Michelle changes bed debt estimation to the balance sheet method at 4%. How much is the difference in net income between the income statement and balance sheet methods?

$3100

Tines Commerce computes bad debt based on the allowance method. They determine their current year's balance estimation to be a credit of $45,000. The previous period had a credit balance in Allowance for Doubtful Accounts of $12,000. What should be the reported figure in the adjusting entry for the current period?

$33,000

Orion Rentals is unable to collect on a note worth $25000 and has accumulated interest of $250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency?

$5,050

Balloons Plus computes bad debt based on the allowance method. They determine their current year's balance estimation to be a credit of $84,000. The previous period had a credit balance in Allowance for Doubtful Accounts of $26,000. What should be the reported figure in the adjusting entry for the current period?

$58,000

A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time?

$7,150

Internal control is said to be the backbone of all businesses. Which of the following is the best description of internal controls?

Internal controls and company policies are important to protect and safeguard assets and to protect all company data and are designed to protect the company from fraud

What is the best way for owners of small businesses to maintain proper internal controls?

The owner must have enough knowledge of all aspects of the company and have controls in place to track all assets

A company is trying to set up proper internal controls for their accounts payable/inventory purchasing system. Currently the purchase order is generated by the same person who receives the inventory. Together the purchase order and the receiving ticket are sent to accounts payable for payment. What changes would you make to improve the internal control structure?

The responsibilities of generating the purchase order and receiving the inventory should be separated among two different people

Which of the following is not a criterion to recognize revenue under GAAP?

cash must be collected

Which of the following is not a way to manage earnings?

change the dates of common stock issuance

Which statement is most directly affected by a change to net income?

income statement

A company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial amount of $30,000. Which accounts are used to record collection of the honored note at maturity date?

interest revenue, interest receivable, cash, notes receivable

Which of the following is true of a maturity date?

it is the date when principal and interest on a note are to be repaid to the lender

Which of the following would a fraudster perceive as a pressure?

living beyond one's means

Which of the following is not considered to be part of the internal control structure of a company?

publish accurate financial statements on a regular basis

If a customer pays with a credit card and and the service has been provided, which of the following accounts will be used to record the sales entry for this transaction?

sales revenue, credit card expense, accounts receivable

There are several elements to internal controls. Which of the following would not address the issue of having cash transactions reported in the accounting records?

the person behind the cash register should also be responsible for making price adjustments