Accy 201 Barton

1.The operating cycle for a merchandiser that sells only for cash moves from: A.Purchases of merchandise to inventory to cash sales. B.Purchases of merchandise to inventory accounts receivable to cash sales. C.Inventory to purchases of merchandise to cash sales. D.Accounts receivable to purchases of merchandise to inventory to cash sales. E.Accounts receivable to inventory to cash sales.

A.

11. When two clerks share the same cash register, which internal control principle is violated? A. Establish Responsibilities B. Maintain adequate records C. Insure assets D. Bond key employers E. Apply technological controls

A.

12. When two clerks had $43 missing from petty cash which was not accounted for by petty cash receipts. The correct procedure is to: A.Debit Cash Over and Short for $43. B.Credit Cash Over and Short for $43. C. Debit Petty Cash for $43. D. Credit Petty Cash for $43. E. Credit Cash for $43.

A.

16. The materiality constraint: A. States that an amount can be ignored if its effect on financial statements is unimportant to user's business decisions. B.Requires use of the allowance method for bad debts. C.Requires use of the direct write-off method. D.States that bad debts not be written off. E.Requires that expense be reported in the same period as the sales they helped produce.

A.

26. On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system on October 4, Alberts returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Robertson must make on October 4 is:

A.

4. A company's internal control system: A.Eliminates risk of loss. B.Monitors and controls business activities. C.Eliminates human error. D.Eliminates the need for audits. E.Is not necessary in large companies.

B.

32. In the comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for November's rent was correctly written and drawn for $7,390 from the bank account but was incorrectly entered in the accounting records as $3,790. When reconciling the November bank statement, the company should: A. Deduct $3,600 from the book balance of cash B. Add $3,600 to the bank statement balance C. Add $7,390 to the book balance of cash D. Deduct $3,600 from the bank statement balance E. Add $3,600 to the book balance of cash

A.

33. The internal document prepared by a department manager that informs the purchasing department of its needs is the: A. Purchase requisition B. Purchase order C. Invoice D. Receiving report E. Invoice approval

A.

36. Newton Company uses the allowances method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July 10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or entries Newton makes to record the recovery of the bad debt is: A. Accounts Receivable-P. Best 3,000 Allowance for Doubtful Accounts 3,000 Cash 3,000 Accounts Receivable-P. Best 3,000 B. Cash 3,000 Bad Debts Expense 3,000 C. Accounts Receivable-P. Best 3,000 Bad Debts Expense 3,000 Cash 3,000 Accounts Receivable-P. Best 3,000 D. Allowance for Doubtful Accounts 3,000 Accounts Receivable-P. Best 3,000 Accounts Receivable-P. Best 3,000 Cash 3,000 E. Cash 3,000 Accounts Receivable-P. Best 3,000

A.

42. Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a: A. Debit to Notes Receivable for $75,000 B. Debit to Accounts Receivable for $75,000 C. Credit to Notes Receivable for $75,000 D. Debit Notes Payable for $75,000 E. Credit to Sales for $75,000

A.

48. An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period of the sales and (2) reports accounts receivable at the amount of cash to be collected is the: A. Allowance method of accounting for bad debts. B. Aging of notes receivable. C. Adjustment method for uncollectible debts. D. Direct write-off method of accounting for bad debts. E. Cash basis method of accounting for bad debts.

A.

6. A company receives a 10%, 90-day note for $1,500 interest due upon the maturity date is: A. $37.50 B. $150.00 C. $75.00 D. $50.00 E. $87.50

A.

The impact of technology on internal control includes which of the following? A. Reduced processing errors. B.Elimination of the need for regular audits. C.Elimination of the need to bond employees. D.More efficient separation of duties. E.Elimination of fraud.

A.

13. Multiple-step income statements: A. Are required by the FASB B.Contain more detail than a simple listing of revenues and expenses. C.Are required for the perpetual inventory system. D.List cost of goods sold as an operating expense. E.Can only be used in perpetual inventory systems

B.

15. Ace Credit Card Company agrees to transfer cash to Seller Company immediately upon deposit of that company's credit card sales receipts. Ace charges a 2% fee for all credit card sales. If Seller Company deposits $57,300 credit card sales receipts, which of the following statements are true? A.Ace will receive $56,154 from Seller Company. B.Seller Company will receive cash $56,154 from Ace. C.Ace will receive $57,300 cash from Seller Company. D.Seller Company will receive $57,300 cash from Ace. E.Ace will pay Seller Company $1,146 credit card fee.

B.

25.Which of the following is the most serious limitation of internal controls? A. Computer error B. Human fraud or human error C. Cost-benefit principle D. Cybercrime E. Management fraud

B.

29. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the: A. Direct write-off method B. Aging of accounts receivable method. C. Percent of sales method. D. Aging of investments method. E. Percent of accounts receivable method.

B.

30. A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000, net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period? A. $1,500,000 B. $1,275,000 C. $1,725,000 D. $1,521,000 E. $1,479,000

B.

31. A company had the following purchases during the current year: January 10 units at $120 February 20 units at $130 May 15 units at $140 September 12 units at $150 November 10 units at $160 On December 31, there were 26 units remaining in the ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September and 10 from November. Using the specific identification method, what is the cost of the ending inventory? A. $3,500 B. $3,800 C. $3,960 D. $3,280 E. $3,640

B.

35. The Cash Over and Short account: A. Is used to record a credit balance in the cash account. B. Is an income statement account used for recording the income effects of cash overage and cash shortages from errors in making change and from missing petty cash receipts. C. Is not necessary in a computerized accounting system. D. Can never have a debit balance. E. Can never have a credit balance.

B.

38. A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's current inventory consists of 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. Calculate the value of this company's inventory at the lower of cost or market. A. $2,550 B. $2,600 C. $2,700 D. $3,000 E. $3,200

B.

43. On October 29 of the current year, a company concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method used to account for bad debts? A. Decrease in net income; no effect on total assets. B. No effect on net income; no effect on total assets. C. Decrease in net income; decrease in total assets. D. Increase in net income; no effect on total assets. E. No effect on net income; decreases in total assets.

B.

5. Acme Company has an agreement with a major credit card company that calls for cash to be received immediately upon deposit of Acme customers' credit card sales receipts. The credit card company receives 3.5% of card sales as its fee. If Acme has $2,000 in credit card sales, which of the following statements are true? A. Acme debits cash $2,000 B. Acme debits cash $1,930 C.Acme debits Accounts Receivable-Credit Card Co $2,000 D.Acme debits Accounts Receivable-Credit Card Co $1,930 E.Acme credits sales $1,930

B.

50. A trade discount is: A. A term used by a purchaser to describe a cash discount given to customers for prompt payment. B. A reduction in price below the list price. C. A term used by a seller to describe a cash discount granted to customers for prompt payment. D. A reduction in price for prompt payment. E. Also called a rebate.

B.

7.Beginning inventory plus net cost of purchases is: A.Costs of goods sold. B.Merchandise available for sale. C. Ending inventory. D. Sales. E. Shown on the balance sheet.

B.

9. In applying the lower of cost or market method to inventory valuation, market is defined as: A. Historical Cost B. Current replacement cost C. Current sales price D. FIFO E. LIFO

B.

Fluffy Pet Grooming deposits all cash receipts on the day when they are received and all cash payments are made by check. At the close of business on June 30, its Cash account shows a $14,811 debit balance. Fluffy Pet Grooming's June 30 bank statement shows $14,472 on deposit in the bank. Prepare a bank reconciliation for Fluffy Pet Grooming using the following information: -Outstanding checks as of June 30 total $2,261. -The June 30 bank statement included a $75 debit memorandum for bank services. -Check No. 919 listed with the canceled checks, was correctly drawn for $789 in payment of a utility bill on June 15. Fluffy Pet Grooming mistakenly recorded it with a debit to Utilities Expense and a credit to cash in the amount of $798. -The June 30 cash receipts of $2,534 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement. What is the adjusted bank balance? A. $14,265 B. $14,745 C. $14,677 D. $14,538 E. $14,877

B.

17. On December 31 of the current year, a company's unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts credit balance of $951. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible? A. $951 B. $3,992 C. $4,884 D. $5,835 E. $6,786

C.

23. A promissory note received from a customer in exchange for an account receivable: A. Is a cash equivalent for the recipient. B. Is an account receivable for the recipient. C. Is a note receivable for the recipient. D. Is a short-term investment for the recipient. E. Is a note payable for the recipient.

C.

27. The quality of receivables refers to: A. The creditworthiness of sellers. B. The speed of collection. C. The likelihood of collection without less. D. Sales turnover. E. The interest rate.

C.

28. Given the following information: Petty cash balance: $450.00 Courier Receipt: $82.50 Postage receipt: $ 48.00 Office Supplies Receipt: $56.22 Business meal Receipt: $102.34 Cash on hand: $76.21 What is the amount that needs to be reimbursed? A. $365.27 B. $289.06 C. $373.79 D. $289.00 E. $450.00

C.

39. Cash equivalents: A. Include saving accounts. B. Include checking accounts. C. Are short-term investments sufficiently close to their maturity date that their value is no sensitive to interest rate changes. D. Include time deposits. E. Have no immediate value.

C.

37. The amount due on the date of maturity for $6,000, 60-day, 8% note receivable is: A. $6,000 B. $6,480 C. $5,520 D. $6,080 E. $5,920

D.

41. The entry necessary to establish a petty cash fund should include: A. A debit to Cash and a credit to Petty Cash B. A debit to Cash and a credit to Cash Over and Short C. A debit to Petty Cash and a credit to Cash D. A debit to Petty Cash and a credit to Accounts Receivable E. A debit to Cash and a credit to Petty Cash Over and Short

C.

44. A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts has a debit balance of $175. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense? A. Bad Debt Expense 15,750 Allowance for Doubtful Accounts 15,750 B. Bad Debt Expense 15,575 Allowance for Doubtful Accounts 15,575 C. Bad Debts Expense 15,925 Allowance for Doubtful Accounts 15,925 D. Accounts Receivable 15,750 Bad Debt Expense 175 Sales 15,925 E. Accounts Receivable 15,925 Allowance for Doubtful Accounts 15,925

C.

47. The maturity date of a note receivable: A. Is the day of the credit sale. B. Is the day the note was signed. C. Is the day the note is due to be paid. D. Is the date of the first payment. E. Is the last day of the month.

C.

14. Teller, a calendar year company, purchased merchandise from TechCom on October 17 of the current year. TechCom accepted Teller's $4,800, 90-day, 10% note as payment. What entry should TechCom make on January 15 of the next year when the note is paid, assuming an adjusting entry was made for interest on December 31?

D.

2. A company had sales of $375,000 and gross profit of $157,500. Its costs of goods sold was: A.$217,000 B.$375,000 C.$157,500 D.$217,500 E.$532,500

D.

21. A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000. A. Net Purchases: $15,000; ending inventory: $7,000 B. Net Purchases: $10,000; ending inventory: $15,000 C. Net Purchases: $9,000; ending inventory: $6,000 D. Net Purchases: $6,000; ending inventory: $7,000 E. Net Purchases: $16,000; ending inventory: $20,000

D.

24. A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

D.

45. A set of procedures and approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a(n): A. Internal cash system. B. Petty cash system. C. Cash disbursement system. D. Voucher system. E. Cash control system.

D.

46. Outstanding checks refer to checks that have been: A. Written, recorded, sent to payees, and received and paid by the bank. B. Written and not yet recorded in the company books. C. Held as blank checks. D. Written, recorded on the company books, sent to the customer, supplier, or creditor but no yet paid by the bank. E. Issued by the bank.

D.

8. On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. The journal entry or entries that Roberston will make on October 1st is:

D.

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for the merchandise is: A. $3,725.00 B. $3,925.00 C. $3,995.00 D. $4,000.50 E. $4,075.00

D.

18. On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. Alberts pays the invoice on October 8 and takes the appropriate discount. The journal entry makes an October 8 is:

E.

22. Temper Company has credit sales of $3.10 million for year 2013. Accounts receivable total $947,360 and the company estimates that 2% of accounts receivable will remain uncollectible. Historically, 0.9% of sales have been uncollectible. On December 31, 2013 the company's Allowance for Doubtful accounts has an unadjusted debit balance of $2,575. Temper prepared a schedule of its December 31, 2013 accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This is information is summarized here:

E.

3. Given the following items and costs as of the balance sheet date, determine the value of Faltron Compnay's merchandise inventory. -$1,000 goods sold by Faltron to another company. The goods are in transit and shipping terms are FOB destination. -$2,000 goods sold by another company to Faltron. The goods are in transit and shipping terms are FOB destination. -$3,000 owned by Faltron but in the possession of another company, the consignee. -Damaged goods owned by Faltron that originally cost $4,000 but now have a $500 net realizable value. A. $10,0000 B. $6,500 C. $5,500 D. $5,000 E. $4,500

E.

34. On July 22, a company that uses the perpetual inventory system purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 1, what would be the appropriate journal entry for August 1? A. Merchandise Inventory 5,250 Accounts Payable 5,250 B. Accounts Payable 5,250 Merchandise Inventory 5,250 C. Purchase Discount 5,145 Accounts Payable 5,145 D. Accounts Payable 5,250 Sales Discount 105 Cash 5,145 E. Accounts Payable 5,250 Merchandise Inventory 105 Cash 5,145

E.

40. According to GAAP, the amount of bad debt expense can be estimated by: A. Only the percent of sales method. B. Only the percent of accounts receivable method. C. Only by the aging of accounts receivable method. D. Only by the percent of sales method or the percent of accounts receivable method. E. The percent of sales method, the percent of accounts receivable method, or by the aging of accounts receivable method.

E.

49. A company made a band deposit on September 30 that did not appear on the bank statement dated September 30. In preparing the September 30 bank reconciliation, the company should: A. Deduct the deposit from the bank statement balance. B. Send the bank a debit memorandum. C. Deduct the deposit from the September 30 book balance and add it to the October 1 book balance. D. Add the deposit to the book balance of cash. E. Add the deposit to the bank statement balance.

E.