Chapters 8,9, and 10 multiple choice
A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is 1) $9,100 2) $10,900 3) $10,150 4) $10,000
$10,150
Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method. Question options: 1) $19,200 2) $9,000 3) $13,200 4) $9,600
$9,600
A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have a cost basis of Question options: 1) $93,000 2) $82,000 3) $90,000 4) $85,000
$93,000
Pilger Corporation has cash on hand at year-end of $201,000 and a negative cash flow from operations of $144,000. What is the ratio of cash to monthly cash expenses? Question options: 1) 7.2 months 2) 16.8 months 3) 1.4 months 4) 12.0 months
16.8 months
A minimum cash balance required by a bank is called Question options: 1) a cash equivalent 2) a compensating balance 3) cash in bank 4) an EFT
a compensating balance
Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include Question options: 1) a debit to Accumulated Depletion for $175,000 2) a credit to Accumulated Depletion for $350,000 3) a debit to Depletion Expense for $175,000 4) a credit to Depletion Expense for $350,000
a debit to Depletion Expense for $175,000
Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is Question options: 1) a deduction from the balance per bank statement 2) an addition to the balance per company's records 3) a deduction from the balance per company's records 4) an addition to the balance per bank statement
a deduction from the balance per company's records
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? Question options: 1) Allowance for Doubtful Accounts 2) Accounts Receivable 3) Uncollectible Accounts Expense 4) Interest Expense
Accounts Receivable
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? Question options: 1) Interest Expense 2) Allowance for Doubtful Accounts 3) Accounts Receivable 4) Uncollectible Accounts Expense
Accounts Receivable
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? Question options: 1) Interest Expense 2) Uncollectible Accounts Expense 3) Allowance for Doubtful Accounts 4) Accounts Receivable
Allowance for Doubtful Accounts
Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write off this account, Dalton should debit Question options: 1) Bad Debt Expense and credit Accounts Receivable 2) Allowance for Doubtful Accounts and credit Accounts Receivable 3) Accounts Receivable and credit Allowance for Doubtful Accounts 4) Bad Debt Expense and credit Allowance for Doubtful Accounts
Allowance for Doubtful Accounts and credit Accounts Receivable
EFT Question options: 1) means Effective Funds Transfer 2) means Efficient Funds Transfer 3) can process certain cash transactions at less cost than by using the mail 4) makes it easier to document purchase and sale transactions
can process certain cash transactions at less cost than by using the mail
Expenditures that add to the utility of fixed assets for more than one accounting period are Question options: 1) capital expenditures 2) utility expenditures 3) revenue expenditures 4) committed expenditures
capital expenditures
Allowance for Doubtful Accounts is classified as a(n) ______ and has a normal ______ balance. Question options: 1) contra asset, debit 2) owners' equity, debit 3) contra asset, credit 4) owners' equity, credit
contra asset, credit
What is the type of account and normal balance of Allowance for Doubtful Accounts? Question options: 1) contra asset, debit 2) asset, debit 3) asset, credit 4) contra asset, credit
contra asset, credit
Which one of the following below is not an element of internal control? Question options: 1) monitoring 2) risk assessment 3) cost-benefit considerations 4) information and communication
cost-benefit considerations
A $135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the account would include a Question options: 1) debit to Cash for $120 2) credit to Petty Cash for $120 3) credit to Cash for $102 4) credit to Cash Over and Short for $3
credit to Cash Over and Short for $3
On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a Question options: 1) credit to Interest Revenue for $300 2) debit to Notes Receivable for $20,000 3) debit to Interest Receivable for $300 4) credit to Notes Receivable for $20,300
credit to Interest Revenue for $300
Expenditures for research and development are generally recorded as Question options: 1) assets and amortized over 40 years 2) assets and amortized over their estimated useful life 3) current assets 4) current operating expenses
current operating expenses
Which of the following would be subtracted from the balance per bank on a bank reconciliation? Question options: 1) outstanding checks 2) service charges 3) deposits in transit 4) notes collected by the bank
outstanding checks
A fixed asset's estimated value at the time it is to be retired from service is called Question options: 1) carrying value 2) market value 3) book value 4) residual value
residual value
An element of internal control is Question options: 1) subsidiary ledgers 2) risk assessment 3) journals 4) controlling accounts
risk assessment
Which of the following would be deducted from the balance per books on a bank reconciliation? Question options: 1) notes collected by the bank 2) deposits in transit 3) outstanding checks 4) service charges
service charges
Credit memos from the bank Question options: 1) decrease a bank customer's account 2) are used to show a bank service charge 3) show the bank has collected a note receivable for the customer 4) show that a company has deposited a customer's NSF check
show the bank has collected a note receivable for the customer
Cash equivalents Question options: 1) will be converted to cash within two years 2) will be converted to cash within 90 days 3) are illegal in some states 4) will be converted to cash within 120 days
will be converted to cash within 90 days
Newport Company has sales of $2,025,000 for the current year. The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000. The fixed asset turnover ratio for Newport is Question options: 1) 3.0 2) 2.5 3) 3.7 4) 3.6
3.0
The depreciation method that does not use residual value in calculating the first year's depreciation expense is Question options: 1) straight-line 2) units-of-output 3) double-declining-balance 4) sum-of-the-digits
double-declining-balance
The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the Question options: 1) units-of-production method 2) time-valuation method 3) straight-line method 4) double-declining-balance method
double-declining-balance method
Which of the following would be subtracted from the balance per books on a bank reconciliation? Question options: 1) error in recording a check for $732 as $723 2) deposits in transit 3) notes collected by the bank 4) outstanding checks
error in recording a check for $732 as $723
Entries are made to the petty cash account when Question options: 1) making payments out of the fund 2) replenishing the petty cash fund 3) establishing the fund 4) recording shortages in the fund
establishing the fund
Expected useful life is Question options: 1) calculated when the asset is sold 2) estimated at the time that the asset is placed in service 3) determined each year that the depreciation calculation is made 4) none of these
estimated at the time that the asset is placed in service
The amount for which a promissory note is written is called the Question options: 1) realizable value 2) face value 3) maturity value 4) proceeds
face value
Interest on a note can be calculated without knowledge of the Question options: 1) principal amount 2) rate of interest 3) note duration 4) fair value of the note
fair value of the note
Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets. Argus had developed the goodwill over 12 years. How much would Xtra amortize the goodwill for its first year? Question options: 1) goodwill is not amortized 2) $8,000 3) $7,000 4) not enough information to calculate amortization
goodwill is not amortized
Internal control does not consist of policies and procedures that Question options: 1) ensure that business information is accurate 2) guarantee the company will earn a profit 3) protect assets from misuse 4) ensure employees and managers comply with laws and regulations
guarantee the company will earn a profit
On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of Question options: 1) $1,800 2) $450 3) $0 4) $900
$450
At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively. Question options: 1) $30,500 and $25,000 2) $19,500 and $25,000 3) $19,500 and $525,000 4) $30,500 and $525,000
$19,500 and $25,000
A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method? Question options: 1) $37,500 2) $16,667 3) $17,500 4) $18,750
$18,750
Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours? Question options: 1) $30,000 2) $19,000 3) $22,000 4) $21,000
$19,000
Thompson Company gathered the following reconciling information in preparing its October bank reconciliation: Cash balance per bank, 10/31: $17,000 Note receivable collected by bank: 4,800 Outstanding checks: 6,500 Deposits-in-transit: 3,000 Bank service charge: 50 NSF check: 2,300 Using the above information, determine the cash balance per books (before adjustments) for the Thompson Company. Question options: 1) $11,050 2) $19,450 3) $15,950 4) $11,150
$11,050
On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service. Question options: 1) $12,500 2) $30,000 3) $40,000 4) $17,500
$12,500
A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000, would have a cost basis of 1) $126,000 2) $132,000 3) $114,000 4) $121,000
$132,000
At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, $120 of previously written off accounts are reinstated and accounts totaling $740 are written-off as uncollectible. The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be Question options: 1) $740 2) $760 3) $140 4) $120
$140
The following data were gathered to use in reconciling the bank account of Savannah Company: Balance per bank: $16,750 Balance per company records: 16,125 Bank service charges: 80 Deposit in transit: 2,195 NSF check: 950 Outstanding checks: 3,850 What is the adjusted balance on the bank reconciliation? Question options: 1) $15,720 2) $10,705 3) $15,095 4) $14,470
$15,095
Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is Question options: 1) $11,636 2) $11,000 3) $8,000 4) $16,000
$16,000
A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is Question options: 1) $120,000 2) $172,000 3) $154,000 4) $160,000
$160,000
On June 1, Scotter Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. Using straight-line depreciation, calculate depreciation expense for the first year. Question options: 1) $30,000 2) $40,000 3) $17,500 4) $12,500
$17,500
An asset was purchased for $120,000 on January 1, Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate the third-year depreciation expense using the revised amounts and straight-line method. Question options: 1) $24,000 2) $25,000 3) $24,500 4) $11,000
$24,000
The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is Question options: 1) $26,000 2) $16,000 3) $15,000 4) $17,500
$26,000
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable? Question options: 1) $340,000 2) $391,000 3) $289,000 4) $51,000
$289,000
Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no sales returns or sales discounts during the year. After the adjusting entry, the December 31, balance in the Bad Debt Expense will be Question options: 1) $3,000 2) $7,200 3) $3,600 4) $1,200
$3,000
Gunnar Company gathered the following reconciling information in preparing its September bank reconciliation. Calculate the adjusted cash balance per books on September 30. Cash balance per books, 9/30: $2,750 Deposits in transit: 200 Notes receivable and interest collected by bank: 630 Bank charge for check printing: 50 Outstanding checks: 1,250 NSF check: 290 Question options: 1) $5,130. 2) $3,040. 3) $1,590. 4) $3,690.
$3,040.
On June 1, Michael Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. Using straight-line depreciation, calculate depreciation expense for the second year. Question options: 1) $17,500 2) $12,500 3) $30,000 4) $40,000
$30,000
Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is Question options: 1) $29,500 2) $34,500 3) $32,000 4) cannot be determined
$32,000
A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? Question options: 1) $45,000 2) $5,000 3) $35,000 4) $21,000
$35,000
Minor Company had checks outstanding totaling $19,200 on its April bank reconciliation. In May, Minor Company issued checks totaling $64,900. The May bank statement shows that $47,600 in checks cleared the bank in May. A check from one of Minor Company's customers in the amount of $300 was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be Question options: 1) $36,500 2) $66,800 3) $17,300 4) $28,400
$36,500
The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is Question options: 1) $43,600 2) $40,000 3) $44,000 4) $40,400
$40,400
Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31. Cash balance per books, 5/31: $5,400 Deposits in transit: 375 Notes receivable and interest collected by bank: 650 Bank charge for check printing: 40 Outstanding checks: 2,400 NSF check: 140 Question options: 1) $5,870 2) $6,245 3) $4,930 4) $3,845
$5,870
At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts.) Question options: 1) $550,000 2) $544,500 3) $575,000 4) $525,000
$525,000
Consider the following information taken from the cash account. Assume cash payments were 80% of collections. Cash ?? - Beg. balance $115,375- Collections ?? - Disbursements $80,275 - End balance How much was the beginning balance of the cash account? Question options: 1) $35,100 2) $103,350 3) $57,200 4) $92,300
$57,200
Jamison Company gathered the following reconciling information in preparing its June bank reconciliation: Cash balance per bank, 6/30: $13,000 Note receivable collected by bank: 4,000 Outstanding checks: 7,000 Deposits-in-transit: 2,500 Bank service charge: 35 NSF check: 1,900 Using the above information, determine the cash balance per books (before adjustments) for the Jamison Company. Question options: 1) $15,065 2) $8,065 3) $10,565 4) $6,435
$6,435
A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account. The face value of the note is Question options: 1) $6,860 2) $7,840 3) $7,140 4) $7,000
$7,000
The formula for depreciable cost is Question options: 1) Initial cost - Residual value 2) Initial cost + Residual value 3) Depreciable cost = Initial cost 4) Initial cost - Accumulated depreciation
Initial cost - Residual value
The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of: Question options: 1) $750 2) $640 3) $110 4) $530
$750
Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is Question options: 1) $8,500 2) $9,500 3) $9,000 4) Cannot be determined
$9,000
The calculation for annual depreciation using the units-of-output method is Question options: 1) Depreciable cost / Yearly output 2) (Depreciable cost / Estimated output) × Actual yearly output 3) (Depreciable cost / Yearly output) × Estimated output 4) (Initial cost / Estimated output) × Actual yearly output
(Depreciable cost / Estimated output) × Actual yearly output
During the year, Tempo Inc. has monthly cash expenses of $115,000. On December 31, its cash balance is $1,437,500. The ratio of cash to monthly cash expenses is Question options: 1) 87.5 2) 8.0 3) 11.5 4) 12.5
12.5
If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? Question options: 1) Allowance for Doubtful Accounts 2) Bad Debt Expense 3) Uncollectible Accounts Receivable 4) Accounts Receivable
Bad Debt Expense
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? 1) Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 2) Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 3) Bad Debt Expense 65,000 Allowance for Doubtful Accounts 65,000 4) Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22,000
Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000
When a company uses the allowance method of accounting for uncollectible receivables, which entry would not be found in the general journal? Question options: 1) Bad Debt Expense 500 Accounts Receivable, Bob Smith 500 2) Bad Debt Expense 500 Allowance for Doubtful Accounts 500 3) Cash 300 Allowance for Doubtful Accounts 200 Accounts Receivable, Bob Smith 500 4) Cash 500 Accounts Receivable, Bob Smith 500
Bad Debt Expense 500 Accounts Receivable, Bob Smith 500
A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would include a credit to Question options: 1) Cash for $20 2) Cash Over and Short for $3 3) Petty Cash for $190 4) Cash for $180
Cash for $180
The calculation for annual depreciation using the straight-line depreciation method is Question options: 1) Depreciable cost / Estimated useful life 2) Depreciable cost × Estimated useful life 3) Initial cost / Estimated useful life 4) Initial cost × Estimated useful life
Depreciable cost / Estimated useful life
If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is Question options: 1) Depreciation Expense 1,200 Accumulated Depreciation 1,200 2) Depreciation Expense 100 Accumulated Depreciation 100 3) Accumulated Depreciation 1,200 Depreciation Expense 1,200 4) Accumulated Depreciation 100 Depreciation Expense 100
Depreciation Expense 100 Accumulated Depreciation 100
Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called Question options: 1) GAAP controls 2) accounting controls 3) FASB controls 4) cash controls
FASB controls
Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared? Question options: 1) Note Receivable 40,000 Cash 40,000 2) Interest Receivable 800 Interest Revenue 800 3) Interest Receivable 200 Interest Revenue 200 4) Cash 200 Interest Revenue 200
Interest Receivable 200 Interest Revenue 200
Paper Company receives a $6,000, 3-month, 6% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note? Question options: 1) Notes Receivable, Dame Company 6,000 Accounts Receivable, Dame Company 6,000 2) Notes Receivable, Dame Company 6,090 Accounts Receivable, Dame Company 6,090 3) Notes Receivable, Dame Company 6,090 Accounts Receivable, Dame Company 6,000 Interest Revenue 90 4) Notes Receivable, Dame Company 6,000 Interest Revenue 90 Accounts Receivable, Dame Company 6,000 Interest Receivable 90
Notes Receivable, Dame Company 6,000 Accounts Receivable, Dame Company 6,000
The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be Question options: 1) Office Equipment 975 Accounts Receivable 975 2) Office Equipment 975 Accounts Payable 975 3) Office Supplies 975 Accounts Receivable . 975 4) Office Supplies 975 Accounts Payable 975
Office Equipment 975 Accounts Payable 975
Which of the following is true? Question options: 1) If using the units-of-output method, it is possible to depreciate more than the depreciable cost. 2) If using the double-declining-balance method, the total amount of depreciation expense during the life of the asset will be the highest. 3) If using the straight-line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance. 4) Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.
Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.
"To maintain public confidence and trust in the financial reporting of companies" is the purpose of Question options: 1) the IRS 2) GAAP 3) Sarbanes-Oxley 4) the FASB
Sarbanes-Oxley
A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is Question options: 1) deposited checks returned for insufficient funds 2) a promissory note left for collection 3) notification that a customer's check for $375 was recorded by the company as $735 on the deposit ticket 4) a service charge
a promissory note left for collection
Which one of the following reflects a weak internal control system? Question options: 1) a single employee is responsible for collecting and recording of cash 2) a single employee is responsible for comparing a receiving report to an invoice 3) all employees are well supervised 4) all employees must take their vacations
a single employee is responsible for collecting and recording of cash
The name, term, or symbol used to identify a business and its products is called Question options: 1) a trademark 2) goodwill 3) a copyright 4) a patent
a trademark
Fixed assets are ordinarily presented on the balance sheet Question options: 1) at current market values 2) at replacement costs 3) at cost less accumulated depreciation 4) in a separate section along with intangible assets
at cost less accumulated depreciation
The amount of deposits in transit is included on the bank reconciliation as a(n) Question options: 1) addition to the balance per company books 2) deduction from the balance per the company's books 3) deduction from the balance per bank statement 4) addition to the balance per bank statement
addition to the balance per bank statement
Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n) Question options: 1) deduction from the balance per company's records 2) addition to the balance per company's records 3) addition to the balance per bank statement 4) deduction from the balance per bank statement
addition to the balance per company's records
Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n) Question options: 1) addition to the balance per company's records 2) deduction from the balance per company's records 3) addition to the balance per bank statement 4) deduction from the balance per bank statement
addition to the balance per company's records
A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n) Question options: 1) addition to the balance per the bank statement 2) deduction from the balance per the company's records 3) addition to the balance per the company's records 4) deduction from the balance per the bank statement
addition to the balance per the company's records
The amount of cash to be reported on the balance sheet at June 30 is the Question options: 1) total of the cash column in the cash receipts journal as of June 30 2) total of the cash column in the cash payments journal as of June 30 3) adjusted balance appearing in the bank reconciliation for June 30 4) balance as of June 30 on the bank statement
adjusted balance appearing in the bank reconciliation for June 30
Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account. Question options: 1) is not an acceptable practice 2) affects only income statement accounts 3) affects only balance sheet accounts 4) affects both balance sheet and income statement accounts
affects only balance sheet accounts
A voucher is usually supported by Question options: 1) a supplier's invoice 2) a purchase order 3) a receiving report 4) all of these
all of these
Which of the following should be included in the acquisition cost of a piece of equipment? Question options: 1) transportation costs 2) installation costs 3) testing costs prior to placing the equipment into production 4) all of these
all of these
The process of transferring the cost of an asset to an expense account is called all of the following except Question options: 1) depreciation 2) allocation 3) depletion 4) amortization
allocation
The balance in Allowance for Doubtful Accounts will directly impact the end-of-period adjustment for the bad debt expense when using which of the following methods? Question options: 1) direct write-off method 2) allowance method based on aging the receivables 3) declining value method 4) accrual method
allowance method based on aging the receivables
The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is Question options: 1) amortization 2) depreciation 3) allocation 4) depletion
amortization
A capital expenditure results in a debit to Question options: 1) a capital account 2) an expense account 3) an asset account 4) a liability account
an asset account
The debit balance in Cash Short and Over at the end of an accounting period is reported as Question options: 1) income on the income statement 2) an expense on the income statement 3) an asset on the balance sheet 4) a liability on the balance sheet
an expense on the income statement
A bank reconciliation should be prepared periodically because Question options: 1) any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected 2) the bank has not recorded all of its transactions 3) the bank must make sure that its records are correct 4) the company's records and the bank's records are in agreement
any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected
The cash account in the company's ledger is a(n) Question options: 1) liability with a normal credit balance 2) asset with a normal credit balance 3) asset with a normal debit balance 4) liability with a normal debit balance
asset with a normal debit balance
The type of account and normal balance of Petty Cash is a(n) Question options: 1) expense, debit 2) asset, debit 3) liability, credit 4) revenue, credit
asset, debit
Journal entries based on the bank reconciliation are required in the company's accounts for Question options: 1) bank errors 2) book errors 3) outstanding checks 4) deposits in transit
book errors
Which of the following is included in the cost of land? Question options: 1) brokerage commission 2) cost of paving a parking lot 3) fences on the land 4) outdoor parking lot lighting attached to the land
brokerage commission
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the company's accounts? Question options: 1) debit Cash; credit Accounts Receivable 2) debit Accounts Payable; credit Cash 3) debit Accounts Receivable; credit Cash 4) debit Cash; credit Accounts Payable
debit Accounts Payable; credit Cash
A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is Question options: 1) debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 2) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120 3) debit Cash, $6,120; credit Notes Receivable, $6,120 4) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Receivable, $120
debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120
Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts? Question options: 1) debit Accounts Receivable; credit Cash 2) debit Cash; credit Accounts Receivable 3) debit Cash; credit Other Income 4) debit Other Income; credit Cash
debit Accounts Receivable; credit Cash
You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to Question options: 1) debit Allowance for Doubtful Accounts and credit Bad Debt Expense 2) debit Bad Debt Expense and credit Allowance for Doubtful Accounts 3) debit Bad Debt Expense and credit Accounts Receivable 4) debit Allowance for Doubtful Accounts and credit Accounts Receivable
debit Allowance for Doubtful Accounts and credit Accounts Receivable
Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense? Question options: 1) debit Bad Debt Expense, $12,400; credit Allowance for Doubtful Accounts, $12,400 2) debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600 3) debit Bad Debt Expense, $600; credit Allowance for Doubtful Accounts, $600 4) debit Allowance for Doubtful Accounts, $600; credit Bad Debt Expense, $600
debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600
Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense? Question options: 1) debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800 2) debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000 3) debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800 4) debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made? Question options: 1) debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200 2) debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800 3) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800 4) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800
debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200
Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense? Question options: 1) debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600 2) debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600 3) debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800 4) debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600
Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the Bad Debt Expense for the year? Question options: 1) debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600 2) debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200 3) debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200 4) debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600
debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year? Question options: 1) debit Allowance for Doubtful Accounts, $43,200; credit Bad Debt Expense, $43,200 2) debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600 3) debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600 4) debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200
debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600
The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following? Question options: 1) debit Sales Returns and Allowance; credit Accounts Receivable 2) debit Bad Debt Expense; credit Accounts Receivable 3) debit Allowance for Doubtful Accounts; credit Accounts Receivable 4) debit Bad Debt Expense; credit Allowance for Doubtful Accounts
debit Bad Debt Expense; credit Accounts Receivable
A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts? Question options: 1) debit Cash; credit Accounts Payable 2) debit Accounts Payable; credit Cash 3) debit Accounts Receivable; credit Cash 4) debit Cash; credit Accounts Receivable
debit Cash; credit Accounts Payable
Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts? Question options: 1) debit Cash; credit Miscellaneous Income 2) debit Notes Receivable; credit Cash 3) debit Cash; credit Notes Receivable and Interest Revenue 4) debit Accounts Receivable; credit Cash
debit Cash; credit Notes Receivable and Interest Revenue
Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts? Question options: 1) debit Miscellaneous Administrative Expense; credit Cash 2) debit Cash; credit Other Income 3) debit Accounts Payable; credit Cash 4) debit Cash; credit Accounts Payable
debit Miscellaneous Administrative Expense; credit Cash
When a company receives an interest-bearing note receivable, it will Question options: 1) debit Notes Receivable for the face value of the note 2) credit Notes Receivable for the face value of the note 3) credit Notes Receivable for the maturity value of the note 4) debit Notes Receivable for the maturity value of the note
debit Notes Receivable for the face value of the note
The journal entry to record a note received from a customer to replace an account is Question options: 1) debit Accounts Receivable; credit Notes Receivable 2) debit Notes Receivable; credit Accounts Receivable 3) debit Cash; credit Notes Receivable 4) debit Notes Receivable; credit Notes Payable
debit Notes Receivable; credit Accounts Receivable
The journal entry for recording payment for the short-term lease of a fixed asset would Question options: 1) debit a liability and credit Cash 2) debit Rent Expense and credit Cash 3) be a memo entry only 4) debit the fixed asset and credit Cash
debit Rent Expense and credit Cash
Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a Question options: 1) debit to Allowance for Doubtful Accounts 2) debit to Accounts Receivable 3) credit to Accounts Receivable 4) credit to Bad Debt Expense
debit to Accounts Receivable
Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James. The journal entry to record the initial write-off includes a Question options: 1) debit to Accounts Receivable, James 2) credit to Bad Debt Expense 3) debit to Allowance for Doubtful Accounts 4) credit to Cash
debit to Allowance for Doubtful Accounts
To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a Question options: 1) debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable 2) debit to Loss on Credit Sales and a credit to Accounts Receivable 3) debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts 4) debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts
An aging of a company's accounts receivable indicates that the estimate of the uncollectible accounts totals $4,000. If Allowance for Doubtful Accounts has a $800 credit balance, the adjustment to record the bad debt expense for the period will require a Question options: 1) debit to Bad Debt Expense for $3,200 2) credit to Allowance for Doubtful Accounts for $4,000 3) debit to Allowance for Doubtful Accounts for $3,200 4) debit to Allowance for Doubtful Accounts for $4,000
debit to Bad Debt Expense for $3,200
An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a Question options: 1) credit to Allowance for Doubtful Accounts for $700 2) debit to Bad Debt Expense for $7,200 3) debit to Bad Debt Expense for $8,600 4) debit to Bad Debt Expense for $7,900
debit to Bad Debt Expense for $7,200
An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a Question options: 1) debit to Bad Debt Expense for $7,700 2) credit to Allowance for Doubtful Accounts for $1,300 3) debit to Bad Debt expense for $5,100 4) debit to Bad Debt Expense for $6,400
debit to Bad Debt Expense for $7,700
A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account would include a Question options: 1) debit to Cash for $83 2) credit to Cash for $54 3) credit to Petty Cash for $29 4) debit to Cash Over and Short for $13
debit to Cash Over and Short for $13
The amount of the outstanding checks is included on the bank reconciliation as a(n) Question options: 1) addition to the balance per bank statement 2) deduction from the balance per company's records 3) addition to the balance per company's records 4) deduction from the balance per bank statement
deduction from the balance per bank statement
Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n) Question options: 1) addition to the balance per bank statement 2) deduction from the balance per company's records 3) addition to the balance per company's records 4) deduction from the balance per bank statement
deduction from the balance per company's records
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n) Question options: 1) addition to the balance per the bank statement 2) addition to the balance per the company's records 3) deduction from the balance per the bank statement 4) deduction from the balance per the company's records
deduction from the balance per the company's records
The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called Question options: 1) deferral 2) depletion 3) depreciation 4) amortization
depletion
Which of the following items that appeared on the bank reconciliation did not require a journal entry? Question options: 1) NSF checks 2) deposits in transit 3) a check for $630, recorded in the check register for $360 4) bank service charges
deposits in transit
The two methods of accounting for uncollectible receivables are the allowance method and the Question options: 1) direct write-off method 2) cost method 3) interest method 4) equity method
direct write-off method
Two methods of accounting for uncollectible accounts are the Question options: 1) direct write-off method and the accrual method 2) allowance method and the net realizable method 3) direct write-off method and the allowance method 4) allowance method and the accrual method
direct write-off method and the allowance method
If the maker of a promissory note fails to pay the note on the due date, the note is said to be Question options: 1) disallowed 2) displaced 3) discounted 4) dishonored
dishonored
The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles Question options: 1) requires a correcting entry for the period in which the account was written off 2) will increase net income in the period it is collected 3) does not affect net income in the period it is collected 4) will decrease net income in the period it is collected
does not affect net income in the period it is collected
A debit balance in the Allowance for Doubtful Accounts Question options: 1) is the normal balance for that account 2) cannot occur if the percentage of receivables method of estimating bad debts is used 3) indicates that actual bad debt write-offs have exceeded previous provisions for bad debts 4) indicates that actual bad debt write-offs have been less than what was estimated
indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
A necessary element of internal control is Question options: 1) database 2) systems analysis 3) information and communication 4) systems design
information and communication
Which of the following is included in the cost of constructing a building? Question options: 1) insurance costs during construction 2) cost of paving the parking lot 3) cost of repairing vandalism damage during construction 4) cost of removing the demolished building existing on the land when it was purchased
insurance costs during construction
Land acquired so it can be resold in the future is listed on the balance sheet as a(n) Question options: 1) investment 2) fixed asset 3) intangible asset 4) current asset
investment
A note receivable due in 18 months is listed on the balance sheet under the caption Question options: 1) investments 2) current assets 3) long-term liabilities 4) fixed assets
investments
Accumulated Depreciation Question options: 1) is a contra asset account 2) is used to show the amount of cost expiration of natural resources 3) is used to show the amount of cost expiration of intangibles 4) is the same as Depreciation Expense
is a contra asset account
The direct write-off method of accounting for uncollectible accounts Question options: 1) emphasizes the matching of expenses with revenues 2) emphasizes cash realizable value 3) emphasizes balance sheet relationships 4) is often used by small companies and companies with few receivables
is often used by small companies and companies with few receivables
The bank reconciliation Question options: 1) is for information purposes only 2) should be prepared by an employee who records cash transactions 3) is part of the internal control system 4) is sent to the bank for verification
is part of the internal control system
When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method Question options: 1) uses an allowance account 2) uses a percentage of sales method to estimate uncollectible accounts 3) is used primarily by large companies with many receivables 4) is used primarily by small companies with few receivables
is used primarily by small companies with few receivables
In a lease contract, the party who legally owns the asset is the Question options: 1) lessee 2) banker 3) operator 4) lessor
lessor
When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when Question options: 1) management estimates the amount of uncollectibles 2) a customer's account becomes past due 3) a sale is made 4) an account becomes bad and is written off
management estimates the amount of uncollectibles
The amount of the promissory note plus the interest earned on the due date is called the Question options: 1) issuance value 2) face value 3) interest value 4) maturity value
maturity value
The term "receivables" includes all Question options: 1) merchandise to be collected from individuals or companies 2) money claims against other entities 3) cash to be paid to creditors 4) cash to be paid to debtors
money claims against other entities
Cash equivalents include Question options: 1) coins and currency 2) checks 3) stocks and short-term bonds 4) money market accounts and commercial paper
money market accounts and commercial paper
When a firm uses internal auditors, it is adhering to which of the following internal control elements? Question options: 1) monitoring 2) information and communication 3) risk assessment 4) proofs and security measures
monitoring
A firm's internal control environment is not influenced by Question options: 1) personnel policies 2) monitoring policies 3) organizational structure 4) management's operating style
monitoring policies
Which of the following are criteria for determining whether to record an asset as a fixed asset? Question options: 1) must be long lived and used by the company in its normal operations 2) must be short lived and tangible 3) must be tangible and an investment 4) must be an investment and long lived
must be long lived and used by the company in its normal operations
Residual value is also known as all of the following except Question options: 1) trade-in value 2) net book value 3) scrap value 4) salvage value
net book value
What entry is required in the company's accounts to record outstanding checks? Question options: 1) debit Accounts Receivable; credit Cash 2) debit Cash; credit Accounts Receivable 3) debit Cash; credit Accounts Payable 4) no entry is required
no entry is required
The receivable that is usually evidenced by a formal, written instrument of credit is a(n) Question options: 1) accounts receivable 2) trade receivable 3) note receivable 4) income tax receivable
note receivable
Which of the following would be added to the balance per books on a bank reconciliation? Question options: 1) outstanding checks 2) deposits in transit 3) service charges 4) notes collected by the bank
notes collected by the bank
Other receivables includes all of the following except Question options: 1) receivables from employees 2) interest receivable 3) notes receivable 4) taxes receivable
notes receivable
Which of the following receivables would not be classified as an "other receivable"? Question options: 1) notes receivable 2) advance to an employee 3) interest receivable 4) refundable income tax
notes receivable
Current assets are usually listed in order Question options: 1) of liquidity 2) of the size 3) alphabetically 4) of the due date
of liquidity
During a bank reconciliation process, Question options: 1) outstanding checks and deposits in transit are subtracted from the bank statement balance 2) outstanding checks and deposits in transit are added to the bank statement balance 3) outstanding checks are subtracted and deposits in transit are added to the bank statement balance 4) outstanding checks are added and deposits in transit are subtracted from the bank statement balance
outstanding checks are subtracted and deposits in transit are added to the bank statement balance
Which intangible assets are amortized over their useful life? Question options: 1) trademarks 2) goodwill 3) patents 4) all of these
patents
Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories Question options: 1) salvage and functional 2) residual and salvage 3) physical and functional 4) functional and residual
physical and functional
Which of the following should not be considered cash by an accountant? Question options: 1) money orders 2) bank checking accounts 3) postage stamps 4) travelers' checks
postage stamps
Which one of the following is not a factor that influences a business's control environment? Question options: 1) proofs and security measures 2) personnel policies 3) organizational structure 4) management's philosophy and operating style
proofs and security measures
The objectives of internal control are to Question options: 1) control the internal organization of the accounting department personnel and equipment 2) provide control over "internal-use only" reports and employee internal conduct 3) prevent fraud, and promote the social interest of the company 4) provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with
provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with
The portion of an invoice that is returned with payment is a Question options: 1) debit memo 2) credit memo 3) voucher 4) remittance advice
remittance advice
Which of the following below is an example of a capital expenditure? Question options: 1) replacing all burned-out light bulbs in the factory 2) tune-up for a company truck 3) cleaning the carpet in the front room 4) replacing an engine in a company car
replacing an engine in a company car
The accumulated depletion account is Question options: 1) reported on the balance sheet as a deduction from the cost of the mineral deposit 2) reported on the income statement as other expense 3) an intangible asset account 4) an expense account
reported on the balance sheet as a deduction from the cost of the mineral deposit
A bank statement Question options: 1) shows a company the financial position of the bank as of a certain date 2) is a bill from the bank for services rendered 3) shows the activity that increased or decreased the company's account balance 4) is a credit reference letter written by the company's bank
shows the activity that increased or decreased the company's account balance
The most widely used depreciation method is Question options: 1) straight-line 2) other 3) double-declining-balance 4) units-of-output
straight-line
In the normal operation of business, you receive a check from a customer and deposit it into your checking account. With your bank statement you are advised that this check for $775 is "NSF." The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will Question options: 1) add both values to balance according to books 2) subtract both values from balance according to books 3) subtract both values from balance according to bank 4) add both values to balance according to bank
subtract both values from balance according to books
Indications that an account may be uncollectible include all of the following except Question options: 1) the customer closes its business 2) the customer is making small but regular payments 3) the customer cannot be located 4) the customer files for bankruptcy
the customer is making small but regular payments
When referring to a note receivable or promissory note Question options: 1) the note cannot be factored to another party 2) the note is not considered a formal credit instrument 3) the maker is the party to whom the money is due 4) the note may be used to settle an accounts receivable
the note may be used to settle an accounts receivable
A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable Question options: 1) net realizable value of accounts receivable increases 2) total current assets are reduced 3) there is no effect on total current assets or total expenses 4) total expenses for the period are increased
there is no effect on total current assets or total expenses
When does an account become uncollectible? Question options: 1) when accounts receivable is converted into notes receivable 2) there is no general rule for when an account becomes uncollectible 3) at the end of the fiscal year 4) when a discount is availed on notes receivable
there is no general rule for when an account becomes uncollectible
A bank reconciliation should be prepared Question options: 1) by the company's bank 2) whenever the bank refuses to lend the company money 3) to explain any difference between the company's balance per books with the balance per bank 4) by the person who is authorized to sign checks
to explain any difference between the company's balance per books with the balance per bank
Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts Question options: 1) liabilities decrease 2) net income is unchanged 3) total assets are unchanged 4) total assets decrease
total assets decrease
On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the Question options: 1) uncollectible accounts expense for the year 2) total of the accounts receivables written-off during the year 3) sum of all accounts that are past due 4) total estimated uncollectible accounts as of the end of the year
total estimated uncollectible accounts as of the end of the year
An alternative name for bad debt Expense is a(n) Question options: 1) uncollectible accounts expense 2) credit loss expense 3) collection expense 4) deadbeat expense
uncollectible accounts expense
All of the following are needed for the calculation of straight-line depreciation except Question options: 1) cost 2) units produced 3) estimated life 4) residual value
units produced
When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is Question options: 1) double-declining-balance method 2) straight-line method 3) MACRS 4) units-of-output method
units-of-output method
A characteristic of a fixed asset is that it is Question options: 1) held for sale in the ordinary course of the business 2) used in the operations of a business 3) intangible 4) a short-term investment
used in the operations of a business
The debit recorded in the journal to reimburse the petty cash fund is to Question options: 1) Cash 2) various accounts for which the petty cash was disbursed 3) Accounts Receivable 4) Petty Cash
various accounts for which the petty cash was disbursed
One of the weaknesses of the direct write-off method is that it Question options: 1) understates accounts receivable on the balance sheet 2) is too difficult to use for many companies 3) is based on estimates 4) violates the matching principle
violates the matching principle
A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n) Question options: 1) debit memo 2) invoice 3) remittance advice 4) voucher
voucher
Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited Question options: 1) when a credit sale is past due 2) at the end of each accounting period 3) whenever a predetermined amount of credit sales have been made 4) when an account is determined to be worthless
when an account is determined to be worthless
Which statement is not true? Question options: 1) Current assets are normally reported in order of their liquidity. 2) All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section. 3) Disclosures related to receivables are reported on the financial statement notes. 4) Cash and cash equivalents are the first items reported under current assets.
All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section.
Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct regarding the entry to record estimated uncollectible receivables? Question options: 1) Allowance for Doubtful Accounts will be credited 2) Bad Debt Expense will be credited 3) Cash will be debited 4) Accounts Receivable will be debited
Allowance for Doubtful Accounts will be credited
Jefferson uses the percent of method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct? Question options: 1) Bad debt expense is estimated to be $11,100. 2) Uncollectible accounts are estimated to be $111,000. 3) Bad debt expense is estimated to be $5,550. 4) Uncollectible accounts are estimated to be $55,500.
Uncollectible accounts are estimated to be $111,000.
The operating expense recorded from uncollectible receivables can be called all of the following except Question options: 1) uncollectible accounts expense 2) bad debt expense 3) doubtful accounts expense 4) accounts receivable
accounts receivable
The accumulated depletion of a natural resource is reported on the Question options: 1) income statement as a deduction from revenues 2) balance sheet as a deduction from the cost of the resource 3) balance sheet as depreciation from the cost of the resource 4) income statement as an increase in revenue
balance sheet as a deduction from the cost of the resource
Selling receivables is called Question options: 1) a factor 2) factoring 3) sold receivables 4) sales revenue
factoring
If collection of an other receivable is expected beyond one year, it is classified as a(n) Question options: 1) other receivable under noncurrent assets 2) other receivable under current assets 3) investment under current assets 4) investment under noncurrent assets
investment under noncurrent assets
Sarbanes-Oxley applies to Question options: 1) publicly held companies 2) not-for-profit organizations 3) all of these 4) privately held businesses
publicly held companies
The natural resources of some companies include Question options: 1) metal ores, copyrights, and supplies 2) timber, equipment, and patents 3) minerals, trademarks, and land 4) timber, metal ores, and minerals
timber, metal ores, and minerals