Question 1

Given the following information from Leo Company, what would the current assets section of the balance sheet include?

Accepted Answer

A) Cash $36,000; Accounts Receivable $12,000 
B) Cash & Cash Equivalents $48,000 
C) Cash $31,000; Accounts Receivable $12,000 
D) Cash $24,000; Cash Equivalents $12,000; Accounts Receivable $12,000 
A) Cash $36,000; Accounts Receivable $12,000 
B) Cash & Cash Equivalents $48,000 
C) Cash $31,000; Accounts Receivable $12,000 
D) Cash $24,000; Cash Equivalents $12,000; Accounts Receivable $12,000 C

Question 2

In a bank reconciliation, the bank balance and the book balance must be adjusted to be reconciled.

Accepted Answer

A) True 
 B)False  True

Question 3

During a bank reconciliation, Bach Inc. discovered a NSF check from their customer, Larry Bobble for $70. The journal entry required to update the cash balance would be:

Accepted Answer

A) Debit cash, credit Accounts Receivable 
B) Debit Accounts Receivable, credit Cash 
C) Debit Accounts Receivable - L. Bobble, credit Cash 
D) No journal entry is required. 
A) Debit cash, credit Accounts Receivable 
B) Debit Accounts Receivable, credit Cash 
C) Debit Accounts Receivable - L. Bobble, credit Cash 
D) No journal entry is required. C

Question 4

Charmed, Inc. had credit sales for the period of $142,000. The balance in Allowance for Doubtful Accounts is a debit of $643. If Charmed ages Accounts Receivable and determines estimated uncollectible accounts to be $2,860, what is the required journal entry to record estimated uncollectible accounts?

Accepted Answer

A) Debit Bad Debt Expense, $2,860; credit Allowance for Uncollectible Accounts, $2,860. 
B) No entry is required. 
C) Debit Bad Debt Expense, $3,503; credit Allowance for Uncollectible Accounts, $3,503. 
D) Debit Bad Debt Expense, $2,217; credit Allowance for Uncollectible Accounts, $2,217. 
A) Debit Bad Debt Expense, $2,860; credit Allowance for Uncollectible Accounts, $2,860. 
B) No entry is required. 
C) Debit Bad Debt Expense, $3,503; credit Allowance for Uncollectible Accounts, $3,503. 
D) Debit Bad Debt Expense, $2,217; credit Allowance for Uncollectible Accounts, $2,217.

Question 5

Interest rates are almost always stated for a period of one month.

Accepted Answer

A) True 
 B)False

Question 6

When counting the days of a note, one should remember to count the day the note was issued.

Accepted Answer

A) True 
 B)False

Question 7

Leo's Leather Shoppe has a checking account that earns interest. The current bank statement shows interest earned of $22.14. This amount should be:

Accepted Answer

A) added to Leo's book balance. 
B) subtracted from Leo's book balance. 
C) ignored, as the bank has added it to Leo's book balance. 
D) subtracted from Leo's bank balance. 
A) added to Leo's book balance. 
B) subtracted from Leo's book balance. 
C) ignored, as the bank has added it to Leo's book balance. 
D) subtracted from Leo's bank balance.

Question 8

Companies who sell on account expect:

Accepted Answer

A) the benefit to outweigh the cost. 
B) to incur bad debt expense. 
C) to reach a wider range of customers. 
D) all of the above. 
A) the benefit to outweigh the cost. 
B) to incur bad debt expense. 
C) to reach a wider range of customers. 
D) all of the above.

Question 9

A 135-day note issued on May 17 will mature on:

Accepted Answer

A) September 28. 
B) September 29. 
C) September 30. 
D) October 1. 
A) September 28. 
B) September 29. 
C) September 30. 
D) October 1.

Question 10

Because petty cash funds are for small dollar amounts, internal control policies to govern the fund are not necessary.

Accepted Answer

A) True 
 B)False

Question 11

On March 1, 2014, Archer Inc. lent $37,000 to Ron Wood on a 1-year 3% promissory note. The amount of interest to be accrued on December 31 will be: (Do not round any intermediary calculations. Round your final answer to the nearest cent.)

Accepted Answer

A) $1,110.00. 
B) $925.00. 
C) $37,000.00. 
D) $740.00. 
A) $1,110.00. 
B) $925.00. 
C) $37,000.00. 
D) $740.00.

Question 12

The formula: principle x rate x time represents

Accepted Answer

A) The amount charged for loaning money. 
B) The amount of revenue to the creditor for loaning money. 
C) The amount of expense to the debtor for borrowing money. 
D) All of the above. 
A) The amount charged for loaning money. 
B) The amount of revenue to the creditor for loaning money. 
C) The amount of expense to the debtor for borrowing money. 
D) All of the above.

Question 13

The percent of sales method is the only method allowed by GAAP to estimate the amount of uncollectible accounts.

Accepted Answer

A) True 
 B)False

Question 14

Northwest Plumbing's bank statement shows a bank balance of $43,667. The statement shows a bank service charge of $95. Northwest Plumbing's book balance shows outstanding checks of $5,292 and deposits in transit of $9,325. The adjusted balance on the bank side of the reconciliation would be:

Accepted Answer

A) $43,667. 
B) $43,572. 
C) $39,634. 
D) $47,700. 
A) $43,667. 
B) $43,572. 
C) $39,634. 
D) $47,700.

Question 15

Cash consists of anything that a bank will take as a deposit.

Accepted Answer

A) True 
 B)False

Question 16

Using a 360-day year, the maturity value of a 60-day note for $5,000 at 8% annual interest is $67.

Accepted Answer

A) True 
 B)False

Question 17

When using the aging method, the amount calculated to be the uncollectible accounts is always the amount used for the adjusting entry at the end of the period.

Accepted Answer

A) True 
 B)False

Question 18

How are net realizable receivables calculated?

Accepted Answer

A) Accounts Receivable plus the Allowance for Doubtful Accounts 
B) Allowance for Doubtful Accounts plus NSF checks 
C) Accounts Receivable less the Allowance for Doubtful Accounts 
D) Accounts Receivable divided by the Allowance for Doubtful Accounts 
A) Accounts Receivable plus the Allowance for Doubtful Accounts 
B) Allowance for Doubtful Accounts plus NSF checks 
C) Accounts Receivable less the Allowance for Doubtful Accounts 
D) Accounts Receivable divided by the Allowance for Doubtful Accounts

Question 19

The end of period adjusting entry for bad debt expense under the direct write-off method is:

Accepted Answer

A) Bad Debt Expense, debit; Allowance for Uncollectible Accounts, credit. 
B) not required. 
C) Cash, debit; Accounts Receivable/customer name, credit. 
D) Bad Debt Expense, debit; Accounts Receivable/customer name, credit. 
A) Bad Debt Expense, debit; Allowance for Uncollectible Accounts, credit. 
B) not required. 
C) Cash, debit; Accounts Receivable/customer name, credit. 
D) Bad Debt Expense, debit; Accounts Receivable/customer name, credit.

Question 20

A petty cash fund may be established for minor expenditures, such as postage.

Accepted Answer

A) True 
 B)False

Given the following information from Leo Company, what would the current assets section of the balance sheet include?

In a bank reconciliation, the bank balance and the book balance must be adjusted to be reconciled.

During a bank reconciliation, Bach Inc. discovered a NSF check from their customer, Larry Bobble for $70. The journal entry required to update the cash balance would be:

Interest rates are almost always stated for a period of one month.

When counting the days of a note, one should remember to count the day the note was issued.

Leo's Leather Shoppe has a checking account that earns interest. The current bank statement shows interest earned of $22.14. This amount should be:

Companies who sell on account expect:

A 135-day note issued on May 17 will mature on:

Because petty cash funds are for small dollar amounts, internal control policies to govern the fund are not necessary.

On March 1, 2014, Archer Inc. lent $37,000 to Ron Wood on a 1-year 3% promissory note. The amount of interest to be accrued on December 31 will be: (Do not round any intermediary calculations. Round your final answer to the nearest cent.)

The formula: principle x rate x time represents

The percent of sales method is the only method allowed by GAAP to estimate the amount of uncollectible accounts.

Northwest Plumbing's bank statement shows a bank balance of $43,667. The statement shows a bank service charge of $95. Northwest Plumbing's book balance shows outstanding checks of $5,292 and deposits in transit of $9,325. The adjusted balance on the bank side of the reconciliation would be:

Cash consists of anything that a bank will take as a deposit.

Using a 360-day year, the maturity value of a 60-day note for $5,000 at 8% annual interest is $67.

When using the aging method, the amount calculated to be the uncollectible accounts is always the amount used for the adjusting entry at the end of the period.

How are net realizable receivables calculated?

The end of period adjusting entry for bad debt expense under the direct write-off method is:

A petty cash fund may be established for minor expenditures, such as postage.

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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Exam 7: Cash and Receivables

Given the following information from Leo Company, what would the current assets section of the balance sheet include?

In a bank reconciliation, the bank balance and the book balance must be adjusted to be reconciled.

During a bank reconciliation, Bach Inc. discovered a NSF check from their customer, Larry Bobble for $70. The journal entry required to update the cash balance would be:

Interest rates are almost always stated for a period of one month.

When counting the days of a note, one should remember to count the day the note was issued.

Leo's Leather Shoppe has a checking account that earns interest. The current bank statement shows interest earned of $22.14. This amount should be:

Companies who sell on account expect:

A 135-day note issued on May 17 will mature on:

Because petty cash funds are for small dollar amounts, internal control policies to govern the fund are not necessary.

On March 1, 2014, Archer Inc. lent $37,000 to Ron Wood on a 1-year 3% promissory note. The amount of interest to be accrued on December 31 will be: (Do not round any intermediary calculations. Round your final answer to the nearest cent.)

The formula: principle x rate x time represents

The percent of sales method is the only method allowed by GAAP to estimate the amount of uncollectible accounts.

Northwest Plumbing's bank statement shows a bank balance of $43,667. The statement shows a bank service charge of $95. Northwest Plumbing's book balance shows outstanding checks of $5,292 and deposits in transit of $9,325. The adjusted balance on the bank side of the reconciliation would be:

Cash consists of anything that a bank will take as a deposit.

Using a 360-day year, the maturity value of a 60-day note for $5,000 at 8% annual interest is $67.

When using the aging method, the amount calculated to be the uncollectible accounts is always the amount used for the adjusting entry at the end of the period.

How are net realizable receivables calculated?

The end of period adjusting entry for bad debt expense under the direct write-off method is:

A petty cash fund may be established for minor expenditures, such as postage.

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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