Question 1

Interest is an expense to the debtor and income to the creditor.

Accepted Answer

A) True 
 B)False

Question 2

Rex's Auto has a checking account that earns interest.The current bank statement shows interest earned of $11.27.This amount should be:

Accepted Answer

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

Question 3

Piper Inc.has cash of $56,000;net Accounts Receivable of $67,000;short-term investments of $12,000 and inventory of $40,000.It also has $45,000 in current liabilities and $75,000 in long-term liabilities.The current ratio for Piper Inc.is:

Accepted Answer

A) 2)73. 
B) 3)00. 
C) 3)62. 
D) 3)89. 
A) 2)73. 
B) 3)00. 
C) 3)62. 
D) 3)89.

Question 4

Which of the following would indicate poor internal control over Accounts Receivable?

Accepted Answer

A) The person handling cash receipts passes the receipts to someone who enters them into Accounts Receivable. 
B) The same person handling cash receipts also records the Accounts Receivable transactions. 
C) The mailroom employees open the mail and give the cash receipts to another employee. 
D) The person who handles Accounts Receivable would not write off accounts as uncollectible. 
A) The person handling cash receipts passes the receipts to someone who enters them into Accounts Receivable. 
B) The same person handling cash receipts also records the Accounts Receivable transactions. 
C) The mailroom employees open the mail and give the cash receipts to another employee. 
D) The person who handles Accounts Receivable would not write off accounts as uncollectible.

Question 5

A 4-month promissory note dated on July 17 will be due on November 17.

Accepted Answer

A) True 
 B)False

Question 6

The entity that signs the note and promises to pay the required amount is referred to as:

Accepted Answer

A) maker of a note 
B) payee of a note 
C) debtor 
D) both A and C 
A) maker of a note 
B) payee of a note 
C) debtor 
D) both A and C

Question 7

When using the allowance method for uncollectible accounts,the percent-of-sales method is called the:

Accepted Answer

A) Balance Sheet approach. 
B) Income Statement approach. 
C) allowance approach. 
D) direct write-off approach. 
A) Balance Sheet approach. 
B) Income Statement approach. 
C) allowance approach. 
D) direct write-off approach.

Question 8

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 9

Cash is listed first on the Balance Sheet because it is the least liquid asset.

Accepted Answer

A) True 
 B)False

Question 10

Accounts Receivable are classified as Current Assets.

Accepted Answer

A) True 
 B)False

Question 11

The allowance method of accounting for bad debts is required by GAAP because of the materiality principle.

Accepted Answer

A) True 
 B)False

Question 12

Separation of duties is essential for internal control over cash receipts and cash payments.

Accepted Answer

A) True 
 B)False

Question 13

Leo Company has a petty cash fund of $300.At the end of the month,$42.38 remains in the fund along with $260.75 in various receipts.The journal entry to replenish the fund would be:

Accepted Answer

A) debit Petty Cash for $257.62 and credit Cash for $257.62. 
B) debit various expenses,$254.49;debit Cash Short for $3.13 and credit Cash for $257.62. 
C) debit various expenses,$260.75;credit Cash Over for $3.13 and credit Cash for $257.62. 
D) debit various expenses,$260.75 and credit Cash for $260.75. 
A) debit Petty Cash for $257.62 and credit Cash for $257.62. 
B) debit various expenses,$254.49;debit Cash Short for $3.13 and credit Cash for $257.62. 
C) debit various expenses,$260.75;credit Cash Over for $3.13 and credit Cash for $257.62. 
D) debit various expenses,$260.75 and credit Cash for $260.75.

Question 14

Cesario Auto's bank statement shows a bank balance of $43,267.The statement shows a bank service charge of $50 and a note collection of $760 on Cesario Auto's behalf.Cesario Auto's book balance should be adjusted by a total of:

Accepted Answer

A) +$810. 
B) +$760. 
C) +$710. 
D) -$710. 
A) +$810. 
B) +$760. 
C) +$710. 
D) -$710.

Question 15

Which of the following is NOT true concerning NSF checks:

Accepted Answer

A) NSF checks represent customer checks that the business previously deposited but have turned out to be worthless. 
B) The amount of the NSF check will need to be subtracted from the book balance. 
C) The amount of the NSF check will need to be added to the book balance. 
D) NSF stands for nonsufficient funds. 
A) NSF checks represent customer checks that the business previously deposited but have turned out to be worthless. 
B) The amount of the NSF check will need to be subtracted from the book balance. 
C) The amount of the NSF check will need to be added to the book balance. 
D) NSF stands for nonsufficient funds.

Question 16

Lionworks Company has cash of $143,000;net Accounts Receivable of $89,000;short-term investments of $35,000 and prepaid expenses of $40,000.It also has $50,000 in current liabilities and $80,000 in long-term liabilities.The quick ratio for Lionworks Company is:

Accepted Answer

A) 3)34. 
B) 4)64. 
C) 5)34. 
D) 6)14. 
A) 3)34. 
B) 4)64. 
C) 5)34. 
D) 6)14.

Question 17

Cash on the Balance Sheet includes:

Accepted Answer

A) checks on hand. 
B) traveler's checks. 
C) Petty Cash. 
D) all of the above. 
A) checks on hand. 
B) traveler's checks. 
C) Petty Cash. 
D) all of the above.

Question 18

Using a 365-day year,the maturity value of a 55-day,7% note for $23,000 rounded to the nearest cent is:

Accepted Answer

A) $23,000.00. 
B) $23,242.60. 
C) $23,245.97. 
D) $24,610.00. 
A) $23,000.00. 
B) $23,242.60. 
C) $23,245.97. 
D) $24,610.00.

Question 19

Quicksilver Co.has cash of $33,000;net Accounts Receivable of $41,000;short-term investments of $15,000 and inventory of $25,000.It also has $30,000 in current liabilities and $50,000 in long-term liabilities.The current ratio for Quicksilver Co.is:

Accepted Answer

A) 3)80. 
B) 1)48. 
C) 2)47. 
D) 1)43. 
A) 3)80. 
B) 1)48. 
C) 2)47. 
D) 1)43.

Question 20

Toy Company has 4% credit/debit card service fees deducted monthly by the bank from Toy Company's bank account.Toy Company has $75,000 in sales for the month.At what amount will Toy Company record this month's sales?

Accepted Answer

A) $78,000 
B) $75,000 
C) $72,000 
D) $3,000 
A) $78,000 
B) $75,000 
C) $72,000 
D) $3,000

Interest is an expense to the debtor and income to the creditor.

Rex's Auto has a checking account that earns interest.The current bank statement shows interest earned of $11.27.This amount should be:

Piper Inc.has cash of $56,000;net Accounts Receivable of $67,000;short-term investments of $12,000 and inventory of $40,000.It also has $45,000 in current liabilities and $75,000 in long-term liabilities.The current ratio for Piper Inc.is:

Which of the following would indicate poor internal control over Accounts Receivable?

A 4-month promissory note dated on July 17 will be due on November 17.

The entity that signs the note and promises to pay the required amount is referred to as:

When using the allowance method for uncollectible accounts,the percent-of-sales method is called the:

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

Cash is listed first on the Balance Sheet because it is the least liquid asset.

Accounts Receivable are classified as Current Assets.

The allowance method of accounting for bad debts is required by GAAP because of the materiality principle.

Separation of duties is essential for internal control over cash receipts and cash payments.

Leo Company has a petty cash fund of $300.At the end of the month,$42.38 remains in the fund along with $260.75 in various receipts.The journal entry to replenish the fund would be:

Cesario Auto's bank statement shows a bank balance of $43,267.The statement shows a bank service charge of $50 and a note collection of $760 on Cesario Auto's behalf.Cesario Auto's book balance should be adjusted by a total of:

Which of the following is NOT true concerning NSF checks:

Lionworks Company has cash of $143,000;net Accounts Receivable of $89,000;short-term investments of $35,000 and prepaid expenses of $40,000.It also has $50,000 in current liabilities and $80,000 in long-term liabilities.The quick ratio for Lionworks Company is:

Cash on the Balance Sheet includes:

Using a 365-day year,the maturity value of a 55-day,7% note for $23,000 rounded to the nearest cent is:

Quicksilver Co.has cash of $33,000;net Accounts Receivable of $41,000;short-term investments of $15,000 and inventory of $25,000.It also has $30,000 in current liabilities and $50,000 in long-term liabilities.The current ratio for Quicksilver Co.is:

Toy Company has 4% credit/debit card service fees deducted monthly by the bank from Toy Company's bank account.Toy Company has $75,000 in sales for the month.At what amount will Toy Company record this month's sales?

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

Interest is an expense to the debtor and income to the creditor.

Rex's Auto has a checking account that earns interest.The current bank statement shows interest earned of $11.27.This amount should be:

Piper Inc.has cash of $56,000;net Accounts Receivable of $67,000;short-term investments of $12,000 and inventory of $40,000.It also has $45,000 in current liabilities and $75,000 in long-term liabilities.The current ratio for Piper Inc.is:

Which of the following would indicate poor internal control over Accounts Receivable?

A 4-month promissory note dated on July 17 will be due on November 17.

The entity that signs the note and promises to pay the required amount is referred to as:

When using the allowance method for uncollectible accounts,the percent-of-sales method is called the:

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

Cash is listed first on the Balance Sheet because it is the least liquid asset.

Accounts Receivable are classified as Current Assets.

The allowance method of accounting for bad debts is required by GAAP because of the materiality principle.

Separation of duties is essential for internal control over cash receipts and cash payments.

Leo Company has a petty cash fund of $300.At the end of the month,$42.38 remains in the fund along with $260.75 in various receipts.The journal entry to replenish the fund would be:

Cesario Auto's bank statement shows a bank balance of $43,267.The statement shows a bank service charge of $50 and a note collection of $760 on Cesario Auto's behalf.Cesario Auto's book balance should be adjusted by a total of:

Which of the following is NOT true concerning NSF checks:

Lionworks Company has cash of $143,000;net Accounts Receivable of $89,000;short-term investments of $35,000 and prepaid expenses of $40,000.It also has $50,000 in current liabilities and $80,000 in long-term liabilities.The quick ratio for Lionworks Company is:

Cash on the Balance Sheet includes:

Using a 365-day year,the maturity value of a 55-day,7% note for $23,000 rounded to the nearest cent is:

Quicksilver Co.has cash of $33,000;net Accounts Receivable of $41,000;short-term investments of $15,000 and inventory of $25,000.It also has $30,000 in current liabilities and $50,000 in long-term liabilities.The current ratio for Quicksilver Co.is:

Toy Company has 4% credit/debit card service fees deducted monthly by the bank from Toy Company's bank account.Toy Company has $75,000 in sales for the month.At what amount will Toy Company record this month's sales?

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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