Question 1

In preparing a bank reconciliation,a service charge shown on the bank statement should be:

Accepted Answer

A) Added to the balance per the bank statement. 
B) Deducted from the balance per the bank statement. 
C) Added to the balance per the depositor's records. 
D) Deducted from the balance per the depositor's records. 
A) Added to the balance per the bank statement. 
B) Deducted from the balance per the bank statement. 
C) Added to the balance per the depositor's records. 
D) Deducted from the balance per the depositor's records.

Question 2

If the allowance method is used,the recovery of an account receivable previously written-off results in a gain being recorded on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

When an Allowance for Doubtful Accounts is used,accounts receivable are valued in the balance sheet at their estimated net realizable value.

Accepted Answer

A) True 
 B)False

Question 4

In reconciling a bank statement,which of the following items could cause the cash per the bank statement to be greater than the balance of cash shown in the depositor's accounting records?

Accepted Answer

A) An outstanding check. 
B) A check returned to the depositor marked NSF. 
C) Check 457 written for $643 was recorded by the depositor as $463. 
D) A bank service charge. 
A) An outstanding check. 
B) A check returned to the depositor marked NSF. 
C) Check 457 written for $643 was recorded by the depositor as $463. 
D) A bank service charge.

Question 5

The Allowance for Doubtful Accounts is called a valuation account,or contra-asset account,and normally has a credit balance.

Accepted Answer

A) True 
 B)False

Question 6

While preparing the bank reconciliation,an accountant discovered that a $426 check returned with the bank statement had been recorded erroneously in the depositor's accounting records as $462.In preparing the bank reconciliation the appropriate action to correct this error would be to:

Accepted Answer

A) Add $36 to the balance per the depositor's records. 
B) Add $36 to the balance per the bank statement. 
C) Deduct $36 from the balance per the bank statement. 
D) Deduct $36 from the balance per the depositor's records. 
A) Add $36 to the balance per the depositor's records. 
B) Add $36 to the balance per the bank statement. 
C) Deduct $36 from the balance per the bank statement. 
D) Deduct $36 from the balance per the depositor's records.

Question 7

Financial assets--effects of transactions
Five events involving financial assets are described below:
(a.)Received dividends earned on investment in marketable securities.
(b.)Invested excess cash in marketable securities.
(c.)Determined that a specific account receivable is worthless and wrote it off against the allowance for doubtful accounts.
(d.)Made sale of merchandise for cash.
(e.)Sold available for sale marketable securities at a loss.Cash proceeds from the sale were equal to the current market value reflected in the last balance sheet.
Indicate the effects of each independent transaction or adjusting entry upon the financial measurements shown in the column headings below.Use the code letters,I for increase,D for decrease,and NE for no effect.

Accepted Answer

@#IMG-DLM& *Note to Instructor: Exchanging marketa

Question 8

Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense.Its Allowance for Doubtful Accounts has a $1,200 credit balance prior to adjusting entries.It has just completed an aging analysis of accounts receivable at December 31,2015.This analysis disclosed the following information:   What is the appropriate balance for Oceanside's Allowance for Doubtful Accounts at December 31,2015?

Accepted Answer

A) $95,000. 
B) $960. 
C) $3,360. 
D) $2,160. 
A) $95,000. 
B) $960. 
C) $3,360. 
D) $2,160.

Question 9

Compensating balances are not included in the amount of cash listed on a balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

At the start of the current year,Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $1,800.During the year a monthly provision of 2% of sales was made for uncollectible accounts.Sales for the year were $600,000,and $5,600 of accounts receivable were written off as worthless.No recoveries of accounts previously written off were made during the year.The year-end financial statements should show:

Accepted Answer

A) Uncollectible accounts expense of $13,800. 
B) Allowance for Doubtful Accounts with a credit balance of $8,200. 
C) Allowance for Doubtful Accounts with a credit balance of $6,400. 
D) Uncollectible accounts expense of $5,600. 
A) Uncollectible accounts expense of $13,800. 
B) Allowance for Doubtful Accounts with a credit balance of $8,200. 
C) Allowance for Doubtful Accounts with a credit balance of $6,400. 
D) Uncollectible accounts expense of $5,600.

Question 11

Efficient management of cash includes which of the following concepts?

Accepted Answer

A) Pay each bill as soon as the invoice is received. 
B) Deposit all cash receipts and make all cash disbursements at the end of each week. 
C) Prepare a control listing of cash receipts at the time and place the money is received. 
D) Pay suppliers in cash out of cash sales receipts before depositing them in the bank. 
A) Pay each bill as soon as the invoice is received. 
B) Deposit all cash receipts and make all cash disbursements at the end of each week. 
C) Prepare a control listing of cash receipts at the time and place the money is received. 
D) Pay suppliers in cash out of cash sales receipts before depositing them in the bank.

Question 12

Which of the following does not contribute toward achieving internal control over cash?

Accepted Answer

A) The practice of making small cash disbursements directly from the current day's cash receipts. 
B) The preparation of cash budgets. 
C) The use of a petty cash fund. 
D) The practice of approving every expenditure before the cash disbursement is made. 
A) The practice of making small cash disbursements directly from the current day's cash receipts. 
B) The preparation of cash budgets. 
C) The use of a petty cash fund. 
D) The practice of approving every expenditure before the cash disbursement is made.

Question 13

Accounts receivable turnover rate
During 2015,Larsen Company's accounts receivable averaged $750,000.Larsen's 2015 income statement reported net sales of $6,780,000,uncollectible accounts expense of $160,000,and net income of $768,000.(Assume 365 days in a year.)
Using the information,compute the following for Larsen Company:
(a)Accounts receivable turnover: (Round to the nearest two decimals.)
(b)Average number of days to collect accounts receivable
(Round to nearest day,if necessary): (Round to the nearest %.)

Accepted Answer

(a)9.04 times ($6,78

Question 14

A good system of internal control will include all of the following except:

Accepted Answer

A) Preparing a pro-forma financial statement on a monthly basis. 
B) Separating the handling of cash from the maintenance of accounting records. 
C) Making all major payments by check. 
D) Reconciling bank statements with accounting records. 
A) Preparing a pro-forma financial statement on a monthly basis. 
B) Separating the handling of cash from the maintenance of accounting records. 
C) Making all major payments by check. 
D) Reconciling bank statements with accounting records.

Question 15

Stanley,Inc.'s 2015 income statement reported net sales of $6,000,000,uncollectible accounts expense of $160,000,and net income of $700,000.Stanley's average accounts receivable during 2015 amounted to $1,200,000.Using 360 days to a year,Stanley's

Accepted Answer

A) Accounts receivable turnover rate is approximately 4.4 times. 
B) Accounts receivable turnover rate is approximately 2.5 times. 
C) Average number of days to collect an account receivable is 72 days. 
D) Accounts receivable turnover rate is approximately 2 times. 
A) Accounts receivable turnover rate is approximately 4.4 times. 
B) Accounts receivable turnover rate is approximately 2.5 times. 
C) Average number of days to collect an account receivable is 72 days. 
D) Accounts receivable turnover rate is approximately 2 times.

Question 16

The financial statements of Baxter Corporation include an Unrealized Holding Gain on Investments.This item:

Accepted Answer

A) Is included in the income statement. 
B) Is shown as a reduction in total stockholders' equity. 
C) Indicates that Baxter's marketable securities have a current market value higher than cost. 
D) Indicate that Baxter Corporation sold marketable securities during the period at a gain. 
A) Is included in the income statement. 
B) Is shown as a reduction in total stockholders' equity. 
C) Indicates that Baxter's marketable securities have a current market value higher than cost. 
D) Indicate that Baxter Corporation sold marketable securities during the period at a gain.

Question 17

Under the allowance method,when a receivable that had been previously written off is collected:

Accepted Answer

A) Net income is increased. 
B) Net assets are increased. 
C) Net income and net assets are not affected. 
D) Net assets and net income are both increased. 
A) Net income is increased. 
B) Net assets are increased. 
C) Net income and net assets are not affected. 
D) Net assets and net income are both increased.

Question 18

Which of the following items would cause cash per the bank statement to be larger than the balance of cash shown in the accounting records?

Accepted Answer

A) Bank service charges. 
B) Deposits in transit. 
C) Outstanding checks. 
D) NSF check from one of the depositor's customers. 
A) Bank service charges. 
B) Deposits in transit. 
C) Outstanding checks. 
D) NSF check from one of the depositor's customers.

Question 19

In preparing the bank reconciliation,certain transactions recorded by the depositor may not have been recorded by the bank.Which of the following is an example of this type of transaction?

Accepted Answer

A) Service charges. 
B) Outstanding checks. 
C) Credit for interest earned. 
D) Charges for NSF checks. 
A) Service charges. 
B) Outstanding checks. 
C) Credit for interest earned. 
D) Charges for NSF checks.

Question 20

Bank reconciliation--computations and journal entry
The Cash account in the ledger of Pine Golf Club shows a balance of $11,925 at December 31,2015.The December 31 bank statement shows a balance of $10,440.The only reconciling items consist of:
Bank service charges of $32.
Deposit in transit of $1,813.
NSF check from customer L.Diamond in the amount of $126.
Error in recording check no.970 for utilities: check was written in the amount of $834 but was recorded in Pine's accounting records as $384.
Outstanding checks.
(a)What is the amount of the adjusted cash balance at December 31,2015?
$_______________
(b)What is the total amount of outstanding checks at December 31,2015?
$________________
(c)Record the journal entry necessary,if any,to adjust Pine's Golf Club accounting records at December 31,2015.(An explanation is not required; a single compound journal entry is acceptable.)

Accepted Answer

(a)Adjusted cash balance on Dec.31,2015:

Exam 7: Financial Assets

In preparing a bank reconciliation,a service charge shown on the bank statement should be:

If the allowance method is used,the recovery of an account receivable previously written-off results in a gain being recorded on the income statement.

When an Allowance for Doubtful Accounts is used,accounts receivable are valued in the balance sheet at their estimated net realizable value.

In reconciling a bank statement,which of the following items could cause the cash per the bank statement to be greater than the balance of cash shown in the depositor's accounting records?

The Allowance for Doubtful Accounts is called a valuation account,or contra-asset account,and normally has a credit balance.

While preparing the bank reconciliation,an accountant discovered that a $426 check returned with the bank statement had been recorded erroneously in the depositor's accounting records as $462.In preparing the bank reconciliation the appropriate action to correct this error would be to:

Compensating balances are not included in the amount of cash listed on a balance sheet.

Efficient management of cash includes which of the following concepts?

Which of the following does not contribute toward achieving internal control over cash?

A good system of internal control will include all of the following except:

Stanley,Inc.'s 2015 income statement reported net sales of $6,000,000,uncollectible accounts expense of $160,000,and net income of $700,000.Stanley's average accounts receivable during 2015 amounted to $1,200,000.Using 360 days to a year,Stanley's

The financial statements of Baxter Corporation include an Unrealized Holding Gain on Investments.This item:

Under the allowance method,when a receivable that had been previously written off is collected:

Which of the following items would cause cash per the bank statement to be larger than the balance of cash shown in the accounting records?

In preparing the bank reconciliation,certain transactions recorded by the depositor may not have been recorded by the bank.Which of the following is an example of this type of transaction?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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