Question 1

It is possible for the allowance account to have a debit balance before the adjusting entry is recorded.

Accepted Answer

A) True 
 B)False

Question 2

A customer purchased $2,000 of goods on credit from Holiday Party Supply on May 1. The customer received the bill on May 15 and mailed a $2,000 cheque on May 28. Holiday received the cheque on May 30. In recording this transaction, Holiday should credit Sales Revenue for $2,000 on which of the following dates?

Accepted Answer

A)  May 1. 
B)  May 28. 
C)  May 30. 
D)  May 15. 
A)  May 1. 
B)  May 28. 
C)  May 30. 
D)  May 15.

Question 3

Allowance for Doubtful Accounts is a contra account that is deducted from Trade Accounts Receivable on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 4

Oucher Corporation's bank statement included two types of electronic funds transfers (EFT). One type of EFT totalled $10,000 and was from customers payin their accounts online. Another type of EFT totalled $16,500 and was from Yamamoto paying its accounts payable online.
Required:
(a) How will each of these items affect Oucher's bank reconciliation?
(b) Prepare the required journal entries, if any, that Oucher will make to record the above information on its books.

Accepted Answer

(a) Oucher Corporation must add the elec

Question 5

In 2013, T Co. reported a receivables turnover ratio of 11.1 and their competitor, WWW Co., reported a ratio of 4.6. Which of the following is true?

Accepted Answer

A)  WWW Co. needs to focus on improving their credit and collection process 
B)  T Co. needs to decrease their ratio in order to improve collection time 
C)  WWW Co. has done a better job of collecting their receivables than T Co. 
D)  All of the statements are true 
A)  WWW Co. needs to focus on improving their credit and collection process 
B)  T Co. needs to decrease their ratio in order to improve collection time 
C)  WWW Co. has done a better job of collecting their receivables than T Co. 
D)  All of the statements are true

Question 6

T Co's gross profit percentage has been increasing in the three years from 2011 through 2013 from 36.5% to 39.8%. This change has most likely been caused by which of the following?

Accepted Answer

A)  Higher product costs 
B)  Selling products for higher prices 
C)  Selling products with lower margins 
D)  Discounted prices 
A)  Higher product costs 
B)  Selling products for higher prices 
C)  Selling products with lower margins 
D)  Discounted prices

Question 7

When a company records adjusting entries following the completion of a bank reconciliation, the cash account is debited for the amount of any deposit in transit.

Accepted Answer

A) True 
 B)False

Question 8

The WD Co. reported revenue of $23,402 million for 2013. Their trade receivables balance was $3,999 million in 2013 and $3,633 million in 2012. How much cash was collected from customers?

Accepted Answer

A)  $23,306 
B)  $23,768 
C)  $23,036 
D)  $23,402 
A)  $23,306 
B)  $23,768 
C)  $23,036 
D)  $23,402

Question 9

Vida Corporation gathered the following reconciling information in preparing its July ban reconciliation:   The adjusted cash balance per books at July 31 is

Accepted Answer

A)  $2,310. 
B)  $4,010. 
C)  $4,160. 
D)  $2,460. 
A)  $2,310. 
B)  $4,010. 
C)  $4,160. 
D)  $2,460.

Question 10

Albert Company agreed to build a bowling complex for Pins R Us for a price of $2,000,000. The project is expected to take three years to complete. Albert estimated that the total cost of the project would be $1,600,000. During the first year, construction costs amount to $600,000. If Albert uses the percentage of completion method, how much revenue will be recognized for the first year?

Accepted Answer

A)  $750,000. 
B)  $600,000. 
C)  $0. 
D)  $150,000. 
A)  $750,000. 
B)  $600,000. 
C)  $0. 
D)  $150,000.

Question 11

When credit terms for a sale are 2/15, n/40, the customer saves by paying the bill early. Approximately what percent would this savings amount to on an annual basis?

Accepted Answer

A)  30%. 
B)  20%. 
C)  37%. 
D)  18%. 
A)  30%. 
B)  20%. 
C)  37%. 
D)  18%.

Question 12

For accounting purposes, cash includes which of the following?

Accepted Answer

A)  IOU's received from employees. 
B)  A note received from a customer in settlement of an overdue trade account receivable. 
C)  Balances on deposit in banks. 
D)  A post-dated cheque received from a customer. 
A)  IOU's received from employees. 
B)  A note received from a customer in settlement of an overdue trade account receivable. 
C)  Balances on deposit in banks. 
D)  A post-dated cheque received from a customer.

Question 13

A good system of internal control does not require monitoring.

Accepted Answer

A) True 
 B)False

Question 14

When is revenue recognized under the completed contract method?

Accepted Answer

A)  Throughout the project as bills are sent to the customer. 
B)  Throughout the project as cash payments are received from the customer. 
C)  When construction begins on the project. 
D)  When the project is complete. 
A)  Throughout the project as bills are sent to the customer. 
B)  Throughout the project as cash payments are received from the customer. 
C)  When construction begins on the project. 
D)  When the project is complete.

Question 15

Near the end of 20B, the ledger of Dice Company included the following accounts and balances:

Accepted Answer

The answer of Near the end of 20B, the ledger...

Question 16

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

Accepted Answer

A) True 
 B)False

Question 17

When goods are sold to a customer with credit terms of 2/15, n/30, the customer will receive which of the following?

Accepted Answer

A)  A 15% discount if they pay within 30 days. 
B)  A 15% discount if they pay within 2 days. 
C)  A 2% discount if they pay within 15 days. 
D)  A 2% discount if they pay 15% of the amount due within 30 days. 
A)  A 15% discount if they pay within 30 days. 
B)  A 15% discount if they pay within 2 days. 
C)  A 2% discount if they pay within 15 days. 
D)  A 2% discount if they pay 15% of the amount due within 30 days.

Question 18

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

Accepted Answer

A) True 
 B)False

Question 19

G Co., which is a biotechnology firm, reported the following revenues on their 2013 income statement: Product sales $582.2 million, Royalties $214.7 million, Contract revenue $107.0 million and Interest income $64.1 million. Their cost of sales was reported as $104.5 million. What was their gross profit percentage?

Accepted Answer

A)  88.4% 
B)  89.2% 
C)  82.1% 
D)  86.9% 
A)  88.4% 
B)  89.2% 
C)  82.1% 
D)  86.9%

Question 20

When an account is written off using the allowance method for uncollectible accounts, trade accounts receivable

Accepted Answer

A)  decreases and the allowance account decreases. 
B)  decreases and the allowance account increases. 
C)  is unchanged and the allowance account increases. 
D)  increases and the allowance account increases. 
A)  decreases and the allowance account decreases. 
B)  decreases and the allowance account increases. 
C)  is unchanged and the allowance account increases. 
D)  increases and the allowance account increases.

It is possible for the allowance account to have a debit balance before the adjusting entry is recorded.

Allowance for Doubtful Accounts is a contra account that is deducted from Trade Accounts Receivable on the statement of financial position.

In 2013, T Co. reported a receivables turnover ratio of 11.1 and their competitor, WWW Co., reported a ratio of 4.6. Which of the following is true?

T Co's gross profit percentage has been increasing in the three years from 2011 through 2013 from 36.5% to 39.8%. This change has most likely been caused by which of the following?

When a company records adjusting entries following the completion of a bank reconciliation, the cash account is debited for the amount of any deposit in transit.

The WD Co. reported revenue of $23,402 million for 2013. Their trade receivables balance was $3,999 million in 2013 and $3,633 million in 2012. How much cash was collected from customers?

Vida Corporation gathered the following reconciling information in preparing its July ban reconciliation: The adjusted cash balance per books at July 31 is

When credit terms for a sale are 2/15, n/40, the customer saves by paying the bill early. Approximately what percent would this savings amount to on an annual basis?

For accounting purposes, cash includes which of the following?

A good system of internal control does not require monitoring.

When is revenue recognized under the completed contract method?

Near the end of 20B, the ledger of Dice Company included the following accounts and balances:

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

When goods are sold to a customer with credit terms of 2/15, n/30, the customer will receive which of the following?

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

When an account is written off using the allowance method for uncollectible accounts, trade accounts receivable

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

It is possible for the allowance account to have a debit balance before the adjusting entry is recorded.

Allowance for Doubtful Accounts is a contra account that is deducted from Trade Accounts Receivable on the statement of financial position.

In 2013, T Co. reported a receivables turnover ratio of 11.1 and their competitor, WWW Co., reported a ratio of 4.6. Which of the following is true?

T Co's gross profit percentage has been increasing in the three years from 2011 through 2013 from 36.5% to 39.8%. This change has most likely been caused by which of the following?

When a company records adjusting entries following the completion of a bank reconciliation, the cash account is debited for the amount of any deposit in transit.

The WD Co. reported revenue of $23,402 million for 2013. Their trade receivables balance was $3,999 million in 2013 and $3,633 million in 2012. How much cash was collected from customers?

Vida Corporation gathered the following reconciling information in preparing its July ban reconciliation: The adjusted cash balance per books at July 31 is

When credit terms for a sale are 2/15, n/40, the customer saves by paying the bill early. Approximately what percent would this savings amount to on an annual basis?

For accounting purposes, cash includes which of the following?

A good system of internal control does not require monitoring.

When is revenue recognized under the completed contract method?

Near the end of 20B, the ledger of Dice Company included the following accounts and balances:

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

When goods are sold to a customer with credit terms of 2/15, n/30, the customer will receive which of the following?

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

When an account is written off using the allowance method for uncollectible accounts, trade accounts receivable

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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