Question 1

When companies are using the allowance for doubtful accounts, they are using the allowance method.

Accepted Answer

A) True 
 B)False  True

Question 2

Use the following information for questions 82-83.  
-The net carrying value of accounts receivable before the bad debt expense is recognized is

Accepted Answer

A)  $156,500. 
B)  $164,200. 
C)  $168,000. 
D)  $171,800. 
A)  $156,500. 
B)  $164,200. 
C)  $168,000. 
D)  $171,800. B

Question 3

Foreign currency held by a Canadian corporation is disclosed on the financial statements using the exchange rate that existed on the date of the

Accepted Answer

A)  financial statements. 
B)  purchase of the currency. 
C)  change in the exchange rate. 
D)  intended use of the currency. 
A)  financial statements. 
B)  purchase of the currency. 
C)  change in the exchange rate. 
D)  intended use of the currency. A

Question 4

Which one of the following calculations is correct for the percentage of credit sales method?

Accepted Answer

A)  Bad debt expense = Sales x historic % 
B)  Bad debt expense = Credit sales x historic % 
C)  Bad debt expense x historic % = Allowance for doubtful accounts 
D)  Bad debt expense = Accounts receivable x historic % 
A)  Bad debt expense = Sales x historic % 
B)  Bad debt expense = Credit sales x historic % 
C)  Bad debt expense x historic % = Allowance for doubtful accounts 
D)  Bad debt expense = Accounts receivable x historic %

Question 5

Which of the following entries would be the appropriate entry for writing off an uncollectible account receivable under the allowance method?

Accepted Answer

A)  Dr. Bad Debt Expense Cr. Accounts Receivable 
B)  Dr. Sales Cr. Accounts Receivable 
C)  Dr. Accounts Receivable Cr. Bad Debt Expense 
D)  Dr. Allowance for Doubtful Accounts Cr. Accounts Receivable 
A)  Dr. Bad Debt Expense Cr. Accounts Receivable 
B)  Dr. Sales Cr. Accounts Receivable 
C)  Dr. Accounts Receivable Cr. Bad Debt Expense 
D)  Dr. Allowance for Doubtful Accounts Cr. Accounts Receivable

Question 6

The likelihood a customer will default on payments depends on the customer's creditworthiness.

Accepted Answer

A) True 
 B)False

Question 7

Cash and accounts receivable are a company's least liquid assets.

Accepted Answer

A) True 
 B)False

Question 8

If bad debts are NOT significant which method is best to use?

Accepted Answer

A)  direct write off method 
B)  percentage of credit sales method 
C)  allowance method 
D)  aging of accounts receivable method 
A)  direct write off method 
B)  percentage of credit sales method 
C)  allowance method 
D)  aging of accounts receivable method

Question 9

The quick ratio is a less stringent measure of liquidity than the current ratio.

Accepted Answer

A) True 
 B)False

Question 10

Writing cheques instead of using cash would be a proper internal control procedure.

Accepted Answer

A) True 
 B)False

Question 11

When selling on account, companies incur costs such as

Accepted Answer

A)  wages for credit granting function. 
B)  rent expense. 
C)  bad debt revenue. 
D)  sales discounts. 
A)  wages for credit granting function. 
B)  rent expense. 
C)  bad debt revenue. 
D)  sales discounts.

Question 12

Collusion is where two or more employees work together to commit the theft and conceal it.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT a reconciling item when preparing a bank reconciliation?

Accepted Answer

A)  bank service charges not recorded by the corporation 
B)  outstanding cheques 
C)  interest collected on a note receivable by the bank and recorded by the corporation 
D)  outstanding deposits 
A)  bank service charges not recorded by the corporation 
B)  outstanding cheques 
C)  interest collected on a note receivable by the bank and recorded by the corporation 
D)  outstanding deposits

Question 14

Opportunities for employee fraud arises when

Accepted Answer

A)  an employee is in charge of purchasing, inspecting, and recording assets. 
B)  employees verify each other's work. 
C)  an employee has clear documentation procedures. 
D)  an employee is responsible for making the daily cash bank deposit. 
A)  an employee is in charge of purchasing, inspecting, and recording assets. 
B)  employees verify each other's work. 
C)  an employee has clear documentation procedures. 
D)  an employee is responsible for making the daily cash bank deposit.

Question 15

Selling on account reduces overall sales.

Accepted Answer

A) True 
 B)False

Question 16

Separation of duties means

Accepted Answer

A)  one person receives cash and one person signs cheques. 
B)  one person signs cheques and orders goods. 
C)  one person enters transactions and signs cheques. 
D)  one person receives cash and reconciles the bank. 
A)  one person receives cash and one person signs cheques. 
B)  one person signs cheques and orders goods. 
C)  one person enters transactions and signs cheques. 
D)  one person receives cash and reconciles the bank.

Question 17

Use the following information for questions 100-103.
Orville Enterprise Ltd. revealed the following information for the years ended December 31, 2014 and 2015:  
-Orville Enterprise's quick ratio for 2015 is

Accepted Answer

A)  1.59:1. 
B)  1.39:1. 
C)  0.88:1. 
D)  0.19:1. 
A)  1.59:1. 
B)  1.39:1. 
C)  0.88:1. 
D)  0.19:1.

Question 18

Bank reconciliations are NOT

Accepted Answer

A)  an important cash control. 
B)  to be completed by all companies. 
C)  sufficient to determine fraud. 
D)  useful. 
A)  an important cash control. 
B)  to be completed by all companies. 
C)  sufficient to determine fraud. 
D)  useful.

Question 19

Use the following information for questions 82-83.  
-The bad debt expense for 2015 was

Accepted Answer

A)  $10,800. 
B)  $11,500. 
C)  $14,600. 
D)  $3,360. 
A)  $10,800. 
B)  $11,500. 
C)  $14,600. 
D)  $3,360.

Question 20

The direct writeoff method recognizes bad debts only when they know the customer is NOT going to pay.

Accepted Answer

A) True 
 B)False

When companies are using the allowance for doubtful accounts, they are using the allowance method.

Use the following information for questions 82-83. -The net carrying value of accounts receivable before the bad debt expense is recognized is

Foreign currency held by a Canadian corporation is disclosed on the financial statements using the exchange rate that existed on the date of the

Which one of the following calculations is correct for the percentage of credit sales method?

Which of the following entries would be the appropriate entry for writing off an uncollectible account receivable under the allowance method?

The likelihood a customer will default on payments depends on the customer's creditworthiness.

Cash and accounts receivable are a company's least liquid assets.

If bad debts are NOT significant which method is best to use?

The quick ratio is a less stringent measure of liquidity than the current ratio.

Writing cheques instead of using cash would be a proper internal control procedure.

When selling on account, companies incur costs such as

Collusion is where two or more employees work together to commit the theft and conceal it.

Which of the following is NOT a reconciling item when preparing a bank reconciliation?

Opportunities for employee fraud arises when

Selling on account reduces overall sales.

Separation of duties means

Use the following information for questions 100-103. Orville Enterprise Ltd. revealed the following information for the years ended December 31, 2014 and 2015: -Orville Enterprise's quick ratio for 2015 is

Bank reconciliations are NOT

Use the following information for questions 82-83. -The bad debt expense for 2015 was

The direct writeoff method recognizes bad debts only when they know the customer is NOT going to pay.

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

Cash and Accounts

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters

Exam 6: The Statement of Cash Flows

When companies are using the allowance for doubtful accounts, they are using the allowance method.

Use the following information for questions 82-83. -The net carrying value of accounts receivable before the bad debt expense is recognized is

Foreign currency held by a Canadian corporation is disclosed on the financial statements using the exchange rate that existed on the date of the

Which one of the following calculations is correct for the percentage of credit sales method?

Which of the following entries would be the appropriate entry for writing off an uncollectible account receivable under the allowance method?

The likelihood a customer will default on payments depends on the customer's creditworthiness.

Cash and accounts receivable are a company's least liquid assets.

If bad debts are NOT significant which method is best to use?

The quick ratio is a less stringent measure of liquidity than the current ratio.

Writing cheques instead of using cash would be a proper internal control procedure.

When selling on account, companies incur costs such as

Collusion is where two or more employees work together to commit the theft and conceal it.

Which of the following is NOT a reconciling item when preparing a bank reconciliation?

Opportunities for employee fraud arises when

Selling on account reduces overall sales.

Separation of duties means

Use the following information for questions 100-103. Orville Enterprise Ltd. revealed the following information for the years ended December 31, 2014 and 2015: -Orville Enterprise's quick ratio for 2015 is

Bank reconciliations are NOT

Use the following information for questions 82-83. -The bad debt expense for 2015 was

The direct writeoff method recognizes bad debts only when they know the customer is NOT going to pay.

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

Cash and Accounts

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters