Question 1

Which of these items is the source document for the purchase journal?

Accepted Answer

A)  Purchase order 
B)  Invoice from supplier 
C)  Duplicate of invoice sent to customer 
D)  Copy of receipt sent to customer 
A)  Purchase order 
B)  Invoice from supplier 
C)  Duplicate of invoice sent to customer 
D)  Copy of receipt sent to customer B

Question 2

In posting the total of the cash column in a cash receipts journal, the entry that would be made is:

Accepted Answer

A)  Dr Cash. 
B)  Cr Cash. 
C)  Dr each of the specific accounts that comprise the total. 
D)  Cr each of the specific accounts that comprise the total. 
A)  Dr Cash. 
B)  Cr Cash. 
C)  Dr each of the specific accounts that comprise the total. 
D)  Cr each of the specific accounts that comprise the total. A

Question 3

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2015 debtors owed $7000 and creditors were owed $4000. Transactions for year ended 30 June 2016 were as follows:
 
What was the balance of the debtors control account at 30 June 2016?

Accepted Answer

A)  $8300 
B)  $9700 
C)  $21 300 
D)  $9000 
A)  $8300 
B)  $9700 
C)  $21 300 
D)  $9000 A

Question 4

A credit balance in a customer's account in the debtors' ledger could be due to:

Accepted Answer

A)  increased credit sales in the period. 
B)  an overpayment by the customer. 
C)  a bad debt. 
D)  return of goods purchased by the customer. 
A)  increased credit sales in the period. 
B)  an overpayment by the customer. 
C)  a bad debt. 
D)  return of goods purchased by the customer.

Question 5

Management uses the percentage-of-sales approach method to calculate the allowance for doubtful debts. Management calculated the allowance for doubtful debts on the basis of 2 per cent of sales. However, by year-end it was aware that the rate should have really been 3 per cent of sales. Management does not adjust the allowance for doubtful debts at year-end. As a result:

Accepted Answer

A)  assets are overstated, and net profit is overstated. 
B)  assets are overstated, and net profit is understated. 
C)  assets are understated, and net profit is overstated. 
D)  assets are understated, and net profit is understated. 
A)  assets are overstated, and net profit is overstated. 
B)  assets are overstated, and net profit is understated. 
C)  assets are understated, and net profit is overstated. 
D)  assets are understated, and net profit is understated.

Question 6

'Accounts receivable' is a credit column in the:

Accepted Answer

A)  sales journal. 
B)  purchase journal. 
C)  cash receipts journal. 
D)  cash payments journal. 
A)  sales journal. 
B)  purchase journal. 
C)  cash receipts journal. 
D)  cash payments journal.

Question 7

The trial balance of Allen Ltd at balance date showed a credit balance of $80 000 in the Allowance for doubtful debts account. Although the account of a customer standing at $16 000 had been determined to be uncollectable, this had not been written off. What was the effect of this neglect on the year-end balance sheet?

Accepted Answer

A)  There was an understatement of total liabilities. 
B)  There was an overstatement of total assets and shareholders' equity. 
C)  There was an understatement of total assets and shareholders' equity. 
D)  There was no effect on total liabilities, assets or shareholders' equity. 
A)  There was an understatement of total liabilities. 
B)  There was an overstatement of total assets and shareholders' equity. 
C)  There was an understatement of total assets and shareholders' equity. 
D)  There was no effect on total liabilities, assets or shareholders' equity.

Question 8

Plume Ltd maintains subsidiary ledgers for debtors and creditors. At 1 January 2016, debtors owed $3000 and creditors were owed $5600. Transactions for the month of January 2016 were as follows:
 
What was the balance of the debtors control account at 31 January 2016?

Accepted Answer

A)  $8400 
B)  $4100 
C)  $3900 
D)  $4400 
A)  $8400 
B)  $4100 
C)  $3900 
D)  $4400

Question 9

At 30 June 2016 Shifty Ltd had a balance of Accounts receivable of $90 000 and an Allowance for doubtful debts of $4000. It was decided to write off the debt of Wriggler, totalling $2500, as irrecoverable. It was further decided that the Allowance for doubtful debts should stand at 5 per cent of Accounts receivable. What was the journal entry needed to write off the debt of Wriggler as irrecoverable?

Accepted Answer

A)  Dr Bad debts expense $2500
Cr Accounts receivable $2500 
B)  Dr Bad debts expense $2500
Cr Allowance for doubtful debts $2500 
C)  Dr Allowance for doubtful debts $2500
Cr Accounts receivable $2500 
D)  None of the answers provided 
A)  Dr Bad debts expense $2500
Cr Accounts receivable $2500 
B)  Dr Bad debts expense $2500
Cr Allowance for doubtful debts $2500 
C)  Dr Allowance for doubtful debts $2500
Cr Accounts receivable $2500 
D)  None of the answers provided

Question 10

Management uses the ageing approach method to calculate the allowance for doubtful debts. An analysis of the ageing of accounts receivable shows a substantial increase in the accounts receivable in the over-90-days category. Management does not adjust the allowance for doubtful debts at year-end. As a result:

Accepted Answer

A)  assets are overstated, and net income is overstated. 
B)  assets are overstated, and net income is understated. 
C)  assets are understated, and net income is overstated. 
D)  assets are understated, and net income is understated. 
A)  assets are overstated, and net income is overstated. 
B)  assets are overstated, and net income is understated. 
C)  assets are understated, and net income is overstated. 
D)  assets are understated, and net income is understated.

Question 11

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2015 debtors owed $7000 and creditors were owed $4000. Transactions for year ended 30 June 2016 were as follows:
 
What was the balance of the creditors control account at 30 June 2016?

Accepted Answer

A)  $11 500 
B)  $6500 
C)  $5500 
D)  $6000 
A)  $11 500 
B)  $6500 
C)  $5500 
D)  $6000

Question 12

Blue Shoes Ltd has gone bankrupt and will not pay $10 000 to XYZ. XYZ has accounts receivable of $12 million and an allowance for doubtful debts of $500 000. XYZ does not adjust its accounts for the $10 000 that will not be paid by Blue Shoes Ltd. Which of the following remarks is true about the financial statements?

Accepted Answer

A)  There is an understatement of net profit. 
B)  There is an overstatement of total assets and net profit. 
C)  There is an understatement of total assets and net profit. 
D)  There is no effect on total liabilities, assets or net profit. 
A)  There is an understatement of net profit. 
B)  There is an overstatement of total assets and net profit. 
C)  There is an understatement of total assets and net profit. 
D)  There is no effect on total liabilities, assets or net profit.

Question 13

The balance in the Allowance for doubtful debts account represents:

Accepted Answer

A)  bad debts written off in the current accounting period. 
B)  liquid funds available to meet losses arising from customers becoming insolvent. 
C)  an amount that is deducted from the Accounts receivable account to reduce it to the estimated realisable value. 
D)  bad debts written off as Accounts receivable considered uncollectable. 
A)  bad debts written off in the current accounting period. 
B)  liquid funds available to meet losses arising from customers becoming insolvent. 
C)  an amount that is deducted from the Accounts receivable account to reduce it to the estimated realisable value. 
D)  bad debts written off as Accounts receivable considered uncollectable.

Question 14

Plume Ltd maintains subsidiary ledgers for debtors and creditors. At 1 January 2016, debtors owed $3000 and creditors were owed $5600. Transactions for the month of January 2016 were as follows:
 
What was the balance of the creditors control account at 31 January 2016?

Accepted Answer

A)  $5800 
B)  $4600 
C)  $3800 
D)  $7400 
A)  $5800 
B)  $4600 
C)  $3800 
D)  $7400

Question 15

The general ledger account representing the subsidiary ledger is known as a control account because:

Accepted Answer

A)  inclusion of both control accounts and subsidiary ledger accounts in the general ledger improves control. 
B)  the accuracy of the detailed accounts in the subsidiary ledger can be checked against the aggregate data and the balance contained in it. 
C)  subsidiary ledgers eliminate the need to record totals in the general ledger. 
D)  it includes all transactions in the subsidiary ledger. 
A)  inclusion of both control accounts and subsidiary ledger accounts in the general ledger improves control. 
B)  the accuracy of the detailed accounts in the subsidiary ledger can be checked against the aggregate data and the balance contained in it. 
C)  subsidiary ledgers eliminate the need to record totals in the general ledger. 
D)  it includes all transactions in the subsidiary ledger.

Question 16

Griffin Ltd made a sale of $800 to a customer on terms of 2/10, n/30 on 1 July. The account was paid on 8 July. Griffin Ltd would make which of the following postings to the ledger on 8 July?

Accepted Answer

A)  Dr Discount expense $16 
B)  Dr Accounts receivable $800 
C)  Cr Discount revenue $16 
D)  Cr Discount expense $16 
A)  Dr Discount expense $16 
B)  Dr Accounts receivable $800 
C)  Cr Discount revenue $16 
D)  Cr Discount expense $16

Question 17

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2015, debtors owed $4000, and $7200 was owing to creditors. Transactions for year ended 30 June 2016 were as follows:
 
What was the balance of the debtors control account at 30 June 2016?

Accepted Answer

A)  $3000 
B)  $7000 
C)  $10 000 
D)  $14 000 
A)  $3000 
B)  $7000 
C)  $10 000 
D)  $14 000

Question 18

S Ltd has the following balance sheet information on 28 February 2016:
$
 
On 28 February 2016, the company receives notification from R Ltd that it has filed for bankruptcy. The controller of S Ltd decides to write off R Ltd's account for $10 600. Which of the following statements is true?

Accepted Answer

A)  Net income and net accounts receivable will decrease. 
B)  Net income will decrease but no change will occur in net accounts receivable. 
C)  No change will occur in net income but net accounts receivable will decrease. 
D)  Neither net income or net accounts receivable will decrease. 
A)  Net income and net accounts receivable will decrease. 
B)  Net income will decrease but no change will occur in net accounts receivable. 
C)  No change will occur in net income but net accounts receivable will decrease. 
D)  Neither net income or net accounts receivable will decrease.

Question 19

The trial balance of Anderson Ltd included the following balances:
 
On 1 October 2016, an account for $1600 was determined to be uncollectable. The journal entry to be made on that date would include a debit to:

Accepted Answer

A)  Bad debts expense. 
B)  Accounts receivable. 
C)  Allowance for doubtful debts. 
D)  none of the answers provided. 
A)  Bad debts expense. 
B)  Accounts receivable. 
C)  Allowance for doubtful debts. 
D)  none of the answers provided.

Question 20

K Ltd reported beginning and ending balances in the Allowance for doubtful debts account of $723 000 and $904 000 respectively. It also reported that write-offs of bad debts amounted to $648 000. Assuming that no previously written-off accounts had been collected, what amount did K Ltd record as bad debt expense for the period?

Accepted Answer

A)  $467 000 
B)  $648 000 
C)  $829 000 
D)  $904 000 
A)  $467 000 
B)  $648 000 
C)  $829 000 
D)  $904 000

Which of these items is the source document for the purchase journal?

In posting the total of the cash column in a cash receipts journal, the entry that would be made is:

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2015 debtors owed $7000 and creditors were owed $4000. Transactions for year ended 30 June 2016 were as follows: What was the balance of the debtors control account at 30 June 2016?

A credit balance in a customer's account in the debtors' ledger could be due to:

'Accounts receivable' is a credit column in the:

Plume Ltd maintains subsidiary ledgers for debtors and creditors. At 1 January 2016, debtors owed $3000 and creditors were owed $5600. Transactions for the month of January 2016 were as follows: What was the balance of the debtors control account at 31 January 2016?

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2015 debtors owed $7000 and creditors were owed $4000. Transactions for year ended 30 June 2016 were as follows: What was the balance of the creditors control account at 30 June 2016?

The balance in the Allowance for doubtful debts account represents:

Plume Ltd maintains subsidiary ledgers for debtors and creditors. At 1 January 2016, debtors owed $3000 and creditors were owed $5600. Transactions for the month of January 2016 were as follows: What was the balance of the creditors control account at 31 January 2016?

The general ledger account representing the subsidiary ledger is known as a control account because:

Griffin Ltd made a sale of $800 to a customer on terms of 2/10, n/30 on 1 July. The account was paid on 8 July. Griffin Ltd would make which of the following postings to the ledger on 8 July?

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2015, debtors owed $4000, and $7200 was owing to creditors. Transactions for year ended 30 June 2016 were as follows: What was the balance of the debtors control account at 30 June 2016?

S Ltd has the following balance sheet information on 28 February 2016: $ On 28 February 2016, the company receives notification from R Ltd that it has filed for bankruptcy. The controller of S Ltd decides to write off R Ltd's account for $10 600. Which of the following statements is true?

The trial balance of Anderson Ltd included the following balances: On 1 October 2016, an account for $1600 was determined to be uncollectable. The journal entry to be made on that date would include a debit to:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 8: Accounts Receivable and Further Record-Keeping

Which of these items is the source document for the purchase journal?

In posting the total of the cash column in a cash receipts journal, the entry that would be made is:

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2015 debtors owed $7000 and creditors were owed $4000. Transactions for year ended 30 June 2016 were as follows: What was the balance of the debtors control account at 30 June 2016?

A credit balance in a customer's account in the debtors' ledger could be due to:

'Accounts receivable' is a credit column in the:

Plume Ltd maintains subsidiary ledgers for debtors and creditors. At 1 January 2016, debtors owed $3000 and creditors were owed $5600. Transactions for the month of January 2016 were as follows: What was the balance of the debtors control account at 31 January 2016?

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2015 debtors owed $7000 and creditors were owed $4000. Transactions for year ended 30 June 2016 were as follows: What was the balance of the creditors control account at 30 June 2016?

The balance in the Allowance for doubtful debts account represents:

Plume Ltd maintains subsidiary ledgers for debtors and creditors. At 1 January 2016, debtors owed $3000 and creditors were owed $5600. Transactions for the month of January 2016 were as follows: What was the balance of the creditors control account at 31 January 2016?

The general ledger account representing the subsidiary ledger is known as a control account because:

Griffin Ltd made a sale of $800 to a customer on terms of 2/10, n/30 on 1 July. The account was paid on 8 July. Griffin Ltd would make which of the following postings to the ledger on 8 July?

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2015, debtors owed $4000, and $7200 was owing to creditors. Transactions for year ended 30 June 2016 were as follows: What was the balance of the debtors control account at 30 June 2016?

S Ltd has the following balance sheet information on 28 February 2016: $ On 28 February 2016, the company receives notification from R Ltd that it has filed for bankruptcy. The controller of S Ltd decides to write off R Ltd's account for $10 600. Which of the following statements is true?

The trial balance of Anderson Ltd included the following balances: On 1 October 2016, an account for $1600 was determined to be uncollectable. The journal entry to be made on that date would include a debit to:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters