Question 1

The Allowance for doubtful debts account would appear in the balance sheet under:

Accepted Answer

A)  current assets. 
B)  current liabilities. 
C)  shareholders' equity. 
D)  property, plant and equipment. 
A)  current assets. 
B)  current liabilities. 
C)  shareholders' equity. 
D)  property, plant and equipment. A

Question 2

S Ltd has the following balance sheet information on 28 February 2019:   On 28 February 2019, 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 nor 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 nor net accounts receivable will decrease. D

Question 3

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2018 debtors owed $7 000 and creditors were owed $4 000. Transactions for year ended 30 June 2019 were as follows:   What was the balance of the creditors control account at 30 June 2019?

Accepted Answer

A)  $11 500 
B)  $6 500 
C)  $6 000 
D)  $5 500 
A)  $11 500 
B)  $6 500 
C)  $6 000 
D)  $5 500 D

Question 4

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 5

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

Question 6

The trial balance of Anderson Ltd included the following balances:   On 1 October 2019, an account for $1 600 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 above. 
A)  Bad debts expense. 
B)  Accounts receivable. 
C)  Allowance for doubtful debts. 
D)  None of the above.

Question 7

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2018 debtors owed $7 000 and creditors were owed $4 000. Transactions for year ended 30 June 2019 were as follows:   What was the balance of the debtors' control account at 30 June 2019?

Accepted Answer

A)  $8 300 
B)  $9 000 
C)  $9 700 
D)  $21 300 
A)  $8 300 
B)  $9 000 
C)  $9 700 
D)  $21 300

Question 8

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2018, debtors owed $4 000, and creditors were owed $7 200. Transactions for year ended 30 June 2019 were as follows:   What was the balance of the creditors' control account at 30 June 2019?

Accepted Answer

A)  $5 200 
B)  $5 500 
C)  $6 000 
D)  $9 200 
A)  $5 200 
B)  $5 500 
C)  $6 000 
D)  $9 200

Question 9

Which of the following is NOT a purpose served by special journals?

Accepted Answer

A)  They reduce the number of postings to the general ledger. 
B)  They eliminate the general journal. 
C)  They provide details of sales transactions together. 
D)  They make it easier to find errors. 
A)  They reduce the number of postings to the general ledger. 
B)  They eliminate the general journal. 
C)  They provide details of sales transactions together. 
D)  They make it easier to find errors.

Question 10

At year end Dodgy Ltd had a balance in Accounts receivable of $40 000 and an Allowance for doubtful debts of $2 000. It was decided to write off as irrecoverable the debt of Houdini Ltd totalling $3 500. It was further decided that the Allowance for doubtful debts should stand at 10 per cent of Accounts receivable. What was the journal entry needed to bring the Allowance for doubtful debts to the required level after writing off the debt of Houdini Ltd?

Accepted Answer

A)  DR Bad debts expense $4 000
CR Allowance for doubtful debts $4 000 
B)  DR Bad debts expense $5 150
CR Allowance for doubtful debts $5 150 
C)  DR Bad debts expense $5 500
CR Allowance for doubtful debts $5 500 
D)  DR Allowance for doubtful debts $3 500
CR Accounts receivable $3 500 
A)  DR Bad debts expense $4 000
CR Allowance for doubtful debts $4 000 
B)  DR Bad debts expense $5 150
CR Allowance for doubtful debts $5 150 
C)  DR Bad debts expense $5 500
CR Allowance for doubtful debts $5 500 
D)  DR Allowance for doubtful debts $3 500
CR Accounts receivable $3 500

Question 11

Which of these items is the source document for the sales 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

Question 12

The trial balance of Wentworth Ltd included the following balances:   It was decided to increase the allowance account by $3 000. 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 above. 
A)  Bad debts expense. 
B)  Accounts receivable. 
C)  Allowance for doubtful debts. 
D)  None of the above.

Question 13

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 14

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 15

At 30 June 2019 Shifty Ltd had a balance of Accounts receivable of $90 000 and an Allowance for doubtful debts of $4 000. 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 adjust the allowance account?

Accepted Answer

A)  DR Bad debts expense $500
CR Accounts receivable $500 
B)  DR Bad debts expense $500
CR Allowance for doubtful debts $500 
C)  DR Allowance for doubtful debts $500
CR Accounts receivable $500 
D)  None of the above 
A)  DR Bad debts expense $500
CR Accounts receivable $500 
B)  DR Bad debts expense $500
CR Allowance for doubtful debts $500 
C)  DR Allowance for doubtful debts $500
CR Accounts receivable $500 
D)  None of the above

Question 16

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2018, debtors owed $4 000, and creditors were owed $7 200. Transactions for year ended 30 June 2019 were as follows:   What was the balance of the debtors' control account at 30 June 2019?

Accepted Answer

A)  $3 000 
B)  $7 000 
C)  $10 000 
D)  $14 000 
A)  $3 000 
B)  $7 000 
C)  $10 000 
D)  $14 000

Question 17

At year end Dodgy Ltd had a balance in Accounts receivable of $40 000 and an Allowance for doubtful debts of $2 000. It was decided to write off as irrecoverable the debt of Houdini Ltd totalling $3 500. It was further decided that the Allowance for doubtful debts should stand at 10 per cent of Accounts receivable. What was the journal entry needed to write off the debt of Houdini Ltd as irrecoverable?

Accepted Answer

A)  DR Allowance for doubtful debts $3 500
CR Accounts receivable $3 500 
B)  DR Bad debts expense $3 500
CR Allowance for doubtful debts $3 500 
C)  DR Bad debts expense $3 500
CR Accounts receivable $3 500 
D)  None of the above 
A)  DR Allowance for doubtful debts $3 500
CR Accounts receivable $3 500 
B)  DR Bad debts expense $3 500
CR Allowance for doubtful debts $3 500 
C)  DR Bad debts expense $3 500
CR Accounts receivable $3 500 
D)  None of the above

Question 18

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 19

'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.

The Allowance for doubtful debts account would appear in the balance sheet under:

S Ltd has the following balance sheet information on 28 February 2019: On 28 February 2019, 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?

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2018 debtors owed $7 000 and creditors were owed $4 000. Transactions for year ended 30 June 2019 were as follows: What was the balance of the creditors control account at 30 June 2019?

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

The trial balance of Anderson Ltd included the following balances: On 1 October 2019, an account for $1 600 was determined to be uncollectable. The journal entry to be made on that date would include a debit to:

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2018 debtors owed $7 000 and creditors were owed $4 000. Transactions for year ended 30 June 2019 were as follows: What was the balance of the debtors' control account at 30 June 2019?

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2018, debtors owed $4 000, and creditors were owed $7 200. Transactions for year ended 30 June 2019 were as follows: What was the balance of the creditors' control account at 30 June 2019?

Which of the following is NOT a purpose served by special journals?

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

The trial balance of Wentworth Ltd included the following balances: It was decided to increase the allowance account by $3 000. The journal entry to be made on that date would include a debit to:

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?

At 30 June 2019 Shifty Ltd had a balance of Accounts receivable of $90 000 and an Allowance for doubtful debts of $4 000. 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 adjust the allowance account?

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2018, debtors owed $4 000, and creditors were owed $7 200. Transactions for year ended 30 June 2019 were as follows: What was the balance of the debtors' control account at 30 June 2019?

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

'Accounts receivable' is a credit column in the:

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

Investments and Shareholders Equity

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

The Allowance for doubtful debts account would appear in the balance sheet under:

S Ltd has the following balance sheet information on 28 February 2019: On 28 February 2019, 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?

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2018 debtors owed $7 000 and creditors were owed $4 000. Transactions for year ended 30 June 2019 were as follows: What was the balance of the creditors control account at 30 June 2019?

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

The trial balance of Anderson Ltd included the following balances: On 1 October 2019, an account for $1 600 was determined to be uncollectable. The journal entry to be made on that date would include a debit to:

Wrigley Ltd uses subsidiary ledgers for debtors and creditors. At 1 July 2018 debtors owed $7 000 and creditors were owed $4 000. Transactions for year ended 30 June 2019 were as follows: What was the balance of the debtors' control account at 30 June 2019?

Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2018, debtors owed $4 000, and creditors were owed $7 200. Transactions for year ended 30 June 2019 were as follows: What was the balance of the creditors' control account at 30 June 2019?

Which of the following is NOT a purpose served by special journals?

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

The trial balance of Wentworth Ltd included the following balances: It was decided to increase the allowance account by $3 000. The journal entry to be made on that date would include a debit to:

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 2018, debtors owed $4 000, and creditors were owed $7 200. Transactions for year ended 30 June 2019 were as follows: What was the balance of the debtors' control account at 30 June 2019?

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

'Accounts receivable' is a credit column in the:

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

Investments and Shareholders Equity

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters