Question 1

When preparing the monthly bank reconciliation,the accountant for Tiffany Toys noted that a cheque received from a customer last month for $89 was marked NSF and returned along with the bank statement.In reconciling the bank balance with the company's cash account,how should the $89 be recorded?

Accepted Answer

A) deducted from the bank balance. 
B) added to the bank balance. 
C) deducted from the company's cash balance. 
D) added to the company's cash balance.

Question 2

Following the completion of an aging analysis,the accountant for Liberty estimated that $1,100 of the receivables would be uncollectible.What would the net realizable year-end balance sheet be?

Accepted Answer

A) $28,800. 
B) $28,900. 
C) $29,900. 
D) $30,100.

Question 3

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 15. 
C) May 28. 
D) May 30.

Question 4

Which of the following is NOT a control activity over cash?

Accepted Answer

A) The same individual receives the cash and pays the bills. 
B) Surprise audits of cash on hand should be made occasionally. 
C) Access to cash is limited. 
D) Only designated personnel are authorized to handle cash.

Question 5

To aid internal control,the individual authorized to sign cheques should be which of the following?

Accepted Answer

A) supervisor of receiving. 
B) accounts payable bookkeeper. 
C) treasurer. 
D) purchasing agent.

Question 6

The trade receivables turnover ratio reflects how many times average trade receivables were recorded and collected during the period.

Accepted Answer

A) True 
 B)False

Question 7

On July 10,20B,Mighty Company sold merchandise at an invoice price of $5,000 with terms of 3/10,n/30.Give the journal entries required below by indicating the account code of the appropriate account for each debit and credit and the amounts involved.
A Cash
B Trade Receivables
C Sales Revenue
D Sales Discounts

Accepted Answer

The answer of On July 10,20B,Mighty Company sold merchandise at...

Question 8

In order to achieve effective control of cash,it is important that one person assume the jobs for handling cash and accounting for cash.

Accepted Answer

A) True 
 B)False

Question 9

When a particular trade receivable is determined to be uncollectible,the entry to write off the account requires a debit to Trade Receivables.

Accepted Answer

A) True 
 B)False

Question 10

The allowance for doubtful accounts normally has a debit balance after the year-end adjustment.

Accepted Answer

A) True 
 B)False

Question 11

Tweed Feed & Seed recorded sales revenue during the year of $120,000,of which $60,000 was on credit.The company has experienced an average loss rate of 3% of credit sales.Give the adjusting journal entry at the end of the year to record bad debt expense.

Accepted Answer

The answer of Tweed Feed & Seed recorded sales revenue...

Question 12

Jackson Company uses the allowance method to account for bad debts.During 20D,a customer became bankrupt and a receivable of $5,000 was deemed uncollectible.What is the entry to record the uncollectible amount?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D

Question 13

Which of the following is true about bad debt expense?

Accepted Answer

A) it should appear on the statement of financial position as a contraasset. 
B) it should appear on the income statement as a contra revenue. 
C) it should appear on the income statement as part of selling expenses. 
D) it should not appear in the financial statements.

Question 14

Finn Company has just received its June 30 bank statement from City Bank.The bank statement and the cash account,summarized below,are to be reconciled for the month of June.
Balance,June 1 $6,800
Required:
a.Prepare a bank reconciliation using the following format:
b.Give the journal entries that should be made in the accounts of Finn Company as a result of the above bank reconciliation.

Accepted Answer

The answer of Finn Company has just received its June...

Question 15

Central Company sold goods for $5,000 to Western Company on March 12 on credit.Terms of the sale were 2/10,n/30.At the time of the sale,Central recorded the transaction by debiting trade receivables for $5,000 and crediting sales revenue for $5,000.Western paid the balance due,less the discount,on March 21.To record the March 21 transaction,Central would debit which of the following?

Accepted Answer

A) Cash for $4,900. 
B) Trade receivables for $4,900. 
C) Cash for $5,000. 
D) Trade receivables for $5,000.

Question 16

Many merchants accept credit cards for the sale of goods because it can increase the number of customers.

Accepted Answer

A) True 
 B)False

Question 17

Managers,analysts,and creditors use this gross profit percentage to assess the effectiveness of the company's product development,marketing,and production strategy.

Accepted Answer

A) True 
 B)False

Question 18

Following the completion of an aging analysis,the accountant for Liberty estimated that $1,100 of the receivables would be uncollectible.The year-end adjusting entry to record bad debt expense would include which of the following?

Accepted Answer

A) credit to allowance for doubtful accounts of $1,100. 
B) credit to allowance for doubtful accounts of $1,200. 
C) debit to bad debt expense of $1,000. 
D) debit to bad debt expense of $900.

Question 19

An entry to bad debt expense and allowance for doubtful accounts is generally made as an adjusting entry at year-end while actual losses may be written off throughout the year.

Accepted Answer

A) True 
 B)False

Question 20

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

Accepted Answer

A) Cheque for $43 recorded as $34 by the company 
B) A returned $200 cheque recorded by the bank as $20 
C) Cheque for $35 recorded as $53 by the company 
D) Deposit of $500 recorded by the bank as $50

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

When preparing the monthly bank reconciliation,the accountant for Tiffany Toys noted that a cheque received from a customer last month for $89 was marked NSF and returned along with the bank statement.In reconciling the bank balance with the company's cash account,how should the $89 be recorded?

Following the completion of an aging analysis,the accountant for Liberty estimated that $1,100 of the receivables would be uncollectible.What would the net realizable year-end balance sheet be?

Which of the following is NOT a control activity over cash?

To aid internal control,the individual authorized to sign cheques should be which of the following?

The trade receivables turnover ratio reflects how many times average trade receivables were recorded and collected during the period.

In order to achieve effective control of cash,it is important that one person assume the jobs for handling cash and accounting for cash.

When a particular trade receivable is determined to be uncollectible,the entry to write off the account requires a debit to Trade Receivables.

The allowance for doubtful accounts normally has a debit balance after the year-end adjustment.

Tweed Feed & Seed recorded sales revenue during the year of $120,000,of which $60,000 was on credit.The company has experienced an average loss rate of 3% of credit sales.Give the adjusting journal entry at the end of the year to record bad debt expense.

Jackson Company uses the allowance method to account for bad debts.During 20D,a customer became bankrupt and a receivable of $5,000 was deemed uncollectible.What is the entry to record the uncollectible amount?

Which of the following is true about bad debt expense?

Many merchants accept credit cards for the sale of goods because it can increase the number of customers.

Managers,analysts,and creditors use this gross profit percentage to assess the effectiveness of the company's product development,marketing,and production strategy.

Following the completion of an aging analysis,the accountant for Liberty estimated that $1,100 of the receivables would be uncollectible.The year-end adjusting entry to record bad debt expense would include which of the following?

An entry to bad debt expense and allowance for doubtful accounts is generally made as an adjusting entry at year-end while actual losses may be written off throughout the year.

For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?