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| 1 | |
In the balance sheet, financial assets are shown at which value? |
| | A) | Historical cost |
| | B) | Current value |
| | C) | Cash equivalent |
| | D) | None of the above |
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| 2 | |
How is interest earned on cash equivalents shown in the statement of cash flows? |
| | A) | As an operating activity |
| | B) | As an investing activity |
| | C) | As a financing activity |
| | D) | As a noncash investing and financing activity |
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| 3 | |
Which of the following would be considered a major step in achieving internal control over cash transactions? |
| | A) | Separate the function of handling cash from the maintenance of accounting records. |
| | B) | Require that all cash receipts be deposited daily. |
| | C) | Make all payments by check (with the exception of the Petty Cash fund). |
| | D) | All of the above. |
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| 4 | |
The proper treatment of outstanding checks is to report them in the bank reconciliation as which of the following? |
| | A) | An addition to the balance per bank statement |
| | B) | A deduction from the balance per bank statement |
| | C) | An addition to the balance per depositor's records |
| | D) | A deduction from the balance per depositor's records |
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| 5 | |
A company purchased store supplies with payment by check. The bookkeeper recorded the payment as $1,340.56. The bank recorded the check at its correct amount of $3,140.56. Which of the following will occur, if no adjusting entries are made and the error is not detected through the bank reconciliation? |
| | A) | The trial balance will not balance |
| | B) | Accounts payable will be understated |
| | C) | The book Cash account will be understated |
| | D) | The checking account might become overdrawn |
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| 6 | |
Recording the purchase 120 shares of June-Girl stock for $53.00 a share, plus a brokerage commission of $120, on October 1 will require a journal entry which will include one of the following. |
| | A) | A debit to Marketable Securities for $6,360 |
| | B) | A debit to Broker Commission Expense for $120 |
| | C) | A credit to Cash for $6,480 |
| | D) | Both (A) and (B). |
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| 7 | |
When a firm writes off a bad debt under the allowance method of accounting for bad debts, which of the following will occur? |
| | A) | The net realizable value of accounts receivable decreases |
| | B) | Total net current assets will decrease |
| | C) | The cash account will decrease |
| | D) | The net realizable value of accounts receivable will not change |
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| 8 | |
The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $450. The uncollectible accounts are estimated at 3% of net credit sales of $650,000. After the appropriate adjusting entry to recognize the uncollectible account expense, the Allowance for Doubtful Accounts account should have a credit balance of which amount? |
| | A) | $19,950 |
| | B) | $19,500 |
| | C) | $19,050 |
| | D) | $20,400 |
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| 9 | |
Calculate the interest on a $4,000, 6% note receivable dated April 10 with a maturity date of July 9. |
| | A) | $24 |
| | B) | $60 |
| | C) | $240 |
| | D) | $18 |
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| 10 | |
Gross Sales total $505,000 and Sales Returns and Allowances total $15,000. Average accounts receivable for the period are $42,000. Calculate the accounts receivable turnover rate. |
| | A) | 11.67 |
| | B) | 12.02 |
| | C) | 12.38 |
| | D) | 12.55 |
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