____ 1. The use of a cash register for cash receipts is an example of the internal control principle of:

____ 1.  The use of a cash register for cash receipts is an example of the internal control principle of:

a. segregation of duties.

b. documentation procedures.

c. physical, mechanical, and electronic controls.

d. independent internal verification.

____ 2.  At August 31, Becker Company has the following bank information: cash balance per bank $3,100; outstanding checks $310; deposits in transit $250; credit memo for interest $15; bank service charge $30. What is Becker’s adjusted cash balance on August 31?

a. $3,025.

b. $3,055.

c. $2,805.

d. $3,040.  

____ 3.  The objectives of internal control are to:

a. safeguard assets and enhance the accuracy and reliability of the

accounting records.

b. prevent unintentional errors and irregularities.

c. enhance the accuracy and reliability of financial statements.

d. safeguard assets and prevent thefts.

____ 4.  When a petty cash fund is in use:

a. an entry must be made to the appropriate expense, asset, etc. account

when a disbursement is made.

b. entries are generally made to Petty Cash only when it is initially set up or

the stipulated amount of the fund is changed.

c. the size of the fund should be such that it can be used to cash employees'

bi-monthly payroll checks.

d. an entry is made to Petty Cash when the fund is replenished to its original

amount.

____ 5.  The balance of a control account in the general ledger:

a. must equal the composite balance of individual accounts in a related

subsidiary ledger.

b. must always be zero.

c. must equal the amount of total assets.

d. is always greater than the composite balance of individual accounts in a

related subsidiary ledger.

___ 6.  The bank statement that a depositor receives from the bank includes:

a. a designation of which deposits are in transit at the end of the month.

b. a designation of which checks are still outstanding at the end of the month.

c. notification of amounts deducted by the bank to cover such things as the

cost of a supply of new checks ordered by the depositor.

d. notification of errors made by the depositor in recording checks written

during the month in the depositor's accounts.

____ 7.  A sales journal is used to record:

a. only cash sales of merchandise.

b. only credit sales of merchandise.

c. sales of all assets on credit and for cash.

d. credit sales of merchandise, sales returns and allowances, and sales

discounts.

____ 8.  In the month of May, Jones Company wrote checks in the amount of $11,450.  In June, checks in the amount of $14,321 were written.  In May, $9,248 of these checks were presented to the bank for payment, and $12,890 were presented in June. If no checks were outstanding at the end of April, what is the amount of outstanding checks at the end of May?

a. $1,431.

b. $3,642.

c. $3,633.

d. $2,202.   

____ 9.  Closing entries are initially recorded in:

a. a special journal.

b. the general journal.

c. the general ledger.

d. a closing journal.

____ 10.  The one characteristic that all entries recorded in a cash receipts journal have

in common is:

a. a debit to the Cash account.

b. a credit to the Cash account.

c. that they all represent collections from customers.

d. that they originate from the sales of merchandise.

____ 11.  Baxter Company bought real estate, on which there was an old office building, for $400,000. It paid $30,000 in cash as a down payment and signed an 8% mortgage for the remainder. It immediately had the old building razed at a net cost of $25,000. Attorneys were paid $8,000 in connection with the land purchase and an additional $4,000 in connection with permits and zoning variances necessary for Baxter's new office building. $25,000 was paid for excavation for the basement of the new building, $1,600,000 was paid for construction of the new building, and $55,000 was paid for a parking lot and necessary walkways and driveways. The new office building should be recorded at:

a. $1,662,000.

b. $1,680,000.

c. $1,684,000.

d. $1,629,000.  

____ 12.  Baxter Company bought real estate, on which there was an old office building, for $400,000. It paid $30,000 in cash as a down payment and signed an 8% mortgage for the remainder. It immediately had the old building razed at a net cost of $25,000. Attorneys were paid $8,000 in connection with the land purchase and an additional $4,000 in connection with permits and zoning variances necessary for Baxter's new office building. $25,000 was paid for excavation for the basement of the new building, $1,600,000 was paid for construction of the new building, and $55,000 was paid for a parking lot and necessary walkways and driveways. Land should be recorded at a cost of:

a. $433,000.   

b. $400,000.

c. $425,000.

d. $403,000.

____ 13.  Kravich Textile purchased machinery for $105,000 that was expected to have a useful life of seven years with no salvage value, and was depreciated using the straight-line method. At the end of its fifth year of use, after recording depreciation expense, it was retired from service and given to a junk dealer.  The entry to record the retirement includes a:

a. credit to Accumulated Depreciation—Machinery for $75,000.

b. credit to Depreciation Expense for $15,000.

c. debit to Machinery for $105,000.

d. debit to Loss on Disposal of Plant Assets for $30,000

____ 14.  When the allowance method of recognizing bad debts expense is used, the entry to recognize that expense:

a. has no effect on net income.

b. increases net income.

c. decreases current assets.

d. has no effect on current assets.

____15.  When customers make purchases with a national credit card, the retailer:  

a. is not involved in the collection process.

b. is responsible for maintaining customer accounts.

c. absorbs any losses from uncollectible accounts.

d. receives cash equal to the full price of the merchandise sold from the credit

card company.

____16.  During 2012, Nathan Corporation reported net sales of $1,800,000 and net income of $400,000. Nathan also reported beginning total assets of $800,000 and ending total assets of $1,200,000. Nathan’s asset turnover ratio is:

a. 1.5 times.

b. 1.8 times.   

c. 2.25 times.

d. .5 times.

____ 17.  Allowance for Doubtful Accounts is presented as a (n):

a. addition to Accounts Receivable on the balance sheet.

b. operating expense on the income statement.

c. contra asset on the balance sheet.

d. deduction from Sales on the income statement.

____ 18.  Which of the following methods and bases of accounting for uncollectible accounts receivable is inconsistent with the proper application of expense recognition?

a. Percentage of sales basis.

b. Direct write-off method.

c. Aging of receivables allowance method.

d. Percentage of receivables basis.

____19.  When recording exchanges of assets that have commercial substance:

a. gains are treated as increases in the cost of the new asset.

b. the gain or loss on the old asset is the difference between its cost and its

fair market value.

c. both gains and losses are recognized immediately.

d. None of the above.

____20.  The cost of a patent should be amortized over:

a. 20 years.

b. its useful life.

c. the longer of its legal life or its useful life.

d. the shorter of its legal life or its useful life.

____21.  On June 30, 2012, Hound Enterprises sold equipment with an original cost of $600,000 for $420,000. The equipment was purchased January 1, 2011, and was depreciated using the straight-line method assuming a four year useful life and $60,000 salvage value. The necessary entries for 2012 include a:

a. debit to Accumulated Depreciation—Equipment for $135,000.

b. debit to Loss on Sale of Plant Assets for $22,500.

c. credit to Gain on Sale of Plant Assets for $22,500.  

d. credit to Accumulated Depreciation—Equipment for $202,500.