ACC 201 - MID TERM quiizzes and tests

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ACC 201 - MID TERM quiizzes and tests 

 

Which financial statements would you use to determine how much cash is used up in operations?

 

 

[removed] A. Balance Sheet

 

[removed] B. Statement of Earnings (Income Statement)

 

[removed] C. Statement of Cash Flows

 

[removed] D. 

Statement of Changes in Owner’s Equity (Statement of Stockholder’s Equity)

 

 

Question 2 of 100

1.0 Points

Which of the following organizations currently sets accounting standards in the USA?

 

 

[removed] A. Financial Accounting Standards Board

 

[removed] B. Public Company Accounting Oversight Board

 

[removed] C. Government Accounting Standards Board

 

[removed] D. International Accounting Standards Board

 

 

Which financial statement’s accounts are “zeroed out” at year-end?

 

 

[removed] A. Balance Sheet

 

[removed] B. Statement of Earnings (Income Statement)

 

[removed] C. Statement of Cash Flows

 

[removed] D. 

Statement of Changes in Owner’s Equity (Statement of Stockholder’s Equity)

 

 

Which of the following types of people do not hold roles in a corporation?

 

 

[removed] A. Shareholders

 

[removed] B. Members

 

[removed] C. Directors

 

[removed] D. Officers

 

 

The definition of expense is decreases in equity other than operating activities and investments.

 

 

[removed] True

[removed] False

 

Accrual accounting means that revenues and expenses are recognized when cash is received/paid.

 

 

[removed] True

[removed] False

 

Under the Sarbanes-Oxley Act of 2002, what will happen to CEOs and CFOs if the company must restate their financial statements for any reason?

 

 

[removed] A. They will be given a raise by the Board of Directors

 

[removed] B. They will have to pay back their bonuses

 

[removed] C. They will become shareholders

 

[removed] D. They will register with the PCAOB.

 

 

Today, the accounting standards setters issue accounting standards through which of the following?

 

 

[removed] A. Statements of Financial Accounting Concepts (SFAC)

 

[removed] B. FASB Accounting Standards Codification (FASB ASC)

 

[removed] C. GASB Accounting Standards Codification (GASB ASC)

 

[removed] D. FASB Accounting Standards (FAS)

 

 

Which of the following states that expenses must be matched to revenue in the proper accounting period?

 

 

[removed] A. Going Concern Assumption

 

[removed] B. Historical Cost Principle

 

[removed] C. Conservatism Principle

 

[removed] D. Matching Principle

 

 

Question 10 of 100

1.0 Points

The definition of revenue is increases in assets or reductions of liabilities.

 

 

[removed] True

[removed] False

 

The revenue recognition principle states that revenue is recognized when it is earned and when it is realized or realizable.

 

 

[removed] True

[removed] False

 

Question 12 of 100

1.0 Points

Which of the following is not a financial statement element of the balance sheet?

 

 

[removed] A. Assets

 

[removed] B. Comprehensive Income

 

[removed] C. Liabilities

 

[removed] D. Equity

 

 

Which assumption do accountants use when in doubt, using the accounting method that is least likely to overstate assets/revenues/gains and understate liabilities/expenses/losses.

 

 

[removed] A. Going Concern Assumption

 

[removed] B. Historical Cost Principle

 

[removed] C. Conservatism Principle

 

[removed] D. Matching Principle

 

 

Fundamental qualitative characteristics of financial information are relevance and

 

 

[removed] A. Faithful representation

 

[removed] B. Enhancing qualitative characteristics

 

[removed] C. Cost benefit constraint

 

[removed] D. Fundamental recognition criteria

 

 

Net income in the Statement of Earnings (Income Statement) is closed out to which of the following accounts at year-end.

 

 

[removed] A. Retained earnings

 

[removed] B. Profit & loss

 

[removed] C. Net increase/decrease in cash

 

[removed] D. Dividends

 

 

In a partnership business entity, decisions are made by a Board of Directors.

 

 

[removed] True

[removed] False

 

Which of the following is not an external user of financial statements?

 

 

[removed] A. Investor

 

[removed] B. The company’s CEO

 

[removed] C. Creditor

 

[removed] D. Supplier

 

 

Which of the following is the accounting equation?

 

 

[removed] A. Assets + Liabilities = Equity

 

[removed] B. Revenue – Expenses = Income

 

[removed] C. Assets – Liabilities – Equity

 

[removed] D. Assets = Liabilities + Equity

 

 

What is a financial statement user’s main focus in reviewing a statement of cash flows?

 

 

[removed] A. Net increase(decrease) in cash

 

[removed] B. Net income

 

[removed] C. Beginning cash

 

[removed] D. Gains and losses

 

 

What decisions would an investor use financial statements for?

 

 

[removed] A. Can I secure the firm’s assets to guarantee my money in bankruptcy?

 

[removed] B. Can the firm pay me a dividend?

 

[removed] C. Will my invoices be paid on time?

 

[removed] D. Can the firm repay my principal and interest on designated due dates?

 

 

Which of the following financial statements measures profitability over a period of time with a start date and end date?

 

 

[removed] A. Balance Sheet

 

[removed] B. Statement of Earnings (Income Statement)

 

[removed] C. Statement of Cash Flows

 

[removed] D. 

Statement of Changes in Owner’s Equity (Statement of Stockholder’s Equity)

 

 

Which of the following organizations has the legal authority to establish U.S. GAAP, but permits the accounting profession to self-regulate?

 

 

[removed] A. Financial Accounting Standards Board

 

[removed] B. Public Company Accounting Oversight Board

 

[removed] C. Securities and Exchange Commission

 

[removed] D. International Accounting Standards Board

 

 

Which of the following financial statements measures financial position on a specific date?

 

 

[removed] A. Balance Sheet

 

[removed] B. Statement of Earnings (Income Statement)

 

[removed] C. Statement of Cash Flows

 

[removed] D. Statement of Changes in Owner’s Equity (Statement of Stockholder’s Equity) 

 

 

 

Question 24 of 100

1.0 Points

Which of the following is not a financial statement?

 

 

[removed] A. Statement of Financial Position

 

[removed] B. Statement of Cash Flows

 

[removed] C. Schedule of Expenses

 

[removed] D. Statement of Stockholder’s Equity

 

 

 

Question 25 of 100

1.0 Points

Which of the following is an operating activity in the income statement?

 

 

[removed] A. Gains

 

[removed] B. Revenue

 

[removed] C. Losses

 

[removed] D. Equity

 

 

Question 26 of 100

1.0 Points

In a set of books, which of the following presents a list of account names or a reporting entity?

 

 

[removed] A. Subsidiary ledger

 

[removed] B. Chart of accounts

 

 

Which of the following is a contra receivable account?

 

 

[removed] A. Accounts payable

 

[removed] B. Allowance for uncollectible accounts

 

[removed] C. Accumulated depreciation

 

[removed] D. Notes receivable

 

 

Question 28 of 100

1.0 Points

Which journal entry is correct to record an equipment purchase in cash for $50,000?

 

 

[removed] A. 

DR: Equipment Expense        $50,000
CR: Cash                                             $50,000

 

[removed] B. 

DR: Equipment                       $50,000
CR: Accounts Payable                        $50,000

 

[removed] C. 

DR: Equipment                       $50,000 
CR: Cash                                             $50,000

 

[removed] D. 

DR: Cash                                $50,000
CR: Equipment                                   $50,000

 

 

Question 29 of 100

1.0 Points

What is the normal account balance of an equity account?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Question 30 of 100

1.0 Points

What is the normal account balance of a revenue account?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Question 31 of 100

1.0 Points

Which of the following is a summary of all of the accounts used to record the firm’s transactions?

 

 

[removed] A. Journal

 

[removed] B. Subsidiary ledger

 

[removed] C. Ledger

 

[removed] D. General ledger

 

 

Question 32 of 100

1.0 Points

What is the normal account balance of a liability account?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Question 33 of 100

1.0 Points

What is the normal account balance of an asset account?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Question 34 of 100

1.0 Points

Which type of transaction does a firm conduct with a separate entity?

 

 

[removed] A. External transactions

 

[removed] B. Internal transactions

 

 

Question 35 of 100

1.0 Points

One of the six steps of measuring external transactions includes

 

 

[removed] A. Preparing the chart of accounts

 

[removed] B. Determining the debits and credits in a bank statement

 

[removed] C. Using source documents to identify accounts affected

 

[removed] D. Posting an equity transaction

 

 

Question 36 of 100

1.0 Points

Two functions of financial accounting are reporting/communicating financial data in financial statements and

 

 

[removed] A. Accounting for money

 

[removed] B. Measuring business activities

 

[removed] C. Banking

 

[removed] D. Regulatory compliance

 

 

Question 37 of 100

1.0 Points

Which journal entry is correct to record the issuance of $25,000 in common stock?

 

 

[removed] A. 

DR: Cash                 $25,000
CR: Equity                           $25,000

 

[removed] B. 

DR: Notes Payable  $25,000
CR: Common Stock            $25,000

 

[removed] C. 

DR: Cash                $25,000
CR: Common Stock           $25,000

 

[removed] D. 

DR: Common Stock $25,000
CR: Cash                             $25,000

 

 

 

Question 38 of 100

1.0 Points

How is an asset account decreased?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Question 39 of 100

1.0 Points

Which journal entry is correct to accrue wages expense on 12/31/201X for $15,000 incurred in the last week of the year that will be paid next year?

 

 

[removed] A. 

DR: Wages Expense               $15,000
CR: Wages Payable                            $15,000

 

[removed] B. 

DR: Wages Expense               $15,000
CR: Cash                                            $15,000

 

[removed] C. 

DR: Wages Payable                $15,000 
CR: Wages Expense                           $15,000

 

[removed] D. 

DR: Cash                                $15,000
CR: Wages Expense                           $15,000

 

 

Question 40 of 100

1.0 Points

The accounting cycle includes the full set of procedures used to accomplish the measurement/communication process in financial accounting.

 

 

[removed] True

[removed] False

 

Question 41 of 100

1.0 Points

Which journal entry is correct to accrue utilities expense for $2,000?

 

 

[removed] A. 

DR: Utilities expense             $2,000
CR: Accrued expenses                        $2,000

 

[removed] B. 

DR: Utilities expense              $2,000
CR: Cash                                             $2,000

 

[removed] C. 

DR: Accrued expenses           $2,000 
CR: Utilities expense                         $2,000

 

[removed] D. 

DR: Cash                                $2,000
CR: Utilities expense                          $2,000

 

 

Question 42 of 100

1.0 Points

Which of the following stores transactions in chronological order in the order posted?

 

 

[removed] A. Journal

 

[removed] B. Subsidiary ledger

 

[removed] C. Ledger

 

[removed] D. General ledger

 

 

Question 43 of 100

1.0 Points

In what direction does financial information flow in an entity’s books from detail to summary?

 

 

[removed] A. General ledger > source documents > accounts > financial statements

 

[removed] B. Source documents > accounts > trial balance > financial statements

 

[removed] C. Financial statements > trial balance > general ledger > accounts

 

[removed] D. Accounts > general ledger > trial balance > financial statements

 

 

Question 44 of 100

1.0 Points

Which journal entry is correct to record a cash receipt for $2,000?

 

 

[removed] A. 

DR: Accounts Payable            $2,000
CR: Cash                                             $2,000

 

[removed] B. 

DR: Cash                                $2,000
CR: Accounts Receivable                   $2,000
 

 

[removed] C. 

DR: Accounts Receivable       $2,000 
CR: Cash                                             $2,000

 

[removed] D. 

DR: Cash                                $2,000
CR: Revenue                                       $2,000

 

 

Question 45 of 100

1.0 Points

In a set of books, which of the following best describes what is used to summarize captured transactions related to a particular item over time?

 

 

[removed] A. Accounts

 

[removed] B. Ledger

 

 

Question 46 of 100

1.0 Points

How is an expense account decreased?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Question 47 of 100

1.0 Points

Which journal entry is correct to record a vendor bill on account for consulting services for $5,000?

 

 

[removed] A. 

DR: Consulting Services Expense  $5,000
CR: Cash                                                  $5,000

 

[removed] B. 

DR: Cash                                          $5,000
CR: Consulting Services Expense            $5,000

 

[removed] C. 

DR: Accounts Payable                     $5,000
CR: Consulting Services Expense            $5,000

 

[removed] D. 

DR: Consulting Services Expense   $5,000
CR: Accounts Payable                              $5,000

 

 

Question 48 of 100

1.0 Points

Which journal entry is correct to record a two-year insurance policy paid in full for 24,000 on 1/1/201X?

 

 

[removed] A. 

DR: Cash                                $24,000
CR: Insurance expense                       $24,000

 

[removed] B. 

DR: Insurance expense           $24,000
CR: Prepaid Asset-Insurance             $24,000

 

[removed] C. 

DR: Insurance expense           $24,000 
CR: Cash                                             $24,000

 

[removed] D. 

DR: Prepaid Asset-Insurance $24,000
CR: Cash                                             $24,000

 

 

Question 49 of 100

1.0 Points

The books do not consist of

 

 

[removed] A. Accounts, sub-ledgers & journals

 

[removed] B. Bank statements

 

[removed] C. General ledger

 

[removed] D. Financial statements

 

 

Question 50 of 100

1.0 Points

Which journal entry is correct to record a credit sale for $10,000?

 

 

[removed] A. 

DR: Cash                         $10,000
CR: Revenue                              $10,000

 

[removed] B. 

DR: Accounts Receivable $10,000
CR: Revenue                               $10,000

 

[removed] C. 

DR: Revenue                   $10,000
CR: Cash                                    $10,000

 

[removed] D. 

DR: Revenue                   $10,000
CR: Accounts Receivable           $10,000

 

 

Question 51 of 100

1.0 Points

Expenses are recognized under three methods. Which of the following is not one of the methods?

 

 

[removed] A. Expense when incurred

 

[removed] B. Expense when cash is paid

 

[removed] C. Amortize ratably(evenly) over accounting period(s)

 

[removed] D. Expense immediately under the Principle of Conservatism

 

 

Question 52 of 100

1.0 Points

Which of the following is a special journal entry that is recorded at the close of the accounting period to properly record events that have occurred during the period – where certain balance sheet asset/liability items are posted to the income statement?

 

 

[removed] A. Deferral

 

[removed] B. Accrual

 

[removed] C. Adjusting entry

 

[removed] D. Closing entry

 

 

Which expense recognition method would be used to record depreciation expense?

 

 

[removed] A. Expense when incurred

 

[removed] B. Expense when cash is paid

 

[removed] C. Amortize ratably(evenly) over accounting period(s)

 

[removed] D. Expense immediately under the Principle of Conservatism

 

 

Question 54 of 100

1.0 Points

What is the calculation for depreciation expense under the straight-line method?

 

 

[removed] A. Accumulated Depreciation ÷ Useful Life

 

[removed] B. Asset Cost ÷ Useful Life

 

[removed] C. Asset Basis X Book Value ÷ Asset Cost

 

[removed] D. Liability Cost ÷ Useful Life

 

 

Question 55 of 100

1.0 Points

A closing entry closes net income to retained earnings.

 

 

[removed] True

[removed] False

 

Question 56 of 100

1.0 Points

As part of the journal entry to close the retained earnings account at year-end, retained earnings is credited and revenue is

 

 

[removed] A. Debited

 

[removed] B. Credited

 

 

Question 57 of 100

1.0 Points

Which of the following results in an asset that will provide future benefits?

 

 

[removed] A. Prepaid expense

 

[removed] B. Accrued expense

 

 

Question 58 of 100

1.0 Points

Which expense recognition method would be used to record expired costs?

 

 

[removed] A. Expense when incurred

 

[removed] B. Expense when cash is paid

 

[removed] C. Amortize ratably(evenly) over accounting period(s)

 

[removed] D. Expense immediately under the Principle of Conservatism

 

 

Question 59 of 100

1.0 Points

Which of the following contain temporary accounts that are reset to zero year-end?

 

 

[removed] A. Balance sheet

 

[removed] B. Income statement

 

 

Question 60 of 100

1.0 Points

To record a cash purchase of depreciable assets such as equipment, cash would be credited and which account would be debited?

 

 

[removed] A. Equipment

 

[removed] B. PP&E

 

[removed] C. Accumulated depreciation

 

[removed] D. Intangible assets

 

 

 

Question 61 of 100

1.0 Points

Revenue recognition involves

 

 

[removed] A. recording revenue before it is earned

 

[removed] B. always recording revenue before cash is received

 

[removed] C. always recording revenue when cash is received

 

[removed] D. the rules to record revenue before or after cash is received

 

 

Question 62 of 100

1.0 Points

The four revenue recognition criteria under SAB 104 are

 

 

[removed] A. Evidence of an arrangement (contract) exists, installment sales have been recorded, seller’s price is fixed, collectability is reasonably assured

 

[removed] B. Installment sales have been recorded, delivery has occurred or services have been rendered, seller’s price is fixed, collectability is reasonably assured

 

[removed] C. Evidence of an arrangement (contract) exists, seller’s price is fixed, collectability is reasonably assured, delivery has occurred or services have been rendered

 

[removed] D. Evidence of an arrangement (contract) exists, seller’s price is fixed, cash has been received, delivery has occurred or services have been rendered

 

 

Question 63 of 100

1.0 Points

What is the book value of an asset that cost $100,000 and has an accumulated depreciation balance of $40,000?

 

 

[removed] A. $20,000

 

[removed] B. $40,000

 

[removed] C. $60,000

 

[removed] D. $80,000

 

 

Question 64 of 100

1.0 Points

Which of the following is used to prepare the financial statements?

 

 

[removed] A. Unadjusted trial balance

 

[removed] B. Adjusted trial balance

 

[removed] C. General ledger accounts

 

[removed] D. Journal entries

 

 

Question 65 of 100

1.0 Points

Which of the following results in an asset (accounts receivable) for future benefits to be received (cash)?

 

 

[removed] A. Deferral

 

[removed] B. Accrual

 

 

Question 66 of 100

1.0 Points

The income statement accounts appear on the post-closing trial balance.

 

 

[removed] True

[removed] False

 

Question 67 of 100

1.0 Points

As part of the journal entry to close the retained earnings account at year-end, retained earnings is credited and expense is

 

 

[removed] A. Debited

 

[removed] B. Credited

 

 

Question 68 of 100

1.0 Points

What is the annual depreciation expense of an asset that cost $50,000 with a useful life of 5 years?

 

 

[removed] A. $5,000

 

[removed] B. $10,000

 

[removed] C. $25,000

 

[removed] D. $50,000

 

 

Question 69 of 100

1.0 Points

Which expense recognition method would be used to record Cost of Goods Sold?

 

 

[removed] A. Expense when incurred

 

[removed] B. Expense when cash is paid

 

[removed] C. Amortize ratably(evenly) over accounting period(s)

 

[removed] D. Expense immediately under the Principle of Conservatism

 

 

Question 70 of 100

1.0 Points

What is the accumulated depreciation balance of an asset that was purchased for $40,000 on 1/1/2011 with a useful life of 4 years on 12/31/2013?

 

 

[removed] A. $10,000

 

[removed] B. $20,000

 

[removed] C. $30,000

 

[removed] D. $40,000

 

 

Question 71 of 100

1.0 Points

Which of the following contain permanent accounts that roll forward forever?

 

 

[removed] A. Balance sheet

 

[removed] B. Income statement

 

 

Question 72 of 100

1.0 Points

Which of the following results in a liability for future performance (obligation)?

 

 

[removed] A. Deferral

 

[removed] B. Accrual

 

 

Question 73 of 100

1.0 Points

Which of the following results in a liability (obligation) that will subsequently be settled in cash or performance.

 

 

[removed] A. Prepaid expense

 

[removed] B. Accrued expense

 

 

Question 74 of 100

1.0 Points

The journal entry to record $5,000 in equipment depreciation expense is debit depreciation expense $5,000 and

 

 

[removed] A. Credit equipment $5,000

 

[removed] B. Credit accumulated depreciation $5,000

 

[removed] C. Debit accumulated depreciation $5,000

 

[removed] D. Credit accumulated depreciation $10,000

 

 

Question 75 of 100

1.0 Points

Which balance sheet account does depreciation expense build up in over time?

 

 

[removed] A. Net PP&E

 

[removed] B. Depreciation expense

 

[removed] C. Accumulated depreciation

 

[removed] D. Contra depreciation expense

 

 

Question 76 of 100

1.0 Points

In understanding fraud, which of the following is a reason to commit fraud?

 

 

[removed] A. Motive

 

[removed] B. Rationalization

 

[removed] C. Misrepresentation

 

[removed] D. Opportunity

 

 

Question 77 of 100

1.0 Points

Which type of fraud involves using one’s occupation for personal enrichment through the deliberate misappropriation of a firm’s resources?

 

 

[removed] A. Scienter

 

[removed] B. Occupational fraud

 

[removed] C. Standard fraud

 

[removed] D. Classic fraud

 

 

Question 78 of 100

1.0 Points

Who are insiders?

 

 

[removed] A. Shareholders of the company

 

[removed] B. Officers

 

[removed] C. Directors

 

[removed] D. Officers & directors

 

 

Question 79 of 100

1.0 Points

In large firms, segregation of duties is not easily achieved because there are large accounting teams.

 

 

[removed] True

[removed] False

 

Question 80 of 100

1.0 Points

In understanding fraud, which of the following is an attempt to justify fraudulent behavior?

 

 

[removed] A. Motive

 

[removed] B. Rationalization

 

[removed] C. Misrepresentation

 

[removed] D. Opportunity

 

 

Question 81 of 100

1.0 Points

Which of the following companies is best known for its accounting scandal?

 

 

[removed] A. JPMorgan Chase & Co.

 

[removed] B. Enron Corporation

 

[removed] C. Carnegie Steel Company

 

[removed] D. The Carlyle Group

 

 

Question 82 of 100

1.0 Points

Which of the following components of internal control describe the internal control consciousness is influenced and set by management “Tone at the Top?”

 

 

[removed] A. Control environment

 

[removed] B. Monitoring

 

[removed] C. Existing control activities

 

[removed] D. Information and communication systems

 

 

Question 83 of 100

1.0 Points

Internal control is implemented by the external auditors.

 

 

[removed] True

[removed] False

 

Question 84 of 100

1.0 Points

Which of the following components of internal control supports the identification, capture and exchange of information in a timely manner?

 

 

[removed] A. Control environment

 

[removed] B. Monitoring

 

[removed] C. Existing control activities

 

[removed] D. Information and communication systems

 

 

Question 85 of 100

1.0 Points

Which of the following is not an element of the fraud triangle?

 

 

[removed] A. Motive

 

[removed] B. Rationalization

 

[removed] C. Misrepresentation

 

[removed] D. Opportunity

 

 

 

Question 86 of 100

1.0 Points

Which of the following components of internal control provides policies & procedures that prevent or detect errors by employees in their routine work?

 

 

[removed] A. Control environment

 

[removed] B. Monitoring

 

[removed] C. Existing control activities

 

[removed] D. Information and communication systems

 

 

Question 87 of 100

1.0 Points

Which of the following is not one of the three objectives of an entity’s internal controls?

 

 

[removed] A. Reliability of financial reporting (lying, financial statement fraud).

 

[removed] B. Effectiveness and efficiency of operations (stealing, asset misappropriation).

 

[removed] C. Compliance with applicable laws and regulations (cheating, corruption).

 

[removed] D. Reasonable assurance provided by auditors.

 

 

Question 88 of 100

1.0 Points

In understanding fraud, which of the following relates to a lack of effective controls?

 

 

[removed] A. Motive

 

[removed] B. Rationalization

 

[removed] C. Misrepresentation

 

[removed] D. Opportunity

 

 

Question 89 of 100

1.0 Points

Which of the following is a tort (wrongful act) where a party makes an intentional misrepresentation to another party that is depending on the representation.

 

 

[removed] A. Negligence

 

[removed] B. Lying

 

[removed] C. Fraud

 

[removed] D. Conspiracy

 

 

Question 90 of 100

1.0 Points

What is the best way to keep customer checks from coming in contact with a company’s employees?

 

 

[removed] A. Designate a person who is not a member of the accounting team to open check envelopes.

 

[removed] B. Instruct customers to send their checks to a lockbox.

 

[removed] C. Ask customers to FedEx their checks.

 

[removed] D. Ask customers to deliver their checks in person to the Treasurer.

 

 

Which account is a contra receivables account that maintains data related to invoice reserves, write downs, and write offs?

 

 

[removed] A. Allowance for uncollectible accounts

 

[removed] B. Expense

 

[removed] C. Stockholder’s equity

 

[removed] D. Comprehensive income

 

 

Question 92 of 100

1.0 Points

A company’s reserve policy for receivables is “reserve 100% of receivables over 120 days.” The aging report indicates the following:
Current=$6,000  1-30=$1,000  31-60=$24,000  61-90=$3,000  91-120=$2,000  >121=$4,000
Total: $40,000

What amount should be reserved?

 

 

[removed] A. $1,000

 

[removed] B. $2,000

 

[removed] C. $3,000

 

[removed] D. $4,000

 

 

Question 93 of 100

1.0 Points

What is the formula to calculate interest revenue?

 

 

[removed] A. Interest Revenue ÷ Annual Interest Rate

 

[removed] B. Face Value X Annual Interest Rate

 

[removed] C. Face Value ÷ Annual Interest Rate

 

 

Question 94 of 100

1.0 Points

A company’s reserve policy for receivables is “reserve 5% of total receivables” The aging report indicates the following: Current=$6,000 1-30=$1,000 31-60=$24,000 61-90=$3,000 91-120=$2,000 >121=$4,000
Total: $40,000 

What amount should be reserved?

 

 

[removed] A. $1,000

 

[removed] B. $2,000

 

[removed] C. $3,000

 

[removed] D. $4,000

 

 

Question 95 of 100

1.0 Points

Which type of risk is inherent in a process when a company delivers goods or services to a customer, and allows them to pay in the future?

 

 

[removed] A. Audit risk

 

[removed] B. Business risk

 

[removed] C. Credit risk

 

[removed] D. Risk of material misstatement

 

 

Question 96 of 100

1.0 Points

Discount terms such as “Net 30” (n/30) mean

 

 

[removed] A. Payment is due after 30 days

 

[removed] B. Total after discounts, payment is due within 30 days

 

[removed] C. Thirty days

 

[removed] D. $30 will be discounted

 

 

Question 97 of 100

1.0 Points

On 1/1/14, the allowance for doubtful accounts balance is $10,000. The net adjustment for allowance for doubtful accounts on 12/31/14 increased by $5,000. If the ending gross A/R balance is $100,000, what amount will be presented for bad debt expense on the income statement at 12/31/14?

 

 

[removed] A. $15,000

 

[removed] B. $10,000

 

[removed] C. $5,000

 

[removed] D. ($15,000)

 

 

 

Question 98 of 100

1.0 Points

The direct write off method is permitted under U.S. GAAP.

 

 

[removed] True

[removed] False

 

Question 99 of 100

1.0 Points

Which type of risk is inherent in a process when a company delivers goods or services to a customer, and allows them to pay in the future?

 

 

[removed] A. Audit risk

 

[removed] B. Business risk

 

[removed] C. Credit risk

 

[removed] D. Risk of material misstatement

 

 

Question 100 of 100

1.0 Points

What is the journal entry to record the full collection of cash related to principal on a note receivable?

 

 

[removed] A. DR: Cash; CR: Notes Receivable

 

[removed] B. DR: Notes Receivable; CR: Cash

 

[removed] C. DR: A/R; CR: Notes Receivable

 

[removed] D. DR: Notes Receivable; CR: Revenue

 

 

The “current” classification in the balance sheet means less than 12 months.

 

 

[removed] True

[removed] False

 

The owners in a corporation are called stockholders or shareholders.

 

 

[removed] True

[removed] False

 

A fundamental correlation that exists in business is that as a public company’s earnings increase, their stock price increases.

 

 

[removed] True

[removed] False

 

Which journal entry is correct to record cash dividends of $50,000 paid to stockholders?

 

 

[removed] A. 

DR: Dividends Expense         $50,000
CR: Cash                                             $50,000

 

[removed] B. 

DR: Retained earnings            $50,000
CR: Cash                                             $50,000

 

[removed] C. 

DR: Dividends payable          $50,000 
CR: Retained earnings                        $50,000

 

[removed] D. 

DR: Cash                                $50,000
CR: Retained earnings                        $50,000

 

 

How is a revenue account increased?

 

 

[removed] A. Debit

 

[removed] B. Credit

 

 

Which of the following is a contra asset account?

 

 

[removed] A. Intangible Assets

 

[removed] B. Goodwill

 

[removed] C. Accumulated Depreciation

 

[removed] D. Inventory

 

 

The sample chart of accounts that we reviewed in class for Alpha Engineering Corp. included an account description, financial statement line item classification, account number and

 

 

[removed] A. Journal entry number

 

[removed] B. Normal account balance

 

[removed] C. Trial balance

 

[removed] D. Statement of cash flows classification

 

 

Outstanding checks not cleared by the bank result in a bank balance that is lower than the GL balance.

 

 

[removed] True

[removed] False

 

In small firms, segregation of duties can still be achieved, but in different ways than large firms achieve their objectives.

 

 

[removed] True

[removed] False

 

ion 78 of 100

1.0 Points

Which of the following is not a component of segregation of duties?

 

 

[removed] A. Recording transactions

 

[removed] B. Preventive controls

 

[removed] C. Custody

 

[removed] D. Recordkeeping

 

 

Question 81 of 100

1.0 Points

The following is not a cash fraud scheme.

 

 

[removed] A. Stealing cash from a cash register.

 

[removed] B. Writing an A/R check to a fictitious vendor and cashing it.

 

[removed] C. Modifying a payroll check, adding an extra zero at the end.

 

[removed] D. Falsifying amounts on an expense report and submitting it for reimbursement.

 

 

The Wall Street Journal Reports that an investigation found that a company filed false financial statements with the Securities and Exchange Commission (SEC). The stock drops 60% within a few hours of the news. Who suffered a loss resulting from the improper filing that triggered a stock sell-off?

 

 

[removed] A. Shareholders of the company

 

[removed] B. The Securities and Exchange Commission

 

[removed] C. External auditors

 

[removed] D. Officers of the company

 

 

 

In large firms, segregation of duties is not easily achieved because there are large accounting teams.

 

 

[removed] True

[removed] False

 

Question 86 of 100

1.0 Points

What is the asset that is most susceptible to employee fraud?

 

 

[removed] A. Intangible assets

 

[removed] B. Accounts receivable

 

[removed] C. Cash

 

[removed] D. Trading securities

 

 

Segregation of duties reduces opportunities for any individual to both perpetrate and conceal errors or fraud in the normal course of duties.

 

 

[removed] True

[removed] False

 

A vendor provides a customer with a discount as part of their business agreement. The discount that the vendor provides is 2% if the bill is paid within ten days. The vendor allows the customer to pay within thirty days. What amount of cash will the customer remit on an invoice for $1,000 if the customer pays on day nine?

 

 

[removed] A. $1,020

 

[removed] B. 1,000

 

[removed] C. $980

 

[removed] D. $20

 

 

Which of the following is a writing that requires a party to repay borrowed funds?

 

 

[removed] A. Bond

 

[removed] B. Promissory note

 

[removed] C. Credit line

 

[removed] D. Venture capital funding

 

 

Which of the following is not an item presented on a Promissory Note?

 

 

[removed] A. Maker

 

[removed] B. Due date

 

[removed] C. Payee

 

[removed] D. Drawer

 

 

A vendor provides a customer with a discount as part of their business agreement. The discount that the vendor provides is 2% if the bill is paid within ten days. The vendor allows the customer to pay within thirty days. What is the sales discount on an invoice for $1,000 if the customer pays on day thirty one?

 

 

[removed] A. $0

 

[removed] B. $20

 

[removed] C. $200

 

[removed] D. $50

 

 

What is the journal entry to write off a receivable that will never be collected?

 

 

[removed] A. DR: Allowance for Doubtful Accounts; CR: A/R

 

[removed] B. DR: Bad Debt Expense; CR: Allowance for Doubtful Accounts

 

[removed] C. DR: Allowance for Doubtful Accounts; CR: Bad Debt Expense

 

[removed] D. DR: A/R; CR: Bad Debt Expense

 

What is the journal entry to record an increase in the allowance for doubtful accounts?

 

 

[removed] A. DR: Allowance for Doubtful Accounts; CR: A/R

 

[removed] B. DR: Bad Debt Expense; CR: Allowance for Doubtful Accounts

 

[removed] C. DR: Allowance for Doubtful Accounts; CR: Bad Debt Expense

 

[removed] D. DR: A/R; CR: Bad Debt Expense

 

 

 

The following journal entry is always correct in recording bad debt expense under the allowance method:

DR: Bad Debt Expense XXX
CR: Accounts Receivable XXX

 

 

[removed] True

[removed] False

 

A vendor provides a customer with a discount as part of their business agreement. The discount that the vendor provides is 2% if the bill is paid within ten days. How will this be presented on the bill if the vendor allows the customer to pay within thirty days?

 

 

[removed] A. Net-30

 

[removed] B. 2/10 Net-30

 

[removed] C. 2% of Net

 

[removed] D. 2/30 Net 10

 

 

 

 

 

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