A+ Answers of the following Questions

1. The entry necessary to establish a petty cash fund should include:
A)A debit to Cash and a credit to Petty Cash.
B)A debit to Cash and a credit to Cash Over and Short.
C)A debit to Petty Cash and a credit to cash.
D)A debit to Petty Cash and a credit to Accounts Receivable.
E)A debit to Cash and a credit to Petty Cash Over and Short.

2. When a petty cash fund is in use:
A)Expenses paid with petty cash are recorded when the fund is replenished.
B)Petty Cash is debited when funds are replenished.
C)Petty Cash is credited when funds are replenished.
D)Expenses are not recorded.
E)Cash is debited when funds are replenished.

3. Outstanding checks refer to checks that have been:
A)Written, recorded, sent to payees, and received and paid by the bank.
B)Written and not yet recorded in the company books.
C)Held as blank checks.
D)Written, then recorded on the company books and sent to the customer, but have not yet been paid by the bank.
E)Issued by the bank.

Question 1

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?

Nothing further must be done.

Debit a stockholders' equity account for $500.

Debit another asset account for $500.

Credit a different asset account for $500.

Question 2

An adjusting entry can include a

debit to an asset and a credit to a revenue.

debit to a revenue and a credit to an asset.

credit to an expense and a debit to a revenue.

debit to an expense and a credit to a revenue.

Question 3

Accrued expenses are

paid and recorded in an asset account before they are used or consumed.

paid and recorded in an asset account after they are used or consumed.

incurred but not yet paid or recorded.

incurred and already paid or recorded.

Question 1

Unearned revenue is classified as a(n)

asset account

revenue account.

contra revenue account.

liability.

Question 2

Which statement is incorrect?

Periodic inventory systems provide better control over inventories than perpetual inventory systems.

Computers and electronic scanners allow more companies to use a perpetual inventory system

Freight in is debited to merchandise inventory when a perpetual inventory system is used.

Regardless of the inventory system that is used, companies should take a physical inventory count.

Question 3

In the credit terms of 1/10, n/30, the "1" represents the

number of days in the discount period.

full amount of the invoice.

number of days when the entire amount is due.

percent of the cash discount.

Question 1

The selection of an appropriate inventory cost flow assumption for an individual company is made by

the external auditors.

the SEC.

the internal auditors.

management.

Question 2

Which of the following statements is correct with respect to inventories?

The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

It is generally good business management to sell the most recently acquired goods first.

Under FIFO, the ending inventory is based on the latest units purchased.

FIFO seldom coincides with the actual physical flow of inventory.

Question 3

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?

Nothing further must be done.

Debit a stockholders' equity account for $500.

Debit another asset account for $500.

Credit a different asset account for $500.

Question 1

Relevance and reliability are two characteristics of useful accounting information.
Briefly define each term.
Why are these characteristics important to users of financial statements?

Question 2

Why is the dividends account increased by a debit? Explain in terms of its relationship to stockholders' equity.

Question 3

Briefly distinguish between a prepayment and an accrual