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12) Internal control does not consist of policies and procedures-
Ans- (c) That guarantee the company will earn a profit. (Because this policy is not present in the Sarbanes-Oxley Act of 2002).
13) The amount of deposits in the transit is included in the bank reconciliation statement as
Ans- (c) Addition to the balance per bank statement ( Because deposits in the transit are the amounts which have been already recorded in the company's books so the company's book will show the correct figure but the amount is not reflected in the bank statement so the amount should be added).
14) The bank reconciliation
Ans- (b) Is the part of the internal control system.( Because it is necessary in preventing and detecting fraudulent activities in an organisation.It also helps in identifying the errors which is causing the mismatch of balances between bank balance position per the bank statement and the cash balance as per the company's books.
15) The amount of outstanding checks is included on the bank reconciliation as a
Ans- (c) Deduction from the balance per bank statement (Outstanding checks needs to cleared resulting in the decrease of the amount from the bank statement).
16) Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. What adjusting entry should be made before the financial statements are prepared by Harper on March 31?
Ans- (b) Interest Receivable 800
To interest Revenue 800
As per the accrual concept of accounting revenue should be recognized when it is earned and not when it is received so we need to pass this adjustment entry on March 31.
17) A $135 petty cash fund has cash of $18 and receipts of $120.The journal entry to replenish the petty cash would include a
Ans - (d)Credit to cash short and over for $3. [($18+$120)-$135]
18) Dalton company uses the allowance method for un collectib le receivables that the irish company account is uncollectible. To write off this account Dalton should debit
Ans- (c) Debit to Allowance for doubtful accounts and a credit to accounts receivables.
19) The accounts receivable turnover measures
Ans- (a) how frequently during the year the account receivables are converted to cash.
20) Indications that an account may be uncollectible include all of the following except the customer
Ans- (b) is making small but regular payments.
21) What entry is required in the company's account to record outstanding checks?
Ans- (d) No entry required. (Because outstanding checks are not an adjustment to the company's cash account).
22) Which of the following items that appeared on the bank reconciliation didn't require a journal entry
Ans- (b) Deposits in transits.
23) The two methods of accounting for uncollectible receivables arfe the allowance method and the
Ans- (b) Direct write off method.
24) To record estimated uncollectible receivables using the allowance method the adjustment entry
Ans- (c) Debit to allowance for doubtful accounts and a credit to accounts receivable.
25) The cash account in a company's ledger is a
Ans- (a) asset with a normal debit balance.
12. Inte al control d protects from e guarantee the company will campo d ensure that...
e owner's equity, delb d. contra asset, credit 2. A bank reconciliation should be prepared periodically because a. the company's records and the bank's records are in agreement b. the bank has not recorded all of its transactions e. any differences between the company's records and the bank's records should be determined, and made by either party should be discovered and corrected d. the bank must make sure that its records are correct 3. Gunnar Company gathered the following reconciling...
1. Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? a. Bad Debt Expense 22,000 Allowance for Doubtful Accounts 22.000 b. Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 c....
When using the allowance method to estimate uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of: a $750 b. $530 c $110 d. 8640 Which one of the following below reflects a weak internal control system? a. a single...
1). An aging of Calypso Company's accounts receivable indicates that $40,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $6,000 credit balance, the adjustment to record bad debts for the period will require a: A) Debit to Bad Debts Expense for $34,000 B) Debit to Allowance for Doubtful Accounts for $34,000 C) Debit to Bad Debts Expense for $40,000 D) Credit to Allowance for Doubtful Accounts for $40,000 2) After completing a bank reconciliation, you are...
TRUE OF FALSE A signature card shows the signature of only the person who authorizes others in the company to sign checks. The payor is the party to whom payment is made. Bank customers are considered creditors of the bank so the bank can shows their accounts with credit balances on the bank’s records. Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over checks. In preparing bank reconciliation, the amount of...
True/False Indicate whether the statement is true or false, 1. Receivables from company owners and officers should be disclosed separately on the balance sheet. 2. Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables. 3. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use. 4. During construction of a building, the cost of interest...
The Boxwood Company sells blankets for $40.00 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 03 Purchase $16.00 May 10 Sale May 17 Purchase $18.00 May 20 Sale May 23 Sale May 30 Purchase $19.00 Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method. 27 Select the...
1) The bank statement that a depositor receives from the bank includes a. notification of amounts deducted by the bank to cover such things as the cost of a supply of new checks ordered by the depositor. b. a designation of which checks are still outstanding at the end of the month. c. a designation of which deposits are in transit at the end of the month. d. notification of errors made by the depositor in recording checks written during the month in the...
11. The two methods of accounting for uncollectible receivables are the allowance method and the a. direct write-off method b. interest method c. wawilinmethod d. cost method 12. Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is a....
d. 66. The objectives of internal control are to a. control the internal organization of the accounting department personnel and equipment b. provide reasonable assurance that assets are safeguarded and used for business purposes, business information is accurate, and laws and regulations are complied with c. prevent fraud, and promote the social interest of the company d. provide control over "internal-use only reports and employee internal conduct 67. A necessary element of internal control is a. database b. systems design...