Question

12. Inte al control d protects from e guarantee the company will campo d ensure that business Information is one the bar 13. The amount of deposits in Hount of deposits in transit is included a. deduction from the balance the company's b. deduction from the balance perbank e n e addition to the balance per bank statement d. addition to the balance per company books 14. The bank reconciliation a. should be prepared by an employee who records castrech b. is part of the internal control system o is for information purposes only d. is sent to the bank for verification ) 15. The amount of the outstanding checks is included on the bank reconciliation as a. deduction from the balance per company's records b. addition to the balance per bank statement deduction from the balance per bank statement d. addition to the balance per company's records 200 16. Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest What adjusting entry should be made before the financial statements are prepared by Harper on March 317 a. Cash 200 Interest Revenue 200 b) Interest Receivable 800 Interest Revenue 800 e. Interest Receivable 200 Interest Revenue d. Notes Receivable 40,000 Cash 40,000 17. A $135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the would include a a. credit to Petty Cash for $120 b. debit to Cash for $120 c. credit to Cash Short and Over for $3 di credit to Cash for $102 18. Dalton Company uses the allowance method to account for uncollectible receivables. D hat the Irish Company account is uncollectible. To write off this account, Dalton should debit a. Bad Debt Expense and credit Accounts Receivable b. Bad Debt Expense and credit Allowance for Doubtful Accounts c. Allowance for Doubtful Accounts and credit Accounts Receivable d. Accounts Receivable and credit Allowance for Doubtful Accounts

Answer 1

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.

Working Notes:-[40,000*6/100*4/12=$800]

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.