Question

TRUE OF FALSE

1. A signature card shows the signature of only the person who authorizes others in the company to sign checks.
2. The payor is the party to whom payment is made.
3. Bank customers are considered creditors of the bank so the bank can shows their accounts with credit balances on the bank’s records.
4. Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over checks.
5. In preparing bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.
6. In preparing bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.
7. In preparing bank reconciliation, the amount indicated by a debit memorandum for bank service charges is added to the balance per depositor’s records.
8. In preparing bank reconciliation, the amount of a check omitted from the journal is added to the balance per depositor’s records.
9. A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to balance, you add $198 to the bank statement balance

PROBLEM II

Answer T or F

1. Notes receivables can also be called trade receivables.
2. Receivable from company owners and officers should be disclosed separately on the balance sheet.
3. Receivables not currently collectible are reported in the investments section of the balance sheet.
4. Since those responsible for receivables record keeping and credit approval do not handle cash, these duties do nor need to be separated to maintain food internal control.
5. Maintaining the Accounts Receivable control account and the Accounts Receivable Subsidiary Ledger should be assigned to the same employee for good internal control.
6. When companies sell their receivables to other companies, the transaction is called factoring.
7. Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables.
8. The difference between Accounts receivable and its contra asset account is called net realizable value.
9. The estimate based on sales method violates the matching principle.
10. When the estimate based on analysis of receivables is used, income is reduced when a specific receivable is written off.
11. When an account receivable that has been written off is subsequently collected, the account receivable is reinstated.
12. Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.
13. At the end of a period, before the accounts are adjusted, Allowance for Doubtful Accounts has a credit balance of $250, and net sales on account for the period total $500,000. If uncollectible accounts expense is estimated at 1% of net sales on account, the current provision to be made for uncollectible accounts expense is $4,750.

At the end of a period, before the accounts are adjusted, Allowance for Doubtful Accounts has a credit balance of $500, and net sales on account for the period total

Answer 1

Problem 1	T or F	Comments
A signature card shows the signature of only the person who authorizes others in the company to sign checks.	FALSE	Shows all authorized persons signature
The payor is the party to whom payment is made.	FALSE	Who is making the payment
Bank customers are considered creditors of the bank so the bank can shows their accounts with credit balances on the bank’s records.	TRUE
Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over checks.	TRUE
In preparing bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.	FALSE	Added to bank statement
In preparing bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.	FALSE	Deducted from bank statement
In preparing bank reconciliation, the amount indicated by a debit memorandum for bank service charges is added to the balance per depositor’s records.	FALSE	Deducted from deposotor's record
In preparing bank reconciliation, the amount of a check omitted from the journal is added to the balance per depositor’s records.	FALSE
A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to balance, you add $198 to the bank statement balance	TRUE
Problem 2
Notes receivables can also be called trade receivables.	FALSE
Receivable from company owners and officers should be disclosed separately on the balance sheet.	TRUE
Receivables not currently collectible are reported in the investments section of the balance sheet.	FALSE
Since those responsible for receivables record keeping and credit approval do not handle cash, these duties do nor need to be separated to maintain food internal control.	FALSE
Maintaining the Accounts Receivable control account and the Accounts Receivable Subsidiary Ledger should be assigned to the same employee for good internal control.	FALSE
When companies sell their receivables to other companies, the transaction is called factoring.	TRUE
Of the two methods of accounting for uncollectible receivables, the allowance method provides in advance for uncollectible receivables.	TRUE
The difference between Accounts receivable and its contra asset account is called net realizable value.	TRUE
The estimate based on sales method violates the matching principle.	FALSE
When the estimate based on analysis of receivables is used, income is reduced when a specific receivable is written off.	FALSE
When an account receivable that has been written off is subsequently collected, the account receivable is reinstated.	FALSE	No change in Accounts receivable
Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.	TRUE
At the end of a period, before the accounts are adjusted, Allowance for Doubtful Accounts has a credit balance of $250, and net sales on account for the period total $500,000. If uncollectible accounts expense is estimated at 1% of net sales on account, the current provision to be made for uncollectible accounts expense is $4,750.	FALSE	Provision should be $5,000
At the end of a period, before the accounts are adjusted, Allowance for Doubtful Accounts has a credit balance of $500, and net sales on account for the period total		Question is not complete