Question

1. Corny Inc. has the following information for its bank account in the month of May: Balance in Cash T-account, May 31 $5,575 Outstanding checks 584 Deposits in transit 2,500 Bank service charges 75 Interest earned on account 25 What is Corny’s correct amount of cash at May 31?

A) $5,500

B) $5,525

C) $5,550

D) $7,466

2. A company’s journal entry incorrectly showed a $700 deposit as $70. How will the correction of this error appear on the company’s bank statement?

A) Addition on the company’s side of $700 and a subtraction of $70

B) Subtraction on the company’s side of $700 and an addition of $70

C) Addition on the bank’s side of $700 and a subtraction of $70

D) Subtraction on the bank’s side of $700 and an addition of $70

3. For which items on the bank reconciliation must the company prepare journal entries?

A) Any errors made by the company

B) Any errors made by the bank

C) All items on the bank’s side of the reconciliation

D) Outstanding checks

4. An uncollectible account receivable of $5,000 must be written off. What is the correct journal entry to record the write-off?

A) Debit to accounts receivable and credit to allowance for doubtful accounts

B) Debit to allowance for doubtful accounts and credit to accounts receivable

C) Debit to bad debt expense and credit to allowance for doubtful accounts

D) Debit to bad debt expense and credit to accounts receivable.

4) The current balance (before year-end adjustments) in the allowance for doubtful accounts is a credit of $658, while the balance of accounts receivable is $100,000. If the company estimates that 3.7% of accounts receivable will be uncollectible, what is the ending (adjusted) balance in the allowance?

A) $3,042

B) $3,700

C) $4,029

D) $4,358

5) The current balance (before year-end adjustments) in the allowance for doubtful accounts is a debit of $740. Revenues for the year were $420,000. If the company estimates that 1% of revenues will result in bad debt expense, what is the ending (adjusted) balance in the allowance?

A) $740

B) $2,760

C) $3,460

D) $4,240

6) Farola Company accepted an 8-month, 8%, $16,000 note receivable as payment from a customer on August 1. What amount of interest revenue should Farola record on December 31, their year-end?

A) $320

B) $533

C) $853

D) $1,280

7) Which accounting concept focuses on the size of amounts on the financial statements to determine their importance?

A) Conservatism

B) Entity Concept

C) Historical Cost

D) Materiality

8) What is the correct journal entry to record the cash sale of goods under a perpetual inventory system?

A) Debit cash, credit sales revenue

B) Debit cost of goods sold, credit cashC) Debit cash, credit inventory

D) Debit cost of goods sold, credit inventory

G)Both a and b

H)Both a and d

9)

Which of the following statements is true when inventory prices are rising?

A) LIFO net income is lower than FIFO net income

B) LIFO net income is higher than FIFO net income

C) LIFO net income is the same as Average Cost net income

D) LIFO net income may be higher or lower than net income under other methods

10.

Janus Corp. had the following information for the year.

Beginning Inventory at January 1       20 units @ $16 per unit

Inventory Purchase, March                40 units @ $18 per unit

Inventory Purchase, August                30 units @ $20 per unit

Inventory Purchase, October              25 units @ $21 per unit

Ending Inventory at December 31      35 units

What is Janus Corp’s cost of goods sold for the year, using FIFO?

A) $1,430

B) $1,440

C) $1,530

D) $1,575

Answer 1

1. (B) $ 5525 (5575-75+50).

2. (C)

3. (A)

4. (B) (100000*3.7%}
5. (C) $ 3460 (420000*1%-740)

6. (B) $ 533 (16000*8%*5/12)

7. (D)

8. (H)