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Study Resources (Accounting)

11) The two methods of estimating uncollectible receivables are ________. A) allowance method and amortization method B) aging-of-accounts-receivable method and percent-of-sales method C) gross-up method and direct write-off method D) direct write-off method and percent-of-completion method 12) An entry to write off an account receivable under the allowance method will ________. A) reduce net income B) have.
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11) The credit department must have access to cash in order to exercise effective internal control over receivables. 12) Businesses must maintain a single account receivable account for all customers. 13) Individual customer accounts of accounts receivable are known as subsidiary accounts. 14) Sales through credit cards and debit cards are journalized in.
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21) A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the corporation? A) net income will be overstated B) revenues will be understated C) assets will be understated D) liabilities will be understated 22) Nobells Corp. has acquired land and paid.
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Learning Objective 9-1 1) Plant assets are long-lived, tangible assets used in the operation of a business. 2) The process of allocating the cost of a plant asset over its useful life is known as cost reduction. 3) The cost principle requires a business to record the assets acquired or services received at.
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41) At Insignia Services, the accounting clerk fills out unnumbered purchase order forms for purchases of supplies. An operations engineer completes the form with a detailed description of the supplies being ordered, and the operations manager approves the purchase and passes the purchase order back to the accountant for processing. In.
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31) Which of the following is an attribute of the internal control component "monitoring of controls"? A) Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. B) Monitoring of controls is the "tone at the top" of the business. C).
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11) Depending on the maturity date, held-to-maturity investments are categorized as current assets or long-term assets on the balance sheet. 12) Long-term investments are also known as marketable securities. 13) Long-term investments are all investments that are not short-term. 14) Held-to-maturity investments are categorized as long-term assets on the balance sheet, irrespective of.
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Learning Objective 9-3 1) Discarding of plant assets involves disposing of the asset for no cash. 2) When a business sells a plant asset for book value, a gain or loss should be recorded. 3) When a plant asset, fully depreciated and has no residual value, is discarded, the company will remove the.
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Learning Objective 7-1 1) Internal control is an organizational plan that ensures that the financial statements are prepared and submitted in time. 2) Sarbanes-Oxley Act requires all the private companies in the U.S. to maintain an internal control system. 3) The Public Company Accounting Oversight Board oversees the work of auditors of public.
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Learning Objective 7-2 1) A point-of-sale terminal provides control over cash receipts over the counter. 2) As a part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department. 3) Regarding controls over cash receipts by mail, the bank.
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21) Which of the following is a requirement of the Sarbanes-Oxley Act? A) An outside auditor must issue an internal control report for each public company. B) The Public Company Oversight Board must conduct audits of public companies. C) The accounting firm that audits a public client must also provide consulting services for.
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Learning Objective 9-6 1) The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested. 2) The asset turnover ratio is calculated by dividing cost of goods sold by average total assets. 3) Maple Corp. had net sales of $200,550 for the year ended December.
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11) Charms Inc., a merchandising company, has an account receivable for $125 which it has now deemed uncollectible. The company uses the direct write-off method. Which of the following entries is required to record the write-off? A) Bad Debts Expense 125      Accounts Receivable 125 B) Cash 125      Accounts Receivable 125 C) Allowance for Bad Debts 125      Accounts Receivable 125 D).
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11) Adams Inc. has the following account balances at the end of the current accounting period. Beginning inventory $ 75,000 Net purchases 415,000 Net sales revenue 500,000 The normal gross profit percent is 40%. What is the estimated ending inventory as determined by the gross profit method? A) $190,000 B) $415,000 C) $196,000 D) $490,000 12) The following data is available: Net sales $13,000 Normal.
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Learning Objective 9-2 1) Depreciation is the allocation of a plant asset's cost to expense over the useful life of the asset. 2) Residual value is also known as depreciable cost. 3) An asset is said to be obsolete when a newer asset can perform the job more efficiently. 4) When a corporation uses.
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11) If a corporation uses the contra account, Accumulated Amortization, this account will typically be shown on the balance sheet. 12) Which of the following is an intangible asset? A) copyright B) building C) land D) equipment 13) Businesses are allowed to record goodwill ________. A) when they enjoy an outstanding reputation and loyalty with customers B) if.
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31) A check for which a maker's bank account has inadequate money to pay the check is known as ________. A) nonsufficient funds checks B) outstanding checks C) restrictive checks D) canceled checks 32) The following information is available for Jack's Inc., for the current month. Book balance end of the month $6,875 Outstanding checks 655 Deposits in transit 3,500 Service charges 85 Interest.
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51) Which of the following items are reconciling items on the bank side of the reconciliation? A) outstanding checks and correction of book error B) deposit in transit and NSF check C) deposit in transit and outstanding checks D) bank service charge and correction of book error 52) Which of the following items are reconciling.
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21) The following information is from the 2015 records of Armand Camera Shop: Accounts Receivable, December 31, 2015 $40,000 (debit) Allowance for Bad Debts, December 31, 2015 prior to adjustment 1,500 (debit) Net credit sales for 2015 175,000 Accounts written off as uncollectible during 2015 15,000 Cash sales during 2015 27,000 Bad debts expense is estimated by the percent-of-sales method. The management.
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11) External auditors evaluate company controls to ensure the financial statements are presented fairly in accordance with Generally Accepted Accounting Principles. 12) The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board. 13) Burglar alarms, fire alarms, and security cameras improve internal control. 14) Separating the custody of assets from accounting.
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Learning Objective 9-7 1) An exchange transaction is said to have commercial substance if the future cash flows change as a result of the transaction. 2) Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized. 3) In exchanges of plant assets with commercial.
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Learning Objective 7-6 1) When calculating the cash ratio, the numerator includes cash equivalents. 2) A cash equivalent is a highly liquid investment that can be converted into cash in three years or less. 3) Having a cash ratio below 1 is a good thing. 4) Cash is a highly liquid asset, but cash.
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Learning Objective 7-3 1) Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received. 2) A receiving report should be matched with the.
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11) If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue. 12) In a bank reconciliation, a book error will be shown on the bank side of the reconciliation. 13) In a bank reconciliation, outstanding checks will be shown on the bank side.
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31) Long-term investments ________. A) include all debt securities that are trading investments or held-to-maturity investments B) are investments in debt and equity securities that are highly liquid and that the investor intends to sell in one year or less C) include debt and equity securities that the investor expects to hold longer.
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Learning Objective 8-2 1) The direct write-off method of accounting for uncollectible receivables is primarily used by small, non-public companies. 2) The expense associated with the cost of uncollectible accounts receivable is known as bad debts expense. 3) Companies that follow GAAP are required to use the direct write-off method for uncollectible accounts.
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Learning Objective 9-4 1) A natural resource is an asset that comes from the earth and is consumed. 2) The process by which businesses spread the allocation of a natural resource's cost over its usage is known as depreciation. 3) The units-of-production method is used to compute the depletion expense. 4) Businesses should not.
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21) Which of the following is an example of debt securities? A) preferred stocks B) forex investment C) common stocks D) corporate bonds 22) U.S. government securities are ________. A) real estate investments B) equity securities C) debt securities D) forward contracts 23) Which of the following financial instruments pay dividends? A) futures contracts B) real estate securities C) debt securities D) equity securities 24).
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Learning Objective 8-5 1) The acid-test ratio is also known as the quick ratio. 2) The higher the quick ratio, the lower the business's ability to pay its current liabilities. 3) The amount of Accounts Receivable is generally reported at its gross amount on the balance sheet. 4) The acid-test ratio is a more.
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Learning Objective 8-1 1) The receivables of an organization can be categorized into accounts receivable, notes receivable, and other receivables. 2) A company will have receivables whenever it sells goods or services on credit. 3) The two major types of receivables are interest receivable and taxes receivable. 4) A receivable can be described as.
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Learning Objective 8-3 1) The allowance method violates the matching principle. 2) A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see which customers the company will not collect from is known as the allowance method. 3) Under both the allowance method and.
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11) When an asset is fully depreciated, no further depreciation expense is recorded. 12) Companies are required to use Modified Accelerated Cost Recovery System (MACRS) for tax purposes. 13) Which of the following categories of assets should be depreciated? A) tangible property, plant and equipment, other than land B) intangible property C) land D) natural resources 14).
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11) A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________. A) Real Time Gross Settlement B) Electronic Data Interchange C) Electronic Fund Transfer D) Evaluated Receipts Settlement 12) Which of the following statements describes.
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