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Study Resources (Accounting)

21) The following accounts are listed in order of liquidity: A) Cash, Inventory, Accounts Receivable, Furniture B) Cash, Accounts Receivable, Inventory, Furniture C) Furniture, Cash, Accounts Receivable, Inventory D) Furniture, Cash, Inventory, Accounts Receivable 22) When classifying assets and liabilities: A) assets are classified as liquid and non-liquid. B) for most businesses the operating cycle is two.
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4.4   Learning Objective 4-4 1) All cash receipts should be deposited in the bank on a weekly or monthly basis. 2) Internal controls for cash receipts over the counter and for cash receipts by mail are identical. 3) In a lock-box system, customers send payments into a special post office box. 4) The duties.
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52) Debit Company just finished its first month of operations. The cash account contains the following information: Balance, January 1$0 Deposits: 1/2$1,000 1/10900 1/201,250 1/312,100 Total Deposits5,250 Checks: 101$300 102225 103 150 104  75 105450 106 250 107500 108 100 Total Checks2,050 Balance, January 31$3,200 Debit Company's January bank statement is shown below: Balance, January 1$0 Deposits and other credits: 1/2$1,000 1/11900 1/211,250 Interest103,160 Checks and other debits: 102300 103225 104150 105450 106250 EFT 100 Service charge  15(1,490) Balance, January 31 $1,670 Based on the.
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11) When a company receives cash by mail: A) all incoming mail containing cash receipts should be opened by the accounting department. B) the mailroom sends all customer checks to the internal audit department. C) the remittance advice goes to the accounting department for preparation of the journal entries. D) the bank deposit is.
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21) Morgan's Fine Meats Co. has the following information for the second quarter of 2012: Reconciled Cash balance March 31$  15,000 Sales for April200,000 Sales for May300,000 Sales for June400,000 Cost of Goods Sold is 75% of Sales Operating expenses is 10% of Sales Purchase a new computer in June 65,000 Interest expense is paid in May40,000 Income taxes.
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11) Unrealized gains and losses on trading securities are reported as part of current income. 12) An unrealized loss occurs when the current market value is more than the original cost of the investment. 13) Which of the following is an incorrect statement regarding short-term investments? A) Short-term investments are also called marketable.
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Chapter 4   Internal Control & Cash   4.1   Learning Objective 4-1 1) One of the main elements of the fraud triangle is rationalization. 2) Perpetrators of fraud usually commit fraud for their own short-term economic gain. 3) Fraud is a major problem. 4) One of the most common types of fraud that impacts the financial statements.
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91) The accounting records of Aqua Inc. include the following selected unadjusted balances at June 30: Supplies, $2,000 Prepaid insurance, $2,500 Salary Payable, $0 Unearned Revenue, $1800 Service Revenue, $35,000 Salary Expense, $8,000 Supplies Expense, $0 Insurance expense, $0. The company obtains the following data for the June 30 adjusting entries: A) Supplies on hand, $600 B) Prepaid insurance that.
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15) The adjusted trial balance of Debit Company is shown below: Debit Company Adjusted Trial Balance December 31, 2012 Cash$6,500 Accounts receivable8,000 Supplies1,000 Prepaid Rent (3 months)2,500 Equipment, net42,000 Accounts payable$4,000 Salary payable2,000 Unearned revenue (2 month advance)2,000 Note payable — long term14,000 Common stock10,000 Retained earnings14,700 Dividends4,000 Service revenue75,000 Salary expense40,000 Rent expense10,000 Supplies expense1,500 Depreciation expense5,000 Utilities expense 1,200      Total$121,700$121,700 Prepare Debit Company's income statement, statement of retained earnings and.
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31) The rule that all major groups of transactions should be supported by hard copy documents or electronic records is part of the control procedure of: A) limited access. B) segregation of duties. C) adequate records. D) proper approvals. 32) A company has a policy that all checks over $5,000 need to have the signature.
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24) Sam's Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the debt ratio. Account Debit Credit Cash 10,500 Accounts Receivable 3,800 Inventory 3,000 Store Supplies 1,900 Prepaid Rent 1,500 Land 28,000 Building 50,000 Accumulated Depreciation–Building 10,000 Store Equipment 27,000 Accumulated Depreciation--Store Equipment 15,625 Accounts Payable 9,000 Notes Payable due in one year 4,500 Salaries Payable            1,000 Unearned Revenue 12,000 Common Stock 31,655 Retained Earnings 4,920 Revenue 63,000 Rent Expense 7,000 Salaries Expense 14,000 Depreciation Expense–Building 3,500 Depreciation Expense--Store Equipment 1,500 TOTALS $151,700   $151,700 25) The adjusted trial balance of Debit.
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44) Prepare a bank reconciliation using Fancy Clothing Store's information for August 31. •Two deposits made on August 31 were not on the bank statement, totaling $7,413. •The note. •August 31 balance in Cash was $11,677. •The bookkeeper forgot to record check # 1578 for $843 which was cashed by the bank on August.
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30) Heidi's Hut, Inc. has the following adjusted trial balance as of March 31, 2012. Prepare a classified balance sheet as of that date. Account Debit Credit Cash 600 Accounts Receivable 1,800 Inventory 3,000 Store Supplies 1,900 Prepaid Rent 1,500 Land 23,000 Building 50,000 Accumulated Depreciation—Building 7,500 Store Equipment 27,000 Accumulated Depreciation—Store Equipment 15,625 Accounts Payable 6,000 Notes Payable 2,500 Salaries Payable Unearned Revenue 8,000 Common Stock 31,650 Retained Earnings 2,520 Revenue 41,000 Rent Expense 1,000 Store Supplies Expense 2,000 Salaries Expense 1,000 Depreciation Expense—Building 1,500 Depreciation Expense—Store Equipment 500 Totals $114,800 $114,800 .
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11) The debt ratio measures a firm's ability to: A) pay current debt. B) pay long-term debt. C) purchase additional assets. D) pay both current and long-term debt. 12) Which of the following is correct regarding transactions and their effect on ratios? A) Lending agreements often require a company's current ratio to stay above 2.5. B) Lending.
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3.6   Learning Objective 3-6 1) To analyze a company's financial position, decision makers use data and ratios computed from various items in the financial statements. 2) A current ratio below 1.0 is a sign of financial strength for a company. 3) A low debt ratio is safer than a high debt ratio. 4) The.
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21) A payment packet of documents: A) reports the arrival of items purchased. B) is sent by the purchasing department to the vendor selling the item. C) identifies the need for merchandise and begins the purchasing process. D) includes the invoice, receiving report and purchase order. 22) When approving an invoice for payment: A) the receiving.
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A) the Toy Store actually only borrowed $9,000. B) the Toy Store actually only borrowed $3,000. C) the actual interest rate is lower than the stated interest rate. D) none of the above are true. A) $77,400 B) $79,900 C) $82,900 D) $88,400 17) The beginning cash balance is $3,000, estimated cash receipts are $105,000, and estimated cash.
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11) Which is NOT an objective of an internal control system? A) Safeguarding of assets B) Compliance with company policies C) Compliance with legal requirements D) Risk minimization 12) The objective of internal control that minimizes waste, which lowers costs and increases profits is: A) operational efficiency. B) asset safeguards. C) cost minimization. D) reliable accounting records. 13) The Sarbanes-Oxley.
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20) XYZ Company is preparing its cash budget for the upcoming year. It anticipates the following cash receipts and cash disbursements for the year: Collections from customers$ 921,400 Cash paid for operating expenses360,000 Interest and dividends received on investments12,000 Sale of machinery for cash45,000 Purchase of inventory for cash407,000 Payment of interest expense14,000 Payment for land175,000 Payment of.
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21) Trading securities: A) must be sold for more than their cost. B) do not include debt securities of another company. C) must increase in fair value. D) can generate dividend revenue. 22) ABC Company purchases a trading security for $12,000. The entry to record this transaction will include a: A) debit to the Investment account. B).
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4.2   Learning Objective 4-2 1) The primary way that fraud and errors are prevented is by external auditors. 2) External auditors are responsible for maintaining a company's system of internal controls. 3) All employees should have a background check before being hired, and should be properly trained and supervised. 4) Small companies cannot have.
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41) The ending bank statement balance for November is $9,845. The bank statement shows a service charge of $95, electronic funds receipts of $500, and a NSF check for $350. Deposits in transit total $2,050 and outstanding checks are $1,835. What is the adjusted bank balance? A) $8,900 B) $10,060 C) $10,115 D) $13,730 42).
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21) A fidelity bond is a(n): A) employment contract for a specified period of time. B) insurance policy that reimburses a company for employee theft. C) contract prohibiting former employees from working for a competitor. D) promise by a company to safeguard customers' personal information. 22) When a company is determining its risk assessment: A) the.
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28) The adjusted trial balance of Debit Company is shown below. Prepare the necessary closing entries. There were no dividends paid during the year. Debit Company Adjusted Trial Balance December 31, 2012 Cash$6,500 Accounts receivable8,000 Supplies1,000 Prepaid Rent (3 months)2,500 Equipment, net46,000 Accounts payable$4,000 Salary payable2,000 Unearned revenue (2 month advance)2,000 Note payable — long term14,000 Common stock10,000 Retained earnings14,700 Service revenue75,000 Salary expense40,000 Rent expense10,000 Supplies expense1,500 Depreciation.
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11) ________ is the most common fraud, but ________ is the most expensive fraud. A) Fraudulent financial reporting, misappropriation of assets B) Misappropriation of assets, fraudulent financial reporting C) Misappropriation of assets, cooking the books D) Cooking the books, misappropriation of assets 12) ________ is the element in the fraud triangle results from either critical.
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3.5   Learning Objective 3-5 1) The books need to be closed in order to prepare the accounts for the next period's transactions. 2) Temporary accounts are closed at the end of the accounting period. 3) During the closing process, each revenue account is credited for the amount of its balance. 4) The income statement.
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3.4   Learning Objective 3-4 1) The balance sheet is the last financial statement to be prepared. 2) Net income for the period appears on the income statement and the balance sheet for the period. 3) The beginning balance of retained earnings appears on the Balance Sheet and the statement of retained earnings. 4) The.
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41) For each of the following situations, indicate which internal control procedure ABC company has violated: _____1.Since they are costly, background checks are not done for the employees. _____2.Purchases of items on credit do not need the approval of the purchasing department. _____3.All hard copies of documents are shredded after one month and.
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11) After the closing entries are prepared: A) all asset accounts will have a zero balance. B) the Retained Earnings account will have the correct ending balance. C) the temporary accounts will have debit balances. D) all liability accounts will have a zero balance. 12) Accounts that relate to a limited period are called: A) asset.
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11) ________ will not be found on the statement of retained earnings. A) Net income. B) Dividends. C) Stockholders' equity. D) Net loss. 12) Revenues and expenses affect stockholders' equity; therefore, net income is then transferred to: A) the income statement. B) retained earnings. C) the balance sheet. D) none of the above. 13) ABC Company has a balance of.
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22) Mary's Dairy has the following information available for the preparation of the cash budget for the second quarter: Reconciled Cash balance March 31$  15,000 Sales for April220,000 Sales for May330,000 Sales for June440,000 Cost of Goods Sold is 80% of Sales Operating expenses is 8% of Sales Interest expense is paid in June80,000 Income tax rate is.
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25) Samantha's Tasty Treats, Inc. has the following assets at the end of the year: Cash in checking account$13,000 Cash in time deposits 12,000 Accounts Receivable  45,000 Investments in IBM stock20,000 Investments in high-grade government securities, maturing in 30 days15,000 Minimum balance–compensating agreement17,000 Determine the amount of cash and cash equivalents at the end of the year.
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7) When goods are shipped FOB destination: A) revenue is recognized when the goods leave the shipping dock. B) revenue is recognized after any returns are received by the seller. C) revenue is recognized only after cash payment is received. D) revenue is recognized when the goods are received by the customer. 8) If a.
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31) When dealing with gains and losses on trading securities: A) the word "realized" must be used in the account title. B) unrealized gains and losses must be labeled "unrealized." C) unrealized gains go on the balance sheet and realized gains go on the income statement. D) unrealized losses and realized losses are both.
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5.1   Learning Objective 5-1 1) Another term for short-term investments is held-to-maturity securities. 2) Short-term investments may be divided into held-to-maturity securities, trading securities and available-for-sale securities. 3) Short-term investments are the most liquid asset. 4) The purpose of a trading security is to hold it for a short term and then sell it.
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21) Rosewood Company had current assets of $582, current liabilities of $433, total assets of $732, and no long-term liabilities. If Rosewood executes a six-month note for $500, what is the new current ratio? A) 0.76 B) 1.16 C) 1.34 D) 2.50 22) ABC Company has total assets of $360,000 and total liabilities of $200,000..
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26) The ABC Company has the following adjusted trial balance as of December 31, 2012: Account Debit Credit Cash            800 Accounts Receivable         1,000 Inventory         2,000 Store Supplies         1,900 Prepaid Rent           500 Land         6,000 Building        40,000 Accumulated Depreciation–Building         8,500 Accounts Payable         7,500 Notes Payable          2,300 Unearned Revenue         4,100 Common Stock          6,600 Retained Earnings          3,100 Service Revenue        33,000 Rent Expense         2,300 Store Supplies Expense         1,200 Salaries Expense         6,400 Depreciation Expense–Building          1,400 Telephone Expense          1,600 Totals     .
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5) A compensating balance increases the actual interest rate. 6) A cash budget is: A) part of the bank reconciliation process. B) used to facilitate minor cash disbursements. C) a means of identifying future cash receipts and future cash payments. D) all of the above. 7) A cash budget does all of the following EXCEPT: A) helps.
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